Avoid the biggest passive income myth and learn how to make money blogging
I like to make the analogy that blogs are much like real estate investments in raw land. If you buy a piece of land, it may take years to develop it into a profitable commercial or residential space. You may see little income over those years, and certainly not passive income. If you have the patience and the drive for the investment, it can offer the pride of development and a strong income. Developing a blog is a lot like that, and you really can make money blogging.
But unlike real estate investment, your blog is unlikely to ever offer genuinely passive income. Making money blogging may be the biggest passive income myth I’ve seen.
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Passive income is technically an income you receive regularly that involves little effort on your part. You get paid every month, quarter, or year but don’t participate in the management or contribute work in the investment. Few investments offer passive income, but some do provide a relatively consistent stream of cash flow without too much effort.
Follow the promises of some blogs, mainly those offering blogging services or “how-to” manuals, and you need only register your website name and wait for checks to deposit into your bank account. While blogging can offer some passive income potential, it is much more a traditional job than a passive income investment.
How Much Do Bloggers Make?
Let’s first look at how much money bloggers make and then at the different income sources. Web firm Technorati found in a 2008 survey that only 7.4 million of the 133 million blogs online had not been updated within 120 days. That means 95% of bloggers had quit and abandoned their dream within about four months. That’s a pretty high failure rate but for a good reason.
The My Work from Home Money Blogger Survey found that 14% of blogs make no money. Of those that make money from their blog, 39% said they made less than $500 per month. Check out the survey for more blogger facts like how much traffic blogs get and the best income sources for bloggers.
Granted, many probably blog simply as a way to share their thoughts and don’t attempt to make any money. The pie chart includes only those bloggers that have tried to make money blogging but paints a fairly dismal picture of the myth of becoming the next internet millionaire through an online property.
But the fact that 13% of bloggers reported making more than $5,000 a month shows that it is possible to make a good living. To do so, you need to know how blogs make money and what you need to do to be successful.
How do Bloggers Make Money?
Why is the passive income myth in blogging so strong if most bloggers never make any real money and quit disappointed? Because blogs can make money, and it’s an investment that requires very little in the way of start-up money.
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Blogs make money primarily through four methods: advertising, sponsored posts, an affiliate advertising and selling the blogger's own products and services. We talked about how to make money blogging through an online store with affiliate sales and your products in Tuesday’s post. We’ll cover how to make money through advertising and sponsored posts here, but you can use all four ideas together to make money from your blog.
Blogs make money through advertising by selling space on the site, usually through boxes of text or picture ads. Most bloggers do this through a middleman like Google Adsense, which contracts with advertisers to pay a certain amount every time someone clicks on their ad (cost per click, CPC). Google then uses a computer program to place ads on your blog that are relevant to your readers, based on what you talk about in the blog.
If a reader clicks on an ad, Google charges the advertiser and gives you a percentage of the payment. Most advertising works this way, through per-click payments, while other ads pay depending on how many thousand times they appear on your blog (cost per mille, CPM). Some blogs with more traffic may even contract directly with advertisers and cut out the middleman.
Once your blog is large enough, advertisers will pay you to write about their product or sponsor you to write about something related to their product. These sponsored posts offer a flat fee, usually starting around $100 and up, to include a mention of the advertiser and a link back to their website. Readers don’t have to click on the link or buy anything for the blogger to get paid.
We’ll detail how to use each method to make money blogging in a minute. First, look at how much you can expect from each source and why blogging is not a great passive income stream.
Why Blogging is NOT Passive Income
Blogging is probably the least passive of all the passive income ideas I’ve tried. Take it from someone that manages five blogs; running a site is at least a part-time job and can consume your life. Even in your “free-time,” you’ll worry over your blog and how to increase traffic.
As the survey above showed, most blogs make little or no money. The ones that do are usually more than a few years old. Most blogs see very little traffic over the first few months. The screenshot below is from one of my blogs that started in January 2015. The site only got about a thousand visitors a month for the first few months, and it wasn’t until October that I was consistently getting more than 10,000 page views a month.
While 10,000 page views a month may seem like a profitable website, most will make less than a few hundred dollars at this point. Advertising rates differ but seem to average around $1 per click with an average click-through rate (CTR), or the number of people that click on an ad per every 100 page views, around one percent.
That 10,000 page views translates to roughly $100 per month for the blog. You might be able to make another $100 or so through affiliate advertising or sponsored posts, but don’t expect to make much in your first year of blogging. I was making an average of $700 per month by my tenth month of blogging, but much of it was due to book sales rather than blogging advertising.
Now consider the amount of work that goes into a blog over that first year. You need to be posting at least twice a week to build an audience and your place in search rankings. If you are not a strong writer, you’ll likely spend at least a few hours or more on each post. There is a blogger saying that goes, “Spend two hours promoting your posts for every hour you spend writing.” While social media makes it pretty easy to share, and I wouldn’t say you need to spend much time promoting your blog, you will spend considerable time commenting, blogging, and sharing.
Over the first six months of blogging, you will likely have spent a minimum of 250 hours setting up, writing, and promoting the blog. For this, you will be lucky to have made a few hundred dollars through advertising and other income sources. Do the math (roughly $300 divided by 250 hours equals the kind of hourly wage even Nike would be ashamed of), and you can see why most bloggers quit before their site reaches six months old.
So Why do People Blog if They don’t Make Money?
Now that I have scared most of you, you’re probably wondering why anyone bothers blogging at all. Why did bloggers create more than 56 million blog posts in April 2015 on WordPress alone?
Because you can make money blogging! Besides the promise of income, blogging brings with it other benefits and can be done by nearly everybody at minimal cost.
Many bloggers enjoy that their message is read by thousands, even hundreds of thousands of people, every month. They are passionate about their blog and the community they build. This is enough to keep many people blogging without even thinking of making any money.
While blogging may not be entirely passive income, it can build big money and a semi-passive income stream. I say semi-passive because you’ll always need to continue posting to your blog and communicating with readers to keep the income stream from dying off. After a while, particularly after six months and a year, your blog will start to see considerable traffic from Google searches. Some of this traffic will continue well after you stop posting, but it will decrease if you neglect the blog.
Once you build a highly trafficked blog, it will continue to bring visitors and make money, but it will always require at least some upkeep. That’s why I say that blogging is the biggest passive income myth because it is more like a business than a hands-off investment that generates income without constant activity.
And when I say big money, consider I am making around $2,000 a month with just a year in the game. I know other bloggers that make upwards of $5,000 a month and even a few that make over $20,000 a month from their blogs.
Two Ways to Make Money Blogging
The secret to making money on a blog is to make money through multiple streams of revenue, i.e., through advertising, sponsored posts, affiliates, and your products, not to rely on just one source. Few single sources will make much money alone unless you’ve got a stellar product or service to promote. Let’s go into more detail about how to make money blogging and what you can expect from each source.
Selling advertising space on a blog generally accounts for most of a new blogger’s income. As your blog grows, you may consider directly approaching advertisers but most bloggers start out with an ad network like Google Adsense. With very little traffic, you won’t be getting many offers for sponsored posts or from affiliate networks, but all you need is one click to make money on advertising.,
It’s pretty simple to set up an Adsense account, and you can link multiple blogs to one report. Once everything is verified, you can start placing ads on your blog. I recommend downloading the official Google Adsense Plugin on your blog, which makes it very easy to place your ad boxes.
Adsense allows you to position up to three advertising boxes on each page, along with up to three “Link Unit” ads which are simple boxes with text links. No rule says you MUST max out your advertising on a page. Overwhelming your readers with advertising can limit how many return in the future. I’ve seen many sites restrict their advertising to two boxes per page along with a couple of link unit ads.
There are two essential ideas to remember when placing advertising on your blog. First, advertising does no good if people do not see it. Place at least one advertising box so that it will appear without the reader having to scroll down. This is called “above the fold.”
The second idea when determining where to put your ads follows where people look when they visit a website. Google and other advertisers have spent a lot of money tracking readers’ attention when they see a site. The result is the heat map below, with red areas getting the most attention, followed by orange and then lighter shades.
It should be evident that readers’ attention would be focused within the area where content usually goes. Try to include at least one advertising box above, below, or within your article. For layouts that include a sidebar on the left side of the screen, this is usually an effective ad spot because people read from left to right.
Because the right sidebar has traditionally carried advertising, readers have learned to subconsciously ignore a lot of the material on the right side. It can still be a good space for advertising, especially for above-the-fold ads but it will probably not be your best placement.
Adsense will do a lot of stuff for you if you allow it. The program will automatically choose the size of the advertising box to maximize revenue and will try to place ads that are more relevant to your audience. You can adjust these features, but most bloggers just let the program do the work. When I used Adsense on my blogs, I adjusted a few of the sidebar ads to display in 300×250 boxes rather than larger boxes. Compared to a 300×600 sidebar box, the smaller box still attracts clicks and lets me fit more content information in the sidebar.
Generally, more giant advertising boxes attract more clicks (duh!), but you don’t want to overwhelm your audience with ads. The graphic below shows the CTR by ad size compared to a 468×60 banner ad. The 300×250 size box is displayed as a “medium rectangle” in the chart.
The way advertising works is that companies pay for their ads to show when a keyword is searched or around content that is relevant to that keyword. Google studies your blog to see what you write about and places ads on the site for which your readers may be interested. If you’ve ever considered advertising through Google, you’ve seen that some keywords and topics cost more than others.
How much money you make from advertising on your blog is a matter of two factors, how often someone clicks on the ads and how much each ad pays per click.
The saying goes that blogs for health, wealth, and romance make the most money. There’s big money in these industries (fitness, finance, and matchmaking), and companies pay big money to advertise their products and services. This doesn’t mean you should force yourself or your blog into one of these topics. Talking about something you have no interest in will take more time to write and will only lead to burnout.
It’s important here to note that you should never click on the ads on your site or ask other people to click. Google is good at seeing which clicks are genuinely through interest and which are fake clicks. If it finds you are clicking ads on your site or asking others to, it will ban you from Adsense, and it will be nearly impossible to get back in the program.
While you can spend hours reading about how to optimize your ads to get more clicks, most people get click-through rates of around one percent. It may vary, but about one in every hundred page views will result in a click on one of your ads. Your blog’s topic will determine how much you make from each click, but the average here seems to be between $0.75 and $1.25 per click.
If you are making about $1 per click and you get approximately one click per hundred page views (1% CTR) then you will be making roughly $0.01 per page view. These are not numbers I pulled out of thin air but the actual statistics from my own Adsense account and in-line with what I’ve seen on other profitable blogs.
Different revenue sources pay for different actions; by the click, by impression and by purchase. I like to use averages and percentages to put everything in terms of how much money you make per page views. That puts everything in a common metric and gives you a better idea of how much you can make as your blog grows.
One penny per page view is not something that is going to make you one of the 10% making more than $15,000 a month blogging. Sponsored posts are a strong revenue stream for bloggers but it may take some time to develop.
Because of the horrible click-through-rates of advertising, content marketing has emerged as a more effective way to get a product or service in front of an audience. Content marketing is stealthier than direct advertising. A blogger writes about a topic that is of interest to the audience. That topic may be about a problem the audience has or just something they’d be interested in learning more about.
What the audience may not know, though sponsored articles should always carry a disclaimer that the article was paid for by the company, is that the article is written to persuade readers to use a specific company’s product or service. One or more links are included in the article that direct back to the company or a product landing page.
Native Advertising Roundup did a 2014 survey that showed 73% of advertisers had paid for sponsored posts and 93% expected to do so in the future. Sponsored posts, also called native advertising and content marketing, is expected to grow from $1.3 billion in 2013 to $9.4 billion by the end of 2018.
There’s a fine line between accepting sponsored content on your blog and alienating readers by being a shill for anyone that will pay you. You should always be honest about your assessment of a product and only accept the paid content if you are comfortable using the product or service yourself.
Since sponsored content is paid on a single article on a single page, you likely will not get many offers or be able to sell the idea to advertisers until you build a decent amount of traffic for your blog. Advertisers are not going to want to pay much if their message is only seen by a few hundred people. Once you’re seeing upwards of 10,000 visitors a month to your blog, it is time to start approaching advertisers for sponsored content.
Where do you find advertisers for sponsored content? Writing in your blog’s topic for even a few months should give you a good idea of who sells products and services in the niche. You can check out your Google Adsense account to see which ads and companies show up frequently. You may even see sponsored content show up on other blogs in the same topic.
After finding your targets for sponsored posts, you’ll need to put together a pitch for why they should advertise though sponsored content on your blog. You can informally pitch them the idea through a quick email but I’ve found that a formal presentation in PowerPoint or pdf goes a long way to getting the deal done.
Within your pitch book, you will want to highlight:
- Keywords for which you rank on the front page of Google – focusing on those relevant to the advertiser
- Blog site statistics including: monthly unique visitors, page views, the percentage of visitors from specific countries, bounce rate, time on page and pages per visitor
- The percentage of your traffic from organic search, social media and referral
- Number of social media followers and any sharing statistics you have for prior posts
- Your MOZ Open Site domain authority and Alexa rank
- The age of your blog and number of email subscribers
When negotiating the sponsored content with an advertiser, it’s important to detail:
- How many words they expect for the content
- How many links will be included in the content and if they will be “nofollow” links
- Whether the paid content will be a flat-fee or based on the number of page views
- If the company requires editing authority before the content goes live
- How many times the article will be promoted through your blog’s social media network or through the newsletter
- How many articles will be written and the posting frequency
While there is no standard price for sponsored content, I’ve seen some research on pricing. MOZ published a great study in 2015 of 474 blogs using sponsored content. About 40% of the blogs charged $100 per post while some bloggers charged as high as $500 per post.
The article attempts to come up with a “formula” for how much you should be charging for sponsored posts.
Blog Price Formula = -60.5 + (5.97 * Domain Authority) + (0.978 * Thousand FB Fans) + (15.1 * Page Rank) – (0.000007 * Alexa Rank)
For example, if you blog has a domain authority of 40 and a page rank of 3 along with an Alexa Rank of 90,000 and 2,000 FB fans then the formula would look like:
Blog Price Formula = -60.5 + (5.97 * 40) + (0.978 * 2) + (15.1 * 3) – (0.000007 * 90,000)
= -60.5 + (238.8) + (1.95) + (45.3) – (0.63)
= $224.92 per sponsored post
The “formula” could be a guide for how much you charge for sponsored content but your own judgement and experience will probably provide a better idea. Domain authority accounts for the biggest change in the formula with the others really adding little additional price meaning. The study found that most blogs charged between $100 and $200 for sponsored content and that’s probably where you should start.
I wouldn’t recommend running more than two or three sponsored content articles per month. It depends on how overt you are promoting the sponsor’s product or service. If the article is useful information without pushing readers to the product, you may be able to run more sponsored articles without appearing to be selling out to sponsors.
Just three sponsored content articles a month could add up to $500 or more for your blog. You may not get much until your blog reaches a certain level of readership but it is definitely a revenue stream you want to approach.
It is more difficult to estimate how much you can make from sponsored content on a per page view basis. How much a blog makes varies quite a bit by the amount of time a blogger spends seeking sponsors and month-to-month blog statistics. I know several bloggers with sites that get over 25,000 page views per month and make between $0.02 and $0.04 per page view on sponsored content by charging $150 per post.
Combining advertising and sponsored content with the two money-making methods we talked about last week, an established blog can expect between $0.03 and $0.07 per page view. If you have the patience and perseverance to grow your blog over several years, that can grow into a sizeable monthly income. I read a monthly income report on one blog earlier in the week that gets over 400,000 page views per month and it is not uncommon to talk to bloggers with 100,000 page views a month.
Blogging and the Passive Income Lie
Blogging is likely the biggest passive income myth out there and anyone that has ever tried running a successful blog will tell you it’s not a road to riches…unless they are trying to sell you their 10-step secret formula to blogging riches!
The draw of blogging comes from its extremely low cost. You can launch a blog on as little as $50 if you sign up through the special offer from Blue Host. Ongoing costs can add up depending on how much support and add-ons you want for the blog but generally costs are very low compared to other passive income investments.
The drawback to blogging, and what makes it a poor choice for true passive income, is that it requires a high time commitment. You will spend a minimum of a couple hours on each post; between writing, sourcing images and optimizing for search engines. You should spend at least a few hours a week promoting your blog through social media and through blogger networks.
Against the time commitment to really make money blogging, the upside is that it’s something that can be done part-time until your blog is big enough to pay the bills. In fact, taking a laid-back view of your blogging income for at least the first six months is the best way to not face burnout. Don’t worry too much about traffic or how much you’re making, just post to your blog once or twice a week and have fun with it.
While a successful blog will continue to attract readers through search well after you’ve stopped contributing, the income will start to decline if you leave it for more than a few months. Given enough income, you can outsource blog administration to make it a true source of passive income but that’s going to take time to generate that level of income to pay for running the entire blog.
If you’ve read this far, I’m guessing you’ve got the commitment to make your blog work. You really can make money blogging and it’s one of the best work at home ideas for spending as little or as much time as you like.