There has been an increasing amount of debate recently over both the ethics and viability of blogging commercially. The focus of this post is not to enter into the question of ‘should bloggers add income streams to their blogs’ – rather I want to examine whether it is a financially viable alternative.
I know of many bloggers who have added contextual ads to their blogs expecting to make a fortune only to discover that it can be a lot harder than it looks – on the other hand I suspect there are a lot of bloggers out there who could actually make some reasonable money from their blogging without too many modifications if they just tried. Let me show you how….
To examine the question of whether blogging for profit is viable I want to focus this post upon contextual advertising (knowing that it is only one of many ways to add an income stream to a blog). By contextual advertising I am referring to programs like Google’s Adsense and Yahoo’s Overture.
3 Keys to Contextual Advertising Success
If you strip down what is needed to have success with contextual advertising there are three main elements that impact your earnings. To put it most simply these three elements are:
– impressions (the number of times ads will be served to your blog – ie the traffic/page views) – I’ve written a number of guides to how to increase your traffic including this one
– click through rate (CTR) – (what percentage of impressions will result in a reader clicking on an ad – and therefore send a micro payment your way). Getting a high CTR is dependent upon a number of things including well designed and positioned ads and getting relevant ads.
– ad value – (the amount that each click generates – which varies depending what the ad is for. This is largely determined by the topic you blog about – eg. blog about match sticks and the ad value will be low – blog about conference calls and it will be higher) – you might like to check out this post on getting high paying ads for Adsense to help you in this area.
To answer the question of whether contextual advertising will be viable on your blog you need to think about each of these areas because they each will impact your earnings. To put it bluntly – if you increase any of these elements it will improve your earnings. Conversely if any of these elements are low it will decrease your earnings.
It makes sense really if you break it down. If your blog has no readership it doesn’t really matter how high your click through rate or ad value is – you’ll not make any money. On the other side if you have heaps of readers but none are clicking on ads you’ll not turn a profit. Likewise if you’ve got high readership who click a lot of ads, but the ads are not valuable you’ll decrease your profits. Its all about balance.
How Much?
Ok – that is the theory – but you’re probably asking – how much traffic, how high a click through rate and what sort of ad value do I need? There is no simple answer to this question as everyone’s blog generates different figures – but it is possible to do some hypothetical calculations.
Anyone can do the sums. I made an excel spreadsheet a while back that helped me think this through – it is too complex to post here – but let me attempt to break some of it down below.
At 1% CTR
This first table is assuming that a blog has an overall Click through rate of 1%. The left hand column shows daily impressions ranging from 1000 to 250,000, the next column shows 1% of these – ie how many daily clicks a blog with a 1% CTR would have. The following columns show how much would be earned if clicks were valued at an average of 1 cent, 5 cents, 10 cents or 50 cents.
| Impressions | Clicks | $0.01 | $0.05 | $0.10 | $0.50 |
| 1,000 | 10 | 0.10 | $0.50 | $1.00 | $5.00 |
| 2,000 | 20 | 0.20 | $1.00 | $2.00 | $10.00 |
| 3,000 | 30 | 0.30 | $1.50 | $3.00 | $15.00 |
| 4,000 | 40 | 0.40 | $2.00 | $4.00 | $20.00 |
| 5,000 | 50 | 0.50 | $2.50 | $5.00 | $25.00 |
| 10,000 | 100 | 1.00 | $5.00 | $10.00 | $50.00 |
| 50,000 | 500 | 5.00 | $25.00 | $50.00 | $250.00 |
| 100,000 | 1000 | 10.00 | $50.00 | $100.00 | $500.00 |
| 250,000 | 2500 | 25.00 | $125.00 | $250.00 | $1,250.00 |
At 2% CTR
The next table is the same except for a blog with a 2% Click Through Rate (which is generally accepted as around the average for most sites displaying Contextual ads).
| Impressions | Clicks | $0.01 | $0.05 | $0.10 | $0.50 |
| 1,000 | 20 | 0.20 | $1.00 | $2.00 | $10.00 |
| 2,000 | 40 | 0.40 | $2.00 | $4.00 | $20.00 |
| 3,000 | 60 | 0.60 | $3.00 | $6.00 | $30.00 |
| 4,000 | 80 | 0.80 | $4.00 | $8.00 | $40.00 |
| 5,000 | 100 | 1.00 | $5.00 | $10.00 | $50.00 |
| 10,000 | 200 | 2.00 | $10.00 | $20.00 | $100.00 |
| 50,000 | 1000 | 10.00 | $50.00 | $100.00 | $500.00 |
| 100,000 | 2000 | 20.00 | $100.00 | $200.00 | $1,000.00 |
| 250,000 | 5000 | 50.00 | $250.00 | $500.00 | $2,500.00 |
So a blog with a CTR of 2% that has 5000 daily impressions and ad value averaging at 10 cents per click will earn $10 a day whilst one with 50,000 impressions at 5 cents per click will earn $50.
At 5% CTR
Lastly we’ll do the same exercise for a blog of 5% CTR. It might sound high but its not unheard of for highly targeted sites to achieve this sort of rate or higher.
| Impressions | Clicks | $0.01 | $0.05 | $0.10 | $0.50 |
| 1,000 | 50 | 0.50 | $2.50 | $5.00 | $25.00 |
| 2,000 | 100 | 1.00 | $5.00 | $10.00 | $50.00 |
| 3,000 | 150 | 1.50 | $7.50 | $15.00 | $75.00 |
| 4,000 | 200 | 2.00 | $10.00 | $20.00 | $100.00 |
| 5,000 | 250 | 2.50 | $12.50 | $25.00 | $125.00 |
| 10,000 | 500 | 5.00 | $25.00 | $50.00 | $250.00 |
| 50,000 | 2500 | 25.00 | $125.00 | $250.00 | $1,250.00 |
| 100,000 | 5000 | 50.00 | $250.00 | $500.00 | $2,500.00 |
| 250,000 | 12500 | 125.00 | $625.00 | $1,250.00 | $6,250.00 |
Hopefully these tables will give you some idea of the potential of Contextual advertising like Adsense and Overture. One of the cool things about looking at it this way is that you can see a variety of ways of making good money. You can actually make as much money with a small readership on a good paying highly targeted blog as you can on a site with massive readership but a low paying topic. Of course without giving it a go you’ll never really know what sort of CTR or Click Value you’ll get.
A common question people ask in Adsense forums is ‘how much is your average click value?’ Unfortunately to answer this question would violate Adsense regulations – all I can really say is that it varies greatly between sites depending upon the topic being blogged about. It can range anything from a cent right through to dollars (some report clicks of $50+). Of course the higher the click value the harder it is to get impressions due to competition – so sometimes medium ad value terms can be a better bet unless you have a very high page rank.
The tables above should hopefully provide a little inspiration for some but also a reality check for others. Making money using contextual advertising is NOT easy money. To have a blog with a high level of impressions, good CTR and ad value takes a lot of time, energy, patience and a bit of luck (you might like to use my Adsense for Bloggers Series to help you improve these different aspects of your blog’s performance.
So is it worth it?
All in all my advice to people wanting to experiment with Contextual advertising is that its worth a shot. You’ll never know what sort of return it will bring unless you apply and add the code to your site. Don’t go into it expecting the world – when it comes down to whether it is viable it all comes down to your own opinion of the value of your time – the purpose of your blog – your willingness to put in the hard work and time to grow it. Each of us can only answer that question for themselves – and I answer the question of whether blogging is profitable using contextual advertising with a ‘YES’.
