As we continue to think about how we are going to grow WP Daily in a way that makes sense for both us, as a business, and our users and community, we’re taking a critical look at existing monetization models as well as beginning to strategize about creating new ones.
The fact is that blog monetization isn’t anything new and most advertising and revenue generation has been well documented as well as tested and vetted so I’m not going to hash out the extensive different models and whether or not they will work for us but I did want to unpack a challenge that we’re facing as well as provide a little bit of education in the mix.
You see, when you first encounter revenue generation in online and blog advertising one of the first conversation pieces is if the blog’s focus and content should go niche or for scale. In other words, the former is where you create and gain an incredibly passionate, deep, and rich audience that advertisers will pay a select premium for in order to get their content and marketing in front of them. The latter is where you go for the large-scale traffic numbers game. Think, hundreds of millions of impressions a month, at the very least.
The challenge, naturally, is that even in a niche-based strategy you still need a little scale to get things moving. This makes sense because you can’t advertise something to no one – you’ll need impressions for the following general campaigns:
- CPM: Cost per 1,000 impressions
- CPC: Cost per click
- CPA: Cost per acquisition
- CPE: Cost per engagement
- Sponsorship: Fixed cost for a fixed program
Ultimately what you find is that most people and businesses end up in the same place – that is, the same number and valuation. For instance, let’s say that you start up a blog and you begin to charge advertisers a set rate of $1.00 per click and one out of every hundred page views finds an actual click from a user. The end result, then, is that you’re creating a valuation of that pageview of $1.00 / 100 views which then turns into $10.00 CPM.
The issue, though, for most online advertisers and online blogs is that CPMs have been going out of style and the reason for this is quite simple: Quantity. Namely, there are more sites and blogs and online publications than ever before. Just think about our context of WordPress for example – there are more Tips and Tutorial Sites and Round Up and Theme Review sites (lots of splogs too) that are now readily available for your viewing pleasure.
As a result inventory is at an all-time high and is massively available. You learned in basic economics the simple construct of supply and demand.
We have near-unlimited supply and the demand (and price) continues to get lower and lower. I know when I first started out blogging back in 2001 there really wasn’t any online advertising and the landscape to compete for pageview and eyeballs was small. Blogging about blogging (WordPress wasn’t even around yet) was still very, very new.
So here’s what this looks like practically from a month-to-month perspective to sustain a successful blog (which I’ve done before) in a world long-gone and now. 5 or 6 years ago is was very possible to get $10 CPM for a basic advertisement on a successful blog. If you had 100,000 page views a month then you could make a decent living and you’d be on your way. No problem.
Now, you’d be lucky to get $1.00 CPM. Lucky. Most are much lower, especially for competitive keywords, and especially for such strong keywords around “WordPress.” The math is simple enough: At $1.00 CPM that means that you’d need 10,000,000 impressions to generate $10,000 per month in income. That’s on the very generous side, remember?
Unless you’re a freak-spender, this could sustain a legit team of 1 to 2 people full time for the online publication. But think about that – 10,000,000 impressions and/or page views. That’s a lot of views and to get there takes a lot of time. It’s not going to happen overnight for us or for any blog for that matter.
If you really want to make it in the editorial blog space you need 100,000,000 impressions. Yes. That’s 100 million. That’s for scale.
Now, let’s head back to niche. Sure, same math but the “quality” of your audience provides a much more “valuable” audience for your advertisers so sure, you could command (or demand) a much larger CPM value. But it’s still a lot of views to make it work and it’s a long and tough battle uphill.
What does this mean for a small startup blog that’s trying to count pennies that it doesn’t really have? Give up and go home? No, it forces you to be creative and to begin to find opportunity in areas that might not otherwise be obvious. Building corollary value for your visitors or even additional services are just a few. Finding partner organizations to market and sell for you (like BuySellAds) who can be the sales force for you. Sure, you give a bit away for the commission of a sale but you save yourself time of selling.
Either way, if we go “niche” or go for “scale” we’ll have to deploy a sales strategy that works either using a technological solution and service or going old school with a sales employee (scale here folks). But we’ll still need the traffic.