(Excerpt from my book How to Write a Book!, an Amazon #1 Best Seller. — andreas)
Can I Make Money with a Blog?
People asked me if they can make money with their blog.
To do this, you use Google Adsense to place advertising in your website or blog. You sign up and download a few lines of code, which you place in your website or blog. When people look at your webpage, Google shows the ads. The ads are related to your page, so if you wrote about Hawaii, there’ll be ads for flights and hotels.
How much can you make with advertising on your website? I’ve been using Adsense on Andreas.com since 2003. Here are numbers from my website.
As the advertiser (you’re using advertising to sell your products), you buy ads by the CPM price. CPM is Cost per Mille (where “mille” is one thousand in Latin). If the CPM is $8, you pay $8 to have your ad shown to a thousand people. If you want ten thousand people to see your ad and the CPM is $8, then you pay $80.
The same thing works in reverse for the publisher (the publisher is the site that shows the advertising. For example, a publisher is a web magazine that shows ads.) The publisher wants to know how much he gets for the ad, so instead of CPM, he uses RPM (Revenue per Mille), which means how much he gets for every thousand viewers.
On average, I get $100 from Google for 15,000 visitors, which means Google Adsense pays me US$0.0067 per unique visitor (the amount varies, depending on the ads, the site, and so on). I get $6.67 RPM.
If the CPM is $8 and the RPM is $6.67, then Google Adsense gets the difference ($1.33). That’s how Google Adsense makes money. Google Adsense is an ad distribution network (ADN). There are dozens of ADNs. Google Adsense has the largest share of the US market. When you look for an ADN to place their ads on your site, ask for the RPM so you can compare the offer.
The Problem with Monetizing a Blog
Are you beginning to see the problem? To get meaningful revenue, say, $2,000 per month, you need 300,000 unique monthly visitors. That’s a huge amount of traffic. Only celebrities and large companies get that.
You may be wondering how online media sites are making millions on advertising. For a media site to have an office in Manhattan or San Francisco with a staff of ten, they need perhaps a million dollars in annual revenues, which means about $80,000 per month. To earn that with digital ads, they need 12.5 million monthly unique visitors, which would make them bigger than TIME magazine or Hewlett-Packard (to see the traffic of large websites, see quantcast.com/top-sites).
When you ask media sites about the number of unique monthly visitors or RPM, they won’t tell you. Why? Because the numbers are so bad. Their RPMs are actually lower than mine because large publishers get bulk RPMs, which are less. I doubt many of those sites can even pay their rent.
What about video? It’s worse. The RPM on YouTube is $2.07. If your cat is a YouTube superstar and gets a million views, you only get $2,070.
How are these sites making money? They’re not. They’re using money from investors to cover salary, costs, and rent with the hope of growing big enough to sell the site to a large company. The real revenue will be the sale of the site, not the advertising. How will the large company make money? Well, that’ll be someone else’s problem, won’t it?
Why are these numbers so low? Don’t people make big bucks with blogs? Back in 2005, I got 60-70,000 monthly visitors and Google also paid a higher RPM, so I got around $12,000 per year. But in 2014, there are 175 million websites, so traffic is diluted. Furthermore, people now spend time on mobile devices, social media, apps, movies, and games which also lowers traffic to websites. For the last five years, I’ve seen a steady downward trend in traffic and RPM. Google pays less.
So what does this mean for your blog? You might get enough to cover the site hosting costs and maybe once a month, you’ll be able to buy a hotdog with mustard.
The point of your website and blog isn’t to make money. Just as with books, the goal is to build your credentials to get more opportunities. See my book for more about this.
What If I Become a YouTube Superstar?
It’s even worse for musicians.
A musician with a music label must see her song played 4,200,000 times on Youtube at $00.0003 per play to make $1,260 (the US monthly minimum wage). She makes one dollar when her song has been played 3,330 times.
Google (owners of Youtube) earns $60 billion per year. Just saying.