Posted: Fri, 06 Jun 2014 02:08:18
Updated 10 Oct 2018
(Excerpt from my book How to Write a Book!, an Amazon #1 Best Seller. -- andreas)
People often asked me, "How can I make money with my 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 ads in your page. The ads are related to your page, so if you wrote about Hawaii, there’ll be ads for flights to Hawaii and hotels in Hawaii.
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.
The advertiser (for example, Purina sells dog food, so they place ads for dog food) buys ads at Google by the CPM price. CPM is Cost per Mille (where “mille” is one thousand in Latin). If the CPM is $8, Purina pays $8 to have their ad shown to a thousand people. If Purina wants ten thousand people to see the ad and the CPM is $8, then Purina pays $80 to Google.
The same thing works in reverse for the publisher (the publisher is the site that shows the advertising, such as you want to show ads on your website or blog). As the publisher, you want to know how much you'll get for the ads, so instead of CPM, you uses RPM (Revenue per Mille), which means how much you get 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). This means I get $6.67 RPM.
Google says it pays out 68% (Oct. 2018) of CPM. If the RPM is $6.67 and Google takes 68%, then CPM is $9.81 (RPM / 0.68 = CPM). Google Adsense gets $3.14 per mille. 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 and it will only just make $24,000 a year, which is low for a business.
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 is about $80,000 per month. To earn that with digital ads, they need 12.5 million monthly unique visitors, which would be more web traffic 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) makes $130 billion per year. Just saying.