Every once in a while, especially once you have some website traffic, it’s good to crunch some numbers to really see what’s going on.
Admittedly I’m not the most data oriented niche site publisher.
But, I do once in a while like digging into the data, slam some spreadsheets together and really see what’s happening traffic and revenue wise.
It was definitely worth the 8 to 12 hours I put into it (I can’t remember exactly how much time I put into it since I often get interrupted throughout the day).
Once the data was crunched, I came to 3 conclusions:
- Amazon is not my most lucrative affiliate merchant;
- Pages with affiliate links earn far more than pages with just display ads (although it’s still worth publishing non-affiliate content in my view); and
- I need to invest a lot more in affiliate content because the ROI is incredible.
This article uses one of my niche sites as an example and demonstrates 3 things:
- How to determine affiliate content return on investment (ROI);
- Why it’s good to know your affiliate content ROI; and
- How to scale valuable affiliate promotion content fast.
Before I jump into the nuts and bolts, let me clarify just what “affiliate content” is.
I know, it’s a lame term for content.
For me, affiliate content is any content that focuses on promoting merchants/products with affiliate links.
It’s important to understand not all content with affiliate links is what I would consider affiliate promotion content. Some content is purely informational and/or entertaining but it includes an affiliate link or two just because it’s reality. The reality is this type of content typically doesn’t generate much affiliate revenue (but can be great for display ad revenue).
Therefore, affiliate promotion content clearly and directly promotes with affiliate links. Examples include:
- Product reviews
- Product comparisons
- Any list/gallery that is comprised mostly of products with affiliate links.
Another important point is that affiliate content can be very informative and helpful. In fact it should be. Yes, even curated product galleries can be helpful because it helps shoppers narrow their search and/or reveal products they might never have found otherwise.
1. How to determine affiliate content return on investment (ROI)
You don’t need much data to figure this out. The data you do get depends on whether you want an overall average ROI for all affiliate promo content or individual pages. It also depends which time duration you consider a reasonable amount of time to assess ROI. For me, I use 12 months as the ROI duration. This is subjective. Maybe you expect to pay for the content within one month, in which case you may have a shorter period of time to assess ROI.
A better way to consider duration or time period is to compare it to how other monetization performs. Generally, content costs the same. If your non-affiliate content earns a 75% ROI over the first 12 months this gives you a baseline on which to compare affiliate content ROI.
I prefer looking at affiliate content as a whole – all posts together. The reason for this is the reality is the future content will perform similarly meaning I’ll have big winners, moderate winners, moderate losers and big losers. I need to assume the mix will remain the same.
From my analysis here, the numbers for one of my niche sites are as follows:
- Affiliate revenue per 1,000 visitors to affiliate promo content: $38.47
- Average number of visitors to affiliate content per month: 84,437
- Average number of visits per affiliate content URL per month: 84,437 / 81 pieces of content = 1,042 visits per content per month
- Average revenue per affiliate content URL per month: = 38.47 x 1.042 = $40.10
- Average revenue per affiliate content URL for 12 months: $40.10 x 12 months = $481
- Average cost per piece of affiliate content: $100
- Net profit per year per piece of content (average): $481 – $100 = $381
- Break even point: approximately 3 months.
A few comments about the above figures:
My site is established and so new content ranks faster and I have older content that’s ranked well for a long time. You will likely not enjoy this ROI with a young site. However, my figures show you what’s possible.
How long until you gain and enjoy some website authority? It can take 6 to 24 months, depending on the competitiveness of the keywords/products you promote. That’s why when starting out, don’t swing for the fences going after insanely competitive keywords. Spend time looking for some long tail keywords with buyer intent. Seriously, even 300 visitors per month can generate some nice cash flow.
I’m also assuming future performance will match past performance.
The average cost for each piece of content has varied tremendously over the years but I’d say $100 is about right. Currently I’m testing different affiliate content prices with this content service and this content service. The costs differ quite a bit so I want to see what works and what doesn’t.
2. Why is it good to know your affiliate content ROI?
For me, it’s good to know my ROI so that I can confidently invest in the website and know how much I can invest in more content. I did a similar ROI analysis on non affiliate content here (monetized with ads).
Considering the ROI figures above for my niche site, I have no problem paying $100 for each piece of content because I’m confident I’ll earn that back within 3 months on average. After that, it’s all profit.
Some content will never earn back its cost. On the flip side, some content will be a cash cow for years earning a 1,000% on investment or more. That’s the nature of earning from content in today’s environment.
In fact, based on the above, I’d happily pay $200 per piece of content if I were confident that an extra $100 would make the article that much better.
For example, this content service charges $60 per 1,000 words of content. But, when I ordered it, my instructions were to apply 1,500 to 3,000 words per article if necessary, which means I will spend $180 or more per article. Based on the above ROI analysis, I’m fine spending $180 per article as long as it’s good content.
3. How to scale valuable affiliate content fast
This is the ultimate point of knowing your site’s affiliate ROI. It’s all about scaling… which admittedly I’ve not done nearly to the degree that I think possible or that I should have. I’ve long focused on non-affiliate content and display ad revenue. I’ve also tested a lot of affiliate tactics that haven’t worked out too well.
Fortunately, I do have some affiliate methods in my niche that’s working well and it’s that approach I’m going to scale.
The simple 3 step process to scaling your affiliate revenue with a niche site is as follows:
Step 1: Test many types of content that promotes affiliate content and see what works. By works, I’m referring to types of content that generates profits from whichever traffic sources your pursue. For me, I focus on organic search traffic to my affiliate content which means I must target keywords/topics for which I have a reasonable chance of getting the search traffic.
Step 2: Analyze results and figure out what types of content is working. It’s important to discern specific types of content that works consistently so you can order that type of content in bulk.
Step 3: Research and come up with dozens or hundreds of topics for the type of affiliate content that is working best. I actually create product or product line series which are mini affiliate content silos consisting of 3 to 10 pieces of content.
Step 4: Order that content from a quality writing service that will deliver the content you need. Preferably, if you really want hands-off scaling, you need the content to be added and formatted directly in your website. This service and this service both write and format content in the backend for you. You just need to add affiliate links and finalize internal linking (if you go the mini product silos like I do).
You can also put together your own in-house writing team or use other services. I set out 15 content sources I’ve used here.
Step 5: Go back and improve your existing content with MarketMuse. I’m doing this extensively. It’s a beast of a job, but I’m optimistic it will help with my content rankings big time. I’m also insisting all people and services involved in writing content for my sites that they evaluate the content with MarketMuse.
Step 6: Continually analyze/crunch the numbers. Adjust as necessary. Adding a lot of content may result in different ROI figures in the long run. What I mean by this is if you have 20 affiliate content pieces published and one of them is an absolute hit generating huge revenue, that could skew ROI. It could well be that you publish another 20 pieces of such content and not have the same level of success at which point your overall ROI goes down.
However, in the long run and once you have quite a bit of affiliate content, your numbers will be reliable. Of course the opposite could happen, your ROI could improve over time as your site gains authority and you attract more traffic. This is always a great development.
Should you publish only affiliate content?
This is a business decision. I used to (for the most part). I don’t any more. I publish far more non-affiliate content than affiliate content because I enjoy publishing on all kinds of topics within my niche.
Even though non-affiliate content earns less per 1,000 visitors from display ads, it still kicks out a lot of monthly revenue.
My view is if you’re building up an authority website, you’re best off publishing content that best serves the niche and your readers. If you make publishing decisions based on what serves your readers/niche the best, you stand a better chance at success.
What an insanely awesome business!!
As website publishers and internet marketers we throw around 30%, 50%, 100% or higher as if it’s the norm in business. However, this is so far from the truth. Consider the stock market in comparison.
If you can generate a 10% ROI investing in stocks in the long run, you’re considered an amazing investor. So good in fact that you could run a hugely successful hedge fund.
Yet, websites and internet marketing in general can generate incredible ROI rates. It’s just another reason I love this business.
In fact, the investing community is getting wind of just how lucrative niche sites can be that there are “hedge fund” style entities that buy up niche sites with investor funds.
This makes niche sites a very exciting business model and is one where with almost no investment, pretty much no barriers to entry can yield such amazing results.