A Fatstacks reader shot me an email yesterday asking me to write about how I go about deciding on how much money and time to put into each site each month given limited resources.
“Limited resources” is the bane of our existence, but without it, life as we know it would be substantially different.
“Limited resources” aka “scarcity” is the foundation of our economic system. The first thing I learned in Economics 101 is that “scarcity” is the underlying principle for the world’s economies and economics as a discipline.
Time to lighten up a bit.
Let’s take a stroll down recent memory lane where I tell you about a bizarre incident.
Don’t worry, there’s a point to this story which will set the foundation for budget allocation talk.
A bizarre thing happened to me walking to my car the other day. I kid you not, this is a true story.
I’ve parked my car in the same parking garage for years. It’s a public lot under a large office building.
I’m an exemplary parking lot customer. I’ve only been issued two tickets so far for forgetting to feed the meter. I never toss any garbage from my car onto the ground. I’ve yet to drive my car into a support post or pedestrian. I don’t kick the meter when it takes forever to spit out the receipt.
The other day I was walking toward the door that enters the stairwell leading to my car. I see another woman approach the door at the same time from the opposite direction.
I wasn’t born in a zoo; I open the door for her. As she’s going through she turns to me and says “do you have a building swipe card?”
I tell her I don’t. I’m already baffled by the question because no swipe card is needed to enter the parking garage. In fact, I politely opened the door for her without a swipe card.
She gets inside the door then grabs the door from me and tells me I’m not allowed into the building. As she pulls the door shut on me, I try to explain that this is the access door to the public parking garage below. She says there isn’t public parking anywhere there and slams the door. She holds onto the door handle pulling it so I can’t get enter.
I’m a nice guy so I’m not going to rip the door out of her hands. I decide to wait it out. She’s bound to let go of the door at some point.
The door has a window so I can see her looking at me with a fierce determination not to let me in the building. She stands there for about two seconds forbidding me to enter. As soon as she turns to continue into the building, I open the door.
She hears the door open and turns around telling me I can’t be there.
She’s agitated at this point. Fortunately, there was another woman in the entry area watching this unfold. The other woman was probably as confused as I am.
I point to the door with the big stairwell sign and tell her I just need to go there so I can get to my car. She says “no, you have to get out.”
I ignore her. I took a gamble that she wasn’t packing any heat. I walked to the door and opened it. I said “here’s a sign for the stairwell. See, no swipe card needed – this goes down to the parking garage.”
She turned in a huff and walked through another door into the building.
For a week after that, I wondered if I’d bump into her again. If so, Would she pepper spray me? Shoot me?
After the incident, I couldn’t help wonder what Larry David would do in a similar situation.
He’d deal with it much better I think. Or I should say it would be a lot funnier. In case you don’t know Larry, here are a couple clips of him from the hilarious show “Curb Your Enthusiasm”. He also co-created/wrote the TV show Seinfeld.
When this woman accosted me, I had three choices. I say “accost” in the nicest way possible. I believe she meant well wanting to protect the building from thugs like me.
My choices were:
1. Politely stand my ground, remain civil, be patient and make my way once she disappeared into the building she was tasked with protecting.
2. Get confrontational – swear at her, call her an idiot (or worse) and get aggressive.
3. Walk away from the building because she told me to.
I chose option 1 and don’t regret it.
Everything we do involves choices.
Sometimes there’s no right or wrong choice. Sometimes it’s hard to know what choice to make. Being faced with many choices can be stressful, but so too can having no choices. I’ll take having too many choices over over not enough any day of the week.
One big choice I’m faced with monthly is deciding how much money and time to put into each niche site I publish. This is no easy feat, but over time I’ve come up with some approaches. Here they are.
14 approaches on deciding how much resources to invest into each niche site you own
1. The “Financial Formula Method”
This sophisticated method requires firing up my custom spreadsheet, inputting recent traffic and revenue data and letting the algo tell me how much money and time I should put into each site.
I know what you’re thinking. You want me to reveal the algo. I’m feeling generous. Here it is:
If not, try Googling it or better yet, ask Siri.
I shouldn’t do this kind of thing but I couldn’t resist.
I’m not anywhere near that formulaic or analytical. I do NOT use the above formula. Heck, I don’t have a clue what that formula is for.
While it’s a pathetic attempt at a joke, there’s a serious undertone to it and that is don’t overthink this stuff too much. Use your brain and more importantly your gut instinct.
For those of you who don’t like thinking too hard or don’t trust your gut, the following are some legit methods for allocating time and resources across niche sites.
2. The “RPM” basis
This approach is actually good and is one I use. It’s simple. Invest more time and money into sites that earn a higher RPM. It makes sense, right? By doing this, in theory, you earn more from your investment.
But, as with all things in this biz, it’s not quite so simple.
You might have a site with high RPMs but the search volume for the topics is really low which means you may not earn as much as if you invested in content with higher search potential despite lower RPMs.
This is where the formula above comes in handy… kidding.
No, this is where you have to figure out which site(s) generates the best ROI for your money.
It’s called choices – you figure it out. If you don’t want to get that analytical, keep reading.
3. The “in case Google kicks my ass” approach
Suppose you have one site that earns the lion’s share of your income. That’s awesome. It’s your baby. You have grand plans for it. But, there’s a niggling at the back of your brain that worries you. The Big G is a fickle beast. G giveth and taketh. You worry one day your site, despite every effort to make it awesome, will get pummeled with a penalty leaving you broke and having to start from scratch. A horrible thought.
So, you hedge. You create for your self a backup plan. You do this by launching a few small sites, throw up some content and let them simmer through the Google sandbox. You do this so that if your big earner takes a massive hit, you have a site or two or three that are primed for growth. They’re out of the sandbox. You’ve incubated them nicely and can dive right in to turn them into powerhouses… or at least one into another powerhouse.
In order to have these incubated sites, you need to invest periodically into them which means publishing an article or few articles each month.
So, while you focus on your baby, you also toss a few bucks into the “plan B” sites just in case.
4. The “Empire-Building” model
Go big or go home. You want to be the Trump of niche sites. One monster site isn’t enough. You’re gonna own 10 of them all pulling down six figures per month net. Go for it.
5. The “Resuscitation” reasoning
The Resuscitation reasoning is when you have some old site sitting around and you want to attempt to give it some legs again which requires investment. This can work very well. I’ve done this. I bought a great site but let it sit for a few years. Eventually I started plowing money into it. It was earning almost nothing when I started putting money into and now it earns over $2,000 per month with very little effort on my part.
6. The “Opportunity Strikes” allocation
The opportunity strikes allocation approach is when you discover some great keyword opportunities that you’d be a fool to not take advantage of.
Or, maybe there’s a new product line or some trending topic I can jump on to cash in quickly for a quick win.
7. The “Fun” justification
This is a great reason to put resources into a site. Maybe you like working on the site. It’s a pet project. Or, maybe you have something interesting to say. All in all, you enjoy the site even if it doesn’t make money or perhaps will never make money.
I can’t fault enjoyment or fun as a reason to put time and/or money into a site. If it’s fun, keep at it.
8. The “Sunk Cost Fallacy” basis
In this situation, you have a site or two that you keep shovelling money into but it doesn’t grow no matter what you do. Not to be deterred, you tell yourself, “I’ve invested $5K into this thing and therefore it has to make money.” So you keep putting more money into.
Another way to put this is “throwing good money after bad.”
Maybe you’re attached emotionally to the site. Maybe you love working on it. There are sound reasons to keep at it, but if the sole reason you keep throwing good money into it is because you’ve already invested $X amount, you’re a victim to the sunk cost fallacy.
9. The “Capitulation” approach
The Capitulation approach is when a site isn’t going anywhere so you decide to not invest time and money into it. It’s a bust. Make peace with a failure and focus on the sites that have potential.
If you really throw in the towel, sell it for scrap. Interestingly, people are selling aged sites with $0 or ridiculously low earnings for over $1,000, so it’s not totally worthless.
I know, I know, I wouldn’t believe if I didn’t see it myself. Sometimes I think maybe I should crank out 100 sites, let them sit 6 months and sell ’em for $1,500 each.
What’s really interesting about this is that if they don’t sell on the first go, they actually increase in value as they sit in inventory.
I’m kinda talking myself into doing this, but then I come to my senses realizing that that’s a lot of work.
10. Pro-Rata Distribution Formula
This is actually a decent approach unless you’re trying to quickly grow new sites.
Pro-Rata means investing resources in relation to some metric that distinguishes your sites. You could base it on traffic, RPM (or EPMV) or revenue.
Here’s an example based on revenue.
Site 1: $15,000 per month
Site 2: $10,000 per month
Site 3: $3,000 per month
Site 4: $1,000 per month
Site 5: $200 per month
To distribute on a pro-rata basis do the following.
Step 1: Total up revenue: $29,200
Step 2: Determine the percentage of total revenue each site generates. Site 1 generates 51% of total revenue. I calculated this as $15,000 / $29,200 = 51%. Do this for each site.
Step 3: If your monthly budget for content and other variable costs is ,000, you distribute that ,000 based on the percentage of revenue each site generates. Site 1 at 51% would get $5,100. Site 2 would get 34% which is $3,400 and so on.
The only problem with this is the baby site earning $200 would only get $68 which is maybe one article. You might have to tweak the distribution so that the baby gets a bit more money… unless you’re just kicking that sucker along and don’t really care if it grows.
11. The “Anecdotal Clueless SEO” allocation justification
You have to love the SEOs of the world. You see, they need clients or need to sell courses so they must demonstrate their SEO knowledge. And demonstrate their knowledge they do in spades… often vociferously. I’m sure brawls have ensued at SEO conferences given how hotly SEOs debate SEO methods and tactics.
- SEO Sally says “do Y for better SEO rankings.”
- SEO Simon replies “you’re an idiot.”
- SEO Sally says “no, you’re an idiot for not doing it. I have empirical data.”
- SEO Simon says “your data sucks.”
- SEO Sally says “no, you’re an illiterate moron and don’t understand the data.”
On and on and on it goes.
When I read the SEO debates (not that I do often), I wonder “what do Larry Page and Sergey Brin think of it all?” They must love it because they actually know the answer which is that both Sally and Simon are clueless.
Option 1: So, now that we’ve established that SEOs aren’t always right, the “Anecdotal Clueless SEO” allocation means allocating resources to your various sites in a way that gets you the best SEO outcome in an aggregate. This usually means, at least for me, to put more into higher authority sites and less into lower authority sites. The thinking here is that new content will rank faster on higher authority sites which will generate a better return on investment.
Option 2: Of course, option 1 is flawed, which leads to option 2. By investing less in lower authority sites, those sites will not gain more authority as fast. One might consider this short-term thinking which means the better approach is to plow more resources into lower authority sites so that over time all your sites have more authority and then generate an excellent ROI with new content.
Mmmmmhhh, where does that leave you?
I hate to say it, but “you have to decide.” It’s that choices thing again.
12. The “All-in-One” Model
I like this approach but I don’t do it.
Here’s the thinking behind it. I publish 9 websites. Some are bigger than others naturally. Some have high authority. Some have no authority.
The “all-in-one” model is viewing my portfolio of sites as one monster site. In other words, what does it matter if I publish three articles on site 5 today instead of focusing on the biggest site? I own them all so it doesn’t really matter where the money goes, right?
Like I said, I like the theory.
However, I can’t help but think the smarter path is to not ignore the most profitable sites. They’re the biggest, have the most authority and therefore have the most opportunity. Or do they?
13. The “Sweetspot for Growth” Approach
Full disclosure. I did not come up with this.
As an aside, I really don’t like it when people insert “Full disclosure” in articles. It makes me wonder that when it’s not mentioned that they’re not telling me something. It’s like when people say “to be honest”. Does that mean they’re dishonest the rest of the time?
The “Sweetspot for Growth” analysis is a great article by Dom Wells at Onfolio. The article discusses what price points for buying sites offer the best opportunity. What’s fascinating about his analysis is that the exact same concept applies to your monthly budget when choosing how to allocate resources into multiple sites.
The article is very good. Check it out.
14. The “Guinea Pig” Approach
I do this too.
One big benefit of having a handful of sites with okay traffic is I can test stuff out without too much risk.
My 3rd and 4th highest earning sites have sufficient traffic and authority to test stuff, but don’t earn so much that if something goes awry it impacts my life.
In fact, I’m doing some testing on those two sites as I write this.
What this approach suggests is that you build up additional sites, which requires investment, so that you have some guinea pigs to test some crazy stuff on. It’s kinda fun actually.
15. The “Gut Instinct” method
I’m a gut instinct guy. I really am. I don’t overthink stuff. I probably underthink stuff. SEO Sally and Simon would accuse me of under-thinking things. I sure don’t track all that much stuff. Throughout my blog I use words like “eyeball it” and “bird’s eye view” because I tend to focus on the big picture.
At the end of the day, my gut usually tells me to put more money and time into the more profitable sites that appear to be growing faster.
That’s it. It’s not always the right choice, but it’s what I do.
Which allocation methods do I use?
Generally I eyeball it but overall, I use a loosely based pro-rata method combined with my gut. I put more money into the more profitable sites.
However, I have 5 sites that are quite profitable and 4 stinkers. I’m pretty happy having 5 sites doing well all with decent potential so those 5 get the lion’s share of resources. The 4 stinkers are plan B sites I’m kicking along just in case. Maybe one day I’ll be in a position to really plow money into them with the Empire Building approach, but for now, I have limited funds so much choose wisely.
Don’t worry, I didn’t forget the pitch
I know you only read this stuff for the pitches and promos so don’t worry, I didn’t forget.
What’s it gonna be today?
Writing service? Software? Course?
Hold on… I’m gonna go spin my brand new “promo-of-the-day wheel”…
Tick tick tick tick tick…
We have a winner!
Today’s promo is a course.
Let me tell you about this course.
It’s 8 modules.
Each module has a video that reveals one awesome way to find low competition keywords.
These are the methods I use and have used for some time to find the stuff other sites don’t.
And the advantage can be all yours for the low price of CLICK HERE TO LEARN MORE.
Jon runs the place around here. He pontificates about launching and growing online publishing businesses, aka blogs that make a few bucks. His pride and joy is the email newsletter he publishes.
In all seriousness, Jon is the founder and owner of a digital media company that publishes a variety of web properties visited and beloved by millions of readers monthly. Fatstacks is where he shares a glimpse into his digital publishing business.