This post was originally sent as an email on March 24, 2020.
I hate to do it but this email is going to force you to turn on your brain.
I had to turn my brain on to write the latter part.
There are numbers and calculations involved. Nothing complicated but it’s not fun fluff that you’d mindlessly rip through on TMZ.com.
Ashley Pearce of Future State Media wrote a great post on the Fat Stacks forum about one approach to assessing financial success (or failure) of content sites.
I thought it so good, that it would make for a great email. Ashley was kind enough to grant me permission to reproduce it.
So we did an assessment of some sites we had access to some metrics on and found a reasonable correlation between number of words published and volume of traffic per year (as you’d expect).
There was a bit of a spread, but 1,000,000 words = 1,000,000 visitors per year came out as a decent benchmark (some sites we looked at were achieving double that, but we wanted to set ourselves a sensible benchmark. (Also, this correlation doesn’t work right the way down to a 20,000 word site – all sites had at least 100,000 words published)
Next was to understand what 1,000,000 visitors was worth
As an Amazon affiliate you can expect to generate clicks from between 20-40% of traffic (researched benchmark – but also something we’ve validated in some parts of our network.
Of course there are going to be outliers. These are working numbers to allow for budgeting)
And again, a demonstrated benchmark of conversion from clicks is about 10% (demonstrated not only as an affiliate, but also see as an eCommerce seller)
So from 1,000,000 visitors
- 200,000-400,000 clicks
- Resulting in 20,000-40,000 sales
- Take an average product value of $30
An affiliate commission of approx 5%
- 5% of 30 = $1.50
- 20,000 * $1.50 = $30,000
- 40,000 * $1.50 = $60,000
- Assume $10 per 1,000 visitors in display ads (assuming worst case of 1 page view per visitor)
- That’s also $10,000 in display Ad revenue.
- Assuming $50 per 1,000 words budget for writing.
That’s $50,000 to get the site to 1,000,000 words.
So for a $50,000 investment, we generate a $40,000-70,000 yearly income, assuming this is achieved in year 2 of the sites life.
We also did some work to look at content life and what that means in terms of
reinvestment, but that’s too complicated for a written post – you need to see the sheet!
My point here is that those economics worked – but they were based on targets:
- Number of visitors per 1,000 words (target 1,000 visitors per 1,000 words / 83 visits per month per 1,000 words)
- Then there was volume of clicks vs volume of traffic (looking for 20-40%)
- Then there was conversion rate at 10%
- Then there was the $10 EPMV
So we monitor each of those numbers as that’s what we’ve budgeted for.
Rightly or wrongly – this is how we’re managing things. It’s keeping us focused on making sure we deliver against the benchmarks – as opposed to saying “yeah, traffic is growing, great!”
This then allows us to look at each number and address the balance between each of the numbers.
For example – we could over-shoot on info content, get lots of traffic, but clicks drops off.
Or we could overshoot on money content, generate lots of clicks, but not the traffic.
Applied to my biggest niche site
When Ashley published that post in the forum, I had never assessed my site’s financial health on a per 1,000 or 1 million published words. However, I like the approach because it’s a very simple formula to get an idea of what to expect 12, 24 or even 36 months out based on various content budgets.
Here are my numbers for 2019:
- Total words published on the site by December: 7,100,000 (this is total words published, not just the number of words published in 2019).
- Total revenue in 2019: $568,624
- Revenue per 1 million published words in 2019: $$80,087 ($568,624 / 7.1)
- Revenue per 1,000 published words in 2019: $80
Paying my current average rate of $.06 per word is worth it. I’m earning that back inside of one year. Of course, that’s partly a result of having plenty of older content earning quite a bit… but that’s the point. Aggregate content value grows as earnings stack.
Stacked earnings is good. It doesn’t get much better than earning today from work done long ago. It’s called passive income. Passive income is good.
Another consideration or benchmark to shoot for according to Ashley is 1 million annual visitors for every 1 million published words. Nice and tidy number, right?
My site exceeds that by a smidgen. Annual traffic topped 9.3 million visits from 7.1 published words.
Of course the benchmark you set will be largely dictated by how much you earn per 1,000 visitors. If you earn $100 per 1,000 visitors, you’d be delighted with 400,000 visitors per 1 million words.
Why tell you my numbers?
When I write emails I put myself into your shoes and ask myself, “what would I want included?”
When it comes to any sort of analysis, I would want to read real world numbers to give context to the analysis. Since that’s what I would want, that’s what you get.
If you think I’m out to lunch, tell me. I’ve added a “Feedback” link which takes you to a feedback form. Tell me what I missed or where I bored you to tears.
Back to the analysis.
4 thing to note:
1. Site size: This analysis is much less helpful for sites less than one year old and/or with less than 100,000 words of content. However, keep this email in your hip pocket for when you get there.
2. My site earns above-average ad revenue per 1,000 visitors. It also earns a little from affiliate promotions. The analysis should result in more money per 1 million words for sites focusing on affiliate promotions.
3. Established: My site has considerable domain authority which helps in ranking. It’s an established site which skews the results favorably.
4. Site sale: The above analysis doesn’t take into account the additional proceeds realized when a site is sold. It merely looks at revenue generated, but as you can see, when also including the value of the site, content sites can be very lucrative.
5. Passive income: I use the term loosely. Over time, older content will be less effective. I do not suggest that content will earn forever.
Even if my site earned half of what it does per million words, it would still be a good business.
TIP: If you’ve already started opening post after post on your site noting down the word count for each post, STOP.
There’s a free plugin for that. It’s called WP Word Count. Install it, click calculate and you’ll get a total word count in a few minutes.
PLEASE NOTE: Any type of forecasting is based on many assumptions, variables and moving parts. The above approach is just one of many and it certainly isn’t ironclad. Yes, 2019 worked out well for me, but the entire analysis could fall flat if my site takes a hit… or it could appear exaggerated if my site’s traffic and revenue skyrockets as a result of some lucky break, algo change, etc.
That’s a wrap. Thanks again to Ashley.
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.