How To Assess Your Income Risk

April 4, 2014

What if Google didn't exist? What would that do to your blog's income stream?

 

Let's examine how at risk your income is. You've worked really hard to get where you're at now.

Can you imagine how devastating it would be if that magically went away?

Blog Income Sources

blog-income-risk-coverWhat are the most common income sources and how at risk are you of losing that income? Specifically, if you rely on this income as a good portion of your total revenue, how at risk are you?

Let's first identify the sources of income – then let's cross reference that with how at risk your blog traffic is. Put a high risk traffic source with a high risk income source together and you're really operating on “hope”.

Google Adsense

This is a high-risk, low reward income source. Adsense is the largest ad network out there. If you've been online then you ‘ve seen Adsense ads in the sidebar of Google search results, on webpages and in Gmail.

Not only does Adsense require a good amount of traffic, but also requires that advertisers continue bidding on your keywords. To top it off Google seems to randomly shut down Google Adsense accounts without a clear path to appeal.

google-adsense

In-text Links

This is a high-risk, low reward income source. Companies like Lijit and InTextLinks provide a bevy of advertisers looking to monetize words in your blog posts. You've seen this kind of advertising when your mouse has hovered over a “blue” word in a sentence and an ad popped up.

This is even a bit riskier because most in-text link companies go into the marketplace to advertise their services and find new advertisers. Google AdSense is so big advertisers go to them. So on top of Google AdSense risk you're also hoping the in-text link company is doing a good job marketing themselves.

Coupon Prints

A medium risk, low reward income source. On a deal or coupon site, the audience is prepared and looking for these coupons they can print, but they still have to do more than click. They have to print. To add to that, there is no guarantee that the current payout will remain that way. Will a declining coupon print payout affect your business? Somewhat low risk, but not the lowest.

Printable coupons

Impression Networks

Relatively low risk, low reward endeavor. Impression ads are the kinds that only need to be seen to pay the blog owner. They don't require clicks, just that the ad was served up on the page.

The only real issue with this kind of income is the level of your traffic risk. Most impression networks work with their host sites. Rarely have I heard of people randomly shut down from their networks.

affiliate marketinAffiliate Sales

Medium to high risk, but typically high reward. You can become an affiliate (commissioned salesperson) for thousands of companies. Companies like Amazon, for instance, offer you trackable links you can put in your blog posts to drive traffic to Amazon. If someone clicks your link and buys something, you get a commission.

Affiliate Income isn't dependent on large quantities of traffic, but targeted traffic. Since payouts are negotiated on the front, you can choose affiliate sources that meet your needs.

Sponsored Posts

Medium risk, high reward. Many bloggers work directly with advertisers and get paid to write content. These are sponsored posts.

The income here isn't tied to traffic or influence, it's tied to your ability to procure it. I've seen sites with almost no traffic get sponsored post deals regularly. The risk here is you. What if you don't have time to procure these monies? When you take you out of the picture, the income goes away.

Your Own Products

Low Risk, high reward. Whether it's an ebook, webinar, .mp3 download, a paid forum, tips, ideas, products or a membership site the money is 100% yours. And with affiliate software you can recruit others and their traffic to drive people to your products and services. Membership site money accrues monthly independent of traffic, search engines, 3rd party sites, or payout reductions.

Your Blog's Traffic Stream

Let's start with traffic by dividing it into low, medium and high risk traffic. And then we'll look at the different kinds of income and assess them as well.

Search Engine Traffic

Risk Assessment: High This is the kind of traffic you want more than anything. When you offer a product, a service or just plain information you can do no better than to be easy to find by the people looking for that. That's the easiest way to generate new business, more income, and better quality visitors.

But search engine traffic is pretty high risk. Competitors, press releases, and major events threaten those rankings at all times. Imagine spending years

Not only that but search engines are acquired by other companies, change their goals and change their algorithms all the time. You're aware of Panda and Penguin of course, but think about other search engines like Instagram and YouTube. Both of those were acquired by bigger companies. And in so doing, their search results changed over time.

And a few years ago Google really went local. Search for anything like “front doors” and you're now going to see local shops, like Frank's Front Door Painting Service, ahead of niche blog results every time.and years building a following and then American Idol comes along and a previously unknown girl who shares your name wins. (Go ahead and search for Carrie Underwood. You know she's not the only person with that name, but you'd have to navigate to page 6 of Google's results to find another one.)

The bottom line with search engine traffic is that it is owned by someone else. You are at their mercy. But it is highly targeted and is quality traffic.

Direct Traffic

This heavenly source of traffic can be divided into two groups: initiative based and impetus based.

search engine traffic

Initiative based direct traffic

Risk Assessment: Medium This is when someone opens their web browser and, on their own accord, types your website name in. That's the best compliment online. While that sounds like a relatively low risk source of traffic, it isn't. In the best case it is medium level risk. You don't have the same worries that you would with search engine traffic, but there is one big problem.

This kind of traffic relies on hope. If you currently rely on this traffic, you have to “hope” these people come to your site tomorrow. They have to take initiative on their own. Without any outside influence, they have to type your website name into the url bar. No guarantees.

Companies who have spent a ton to become a household name, like Amazon, Expedia and Google, rely heavily on this kind of traffic.

Impetus based direct traffic

Risk Assessment: Medium This is when you are giving your audience reason to type your website name into the browser.  Think of GoDaddy commercials, Infomercials and Woman's Day Magazine. They're all in formats where you can't “click” a link. They constantly ask you to go to their website. Telling you to visit GoDaddy.com in the commercial is the impetus that person needs to go put that url in the browser.

This is a low risk traffic source, but does require promotion, which usually means money. And when the promotion is over, visitors stop coming. Because you're not likely on your computer when you're asked to visit the website, this requires the audience to remember. . . go to a computer and then type the website address.

Billboards, magazines and radio create this kind of traffic.

Referral Traffic

There are a myriad of sources of referral traffic. We can mainly divide this traffic into involuntary, push and list based.

List Based Traffic

Risk Assessment: Low List building is the act of collecting contact information sorted by affinity group. I'm not talking about that. List based traffic are the visitors that came as a result of list building. They come to your site because you reach out to them by email, RSS, phone, etc . . . It is by far the lowest risk, highest quality traffic there is.  A homeschool blog would attract homeschoolers and thus their list building efforts would result in a homeschool based list. Since lists are your “property”, they reduce the risk of relying on outside sources.

The best part about list ownership is that your messages can be delivered at your will and land in an inbox that is largely asynchronous. Unlike impetus based direct traffic, contacting your list via email and RSS requires only a mouse click. .

Push Traffic

Risk Assessment: Medium Another kind of referral traffic is the kind you push out. Guest blog posts, tweets, link exchanges, Facebook, and articles on 3rd party sites are all forms of push traffic. This is very similar to impetus based direct traffic, but is more convenient since it requires only clicking a link. While the effort is high here, the risk is relatively low.

Push traffic does rely on sites you don't own and the traffic that visits those sites (like Twitter for example), but it's low because you control the push. You know that few people visit MySpace everyday so you aren't likely there promoting. And now that Pinterest is hot, it's something you're likely doing more than you were 4 years ago. The risk here is that the audience you are counting on today will not be there when that third-party site goes away. For instance, someday Facebook will be a name of the past – if today's traffic comes from Facebook where does that put you tomorrow?

Involuntary Traffic

Risk Assessment: High When someone writes about you, links to you or otherwise posts links to your web properties on their own accord you should jump up and down with joy. What a compliment and great thing to happen. But it's not something you can rely on day after day. When was the last time you saw mention of TravelZoo.com, OJ Simpson or Webcrawler? These are all things that used to get written about regularly. Perhaps no one on the planet will write about them today. As I always say “Hope is not a marketing plan”.

Now Assess Your Risk

So where do you fall? What is your level of risk? In this table I've put together the traffic source and in the income source. You can see in the top right cell that Google AdSense powered by search engine traffic is a “High Risk – High Risk” plan. What kinds of traffic and income should you pursue to reduce your overall risk and exposure to problems?

If you haven't put together your marketing calendar for this year yet, how are you going to pursue lower risk options to safeguard all your hard work and effort?

Blog Income Risk Assessment Table

Search Engine Traffic
Direct Traffic
List Traffic
Push Traffic
Involuntary Traffic
Google Adsense
High – High
High – Medium
High – Low
High – Medium
High – High
In-Text Ads
High – High
High – Medium
High – Low
High – Medium
High – High
Coupon Prints
Medium – High
Medium – Medium
Medium – Low
Medium – Medium
Medium – High
Impression Networks
Low – High
Low – Medium
Low – Low
Low  – Medium
Low – High
Affiliate Sales
Medium – High
Medium – Medium
Medium – Low
Medium – Medium
Medium – High
Sponsored Posts
Low – High
Low – Medium
Low – Low
Low – Medium
Low – High
Your own Products
Low – High
Low – Medium
Low – Low
Low – Medium
Low – Medium

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5 Comments

  • Hans Hansen says:

    Hi Dan, good post. Yes, I agree that offering your own products and building list targeted traffic are the least risky and most profitable. Anyway I think it’s a good thing letting people know where there risks lay, so they can prepare or adjust their business for possible future changes. Even more so when they are financially dependent on this.
    Keep it up and with friendly greetings, Hans

  • Sam Woods says:

    I think it’s less about finding one thing, one source, more about trying to put yourself on as many feet as possible, that way if one area fails, you’re not on your ass. You can find out a lot about the risks people are willing to take from which area they’re in though 🙂

  • Karan Rawat says:

    My level of Risk? Nothing!

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