Calculator Built Based on My Own Experience
I have been working full-time online from my home since 1997. I began as a self-taught web developer earning my living by creating interactive calculators for financial websites (you can read my story here). I enjoyed building calculators, but I had grown tired of having to build calculators based on customer specifications instead of based on my own creative self-expression.
Luckily, in April of 2010 I happened across a company called SiteBuildIt! or SBI, whose website was extolling the virtues of becoming an Infopreneur. What a cool concept!
While SBI teaches a host of different ways to make money from a website, the method that appealed to me most was the online advertising revenue model because it would free me to create my calculators based on my own creative self-expression, instead of based on the rigid and enslaving specifications of others.
Thank goodness I decided to purchase the program.
While I'm not comfortable with telling you how much my website is currently generating in ad revenues, I will tell you that I'm earning just as much as I was earning back when I was a restaurant owner. And what's significant about that is that I had to pay $350,000 to purchase the restaurant only to end up working 80 stress-filled hours per week -- which left no time for having a life outside of work.
My website and traffic building program, on the other hand, costs me less than my monthly cable bill, and I am now totally free to work at what I want, with whom I want, when I want, and wherever I want.
For the first 2-1/2 years, I was excited about the product I was using to create this website, but I didn't want to promote the product until I had proven the product worked like the company claimed it did.
Well, that time arrived in September of 2012. After just 28 months of following their step-by-step system, the income from my website not only surpassed the amount I told myself I would be happy with ... but it just keeps growing!
One of the things that convinced me to subscribe to their website and traffic building program is a page that displays a sampling of websites built with their product that rank in the top 1/2% of all websites on the planet.
You see, after visiting many of the sites on the Top 0.5% list, I thought, if they can do it, so can I.
Well, not only did I "do it", but my site is now listed on the very Results page that convinced me to give SBI a try in the first place (I'm listed under the FINANCE section). Is that cool, or what?!
What is the Online Advertising Revenue Model?
Basically, you place small bits of code from an advertising vendor (Google Adsense, Media.net, Infolinks, etc.) in various locations on your web pages or blog posts.
In turn, the ad vendor delivers ads to each page based on the content of the page, thereby ensuring that the advertisers who are paying for the ads are reaching their target market.
How Do You Earn Money From the Ads?
There are basically two general types of website ads. One type generates revenue when a visitor clicks on it (1 step), and another type that opens a page of links when clicked, which in turn makes you money if the visitor clicks on one of the listed links (2 steps, also referred to as "Link Units"). And as you might expect, the 1-step ads typically outperform the 2-step ads.
How much do you earn when a visitor clicks on an ad or a link? Well, that depends on how much advertisers are willing to pay to get a click from your audience.
You see, advertisers bid (how much they are willing to pay per click, called PPC) on keywords and key phrases that they feel would best attract their target audience. The amount they bid depends on the potential revenue their business can earn from the sale of their product.
Obviously, an advertiser selling shoelaces is going to pay far less for a click that an advertiser selling luxury condominiums, so how much you make per click depends on what niche your website covers. Speculatively speaking, a shoelace ad might pay anywhere from $0.01 to $0.10 per click, where an ad for a luxury condominium ad might pay anywhere from $5 to $15 for the click.
But guess what. If you build a site about shoelaces, don't expect to have the ad vendor send luxury condominium ads to your site. It's not going to happen.
This explains why it is imperative that you fully research the income potential of your website ... before you decide what niche you are going to build it around.
The absolute best tool I have ever found for doing website niche research is a tool called "BrainStormIt!" -- which is just one of the many invaluable tools that come with the site and traffic building program that SBI offers.
Traffic is the Key to Earning a Living from Ad Revenues
In the advertising world, "conversion rate" is a common term used to describe how many people you have to expose your ad to in order to make one sale. For example, if you show your ad to 100 people and 1 person places an order, your ad would be generating 1% conversion rate (1/100 = .01 = 1%).
In the online advertising revenue model, the conversion rate is known as the Click Through Rate (CTR), which refers to how many times an ad is viewed (number of impressions) before one of your visitors clicks on the ad.
Depending on where the ad is displayed on a web page or blog post, the CTR can range from .0% to 3% or higher. So to see how much traffic you would need to achieve a certain ad revenue goal, you need to estimate the average CPC (the amount you earn per click), the average IPV (Impressions Per visitor), and the average CTR (Click Through Rate).
Once you have arrived at your estimations, the formula to estimate the traffic needed to achieve your goal is as follows:
So, for example, if you want to earn $100 per day in ad revenue and you estimate a CPC of $0.10, a CTR of 1%, and an IPV of 1.5, the estimated visits you would need would be 66,667 daily visits, calculated as follows:
Traffic Needed = 66,667 daily visits
To check to see if the above is correct, you work backwards like this:
Ad impressions = 66,667 x 1.5 IPV = 100,000
Number of clicks = 100,000 x .01 CTR = 1,000
Daily ad revenue = 1,000 x .10 CPC = $100
Obviously, attracting over 66,000 visitors per day is an unlikely prospect for the average website owner, so again, you want to do your homework up front to ensure that you will be able to achieve your $100 per day goal with far less traffic. This is especially true when you consider that in order to net $100 per day, you can't spend any money to attract your visitors.
"Free" Traffic is Essential to Online Advertising Revenue Model
What do I mean by "Free Traffic?"
Free traffic, as the name suggests, is traffic that visits your site without you having to pay to advertise and/or promote your site.
If you think about it, if you have to pay to advertise your site, then most of the money you make from selling ads on your site will be spent on advertising your site. That's why free (or organic) traffic is so critical to the online advertising revenue model.
So how do visitors find your site if they're not finding out about you through paid advertisements? They find you through search engines (Google, Bing, Yahoo, Ask, etc.), social media (Facebook, Twitter, LinkedIn, Pinterest, etc.), and websites who link to your site for free because they think your content will provide value to their visitors.
In other words, you must provide high quality content in order to attract free traffic.
So the bottom line is, in order to make a living using the online advertising revenue model, you must:
- Choose the right niche: Don't build your site until research has uncovered a niche where there isn't an insurmountable competition, yet there is enough competition to attract advertisers willing to pay higher CPCs.
- Provide high-value content: You must build every page from the perspective that if you do it better than your competition, that page could be worth thousands of dollars in online ad revenues over the course of the next 10 years.
June 29, 2017 Update: How I Tripled My Ad Revenues
Since first creating this calculator back in 2012, site ad revenues had grown steadily along with my traffic until 2014. However, starting in 2015, ad revenues started falling due to the rise of ad blockers and visits from mobile devices. Thankfully, back in March of 2016, I decided to turn my ad optimizations over to a company named Ezoic.
Ezoic offers a product called, Ad Tester. Ad Tester uses a machine learning algorithm for optimizing the ad sizes and placements on a per-visitor basis. The results have been nothing short of amazing!
As of this update (June 29, 2017), Ad Tester has not only tripled my ad revenues over June 2016, but June 2017's revenues set a new, all-time earnings record for a single month. Not bad, considering June is usually my lowest earning month of the year!
More Money ... And More Time To Make More Money!
What's super cool about the Ad Tester handling all of your ad optimizations, is that it allows you to focus all of your time on growing traffic to your site (more traffic = more income). No more having to split your time between trying to increase your ad revenues per visitor, and trying to grow your traffic!
So if your site's primary monetization method is contextual ads, I highly recommend you give Ezoic a try.
Disclaimer: After experiencing the dramatic turn-around of my ad revenues, it was a no-brainer to become an affiliate of Ezoic.