How to Turn Your Passion into Profit

Part 2: When to Consider Monetizing Your Audience

The key to successfully monetizing your WordPress site is to learn both how and when to monetize your audience. Part 1 covered the “how” in detail, but how do you know when to begin to monetize for a maximum return on investment (ROI)?

That’s actually one of the hardest questions for most WordPress blog owners to answer. Some would argue that monetization should start as early as possible, even as early as day one. As engaging as this proposition sounds, for most WordPress bloggers this is the wrong answer. The reason has to do with time, effort and the expected ROI. Let me explain with an example.

Google AdSense Variables and Formula

Let’s assume that you plan to monetize your WordPress blog by introducing display ads in your blog posts through Google’s AdSense program. Depending on your level of expertise with WordPress and AdSense, setting up your AdSense account can take as long as 8 hours. Then you’ll need to spend another hour or two a week monitoring and optimizing your AdSense account. This may not sound like a lot of time, but for someone who already is working a full-time job and has family obligations, this additional time commitment may get in the way of content creation. It’s not so bad if the revenue is there to justify the added effort, but what if it’s not?

Let’s try to answer that question by applying a little math. The formula that we’ll use to answer this question relies on a few important variables, namely:

  • Average daily visitors to your WordPress blog. For the sake of our example (and to keep the math easy) let’s assume your site gets 1,000 visitors a day.
  • Average pageviews per visitor. Let’s assume that for your site this average is two.
  • Average click-through rate (CTR) for display ads. Display ad CTR can be all over the map depending on your industry. Let’s assume for our example that the CTR is 0.24%.
  • Average earnings per click (EPC) that you get on your display ads. Let’s assume this is $0.20 per click.

The formula we’ll use is as follows:

Daily Visitors * Avg. Number of Page Views * Avg. CTR * Avg. EPC * 30 Days = Monthly Revenue

So for our example, that would mean:

1,000 * 2 * 0.24% * $0.20 * 30 = $28.80 per Month

Clearly, $28.80 a month would not justify the amount of time required to set up and manage an AdSense account. At this stage of the business, that time would be better spent creating more content and attracting a larger audience.

Now please remember that this is only an example and one that might not apply to your specific situation. I’m not trying to discourage anyone with only 1,000 daily visitors from trying to earn revenue. What I’m saying is that before you make the investment in time required to monetize your audience, you need to run the math.

By the way, the variables and formula that I outlined above are very specific to advertising through channels like Google AdSense, where you are paid by the click. Here are two additional sets of variables and formulas that are more specific to affiliate selling and running your own online store.

Affiliate Selling Variables and Formula

Here are the variables you should use for calculating the potential ROI for affiliate selling:

  • Average number of daily visitors to your WordPress blog. For the sake of our example (and to keep the math easy) let’s assume your site gets 1,000 visitors a day.
  • Average pageviews per visitor. Let’s assume that for your site this average is two.
  • Average click-through rate (CTR) for any display ads and in-post links. Display ad CTR can be all over the map depending on your industry. Let’s assume for our example that the CTR is 0.5%. In-post links (where you are weaving the marketing call to action in your blog post) typically average 1% CTR.
  • Average conversion rate (CONV) from click to sale. This is typically around 2%.
  • Average revenue per sale (RPS), which will vary depending on the products that you sell.
  • Average sales commission (SCOM), a percentage typically between 1% – 10%.

The formula for affiliate selling is as follows:

Avg. Daily Visitors * Avg. Pageviews * Avg. CTR * Avg. CONV * Avg. RPS * Avg. SCOM * 30 Days = Monthly Revenue

So for our example, I’m going to assume 1,000 daily visitors, an average of 2 page views, an average CTR of 1%, an average conversion rate of 2%, an average revenue per sale of $100, and an average commission of 5%, which translates to the following:

1,000 * 2 * 1% * 2% * $100 * 5% * 30 = $60 per Month

E-commerce Variables and Formula

Here are the variables you should use for calculating the potential ROI for running your own e-commerce store:

  • Average daily visitors to your WordPress blog. For the sake of our example (and to keep the math easy) let’s assume your site gets 1,000 visitors a day.
  • Average pageviews per visitor. Let’s assume that for your site this average is two.
  • Average click-through rate (CTR) for any display ads and in-post links. Display ad CTR can be all over the map depending on your industry. Let’s assume for our example that the CTR is 0.5%. In-post links (where you are weaving the marketing call to action in your blog post) typically average 1% CTR.
  • Average conversion rate (CONV) from click to sale. This is typically around 2%.
  • Average revenue per sale (RPS), which is an estimate of your e-commerce revenues minus your costs.
  • Average cost per sale (CPS), which includes items like your inventory costs (for physical goods), shipping costs, etc.

The formula for running your own e-commerce store is as follows:

Avg. Daily Visitors * Avg. Pageviews * Avg. CTR * Avg. CONV *
(Avg. RPS – Avg. CPS) * 30 Days = Monthly Revenue

So for our example, I’m going to assume 1,000 daily visitors, an average of 2 page views, an average CTR of 1%, an average conversion rate of 2%, an average revenue per sale of $50, and an average cost per sale of $35, which translates to the following:

1,000 * 2 * 1% * 2% * ($50 – $35) * 30 = $180 per Month

To use any of the formulas above, just follow these steps:

  1. Given your specific monetization strategy, use the appropriate formula and insert values for each of the variables to calculate your estimated monthly revenue.
  2. Compare your monthly revenue to the level of effort required to support your chosen monetization strategy.
  3. If the ROI works out, go for it. Start monetizing your audience by executing your monetization strategy.
  4. If the ROI doesn’t work out, focus on delivering great content and growing your audience size until the math does work out.

I’d like to offer you one final word of advice. Everything that we’ve discussed relies on having a responsive, secure, and reliable place to host your WordPress blog. There’s a lot that goes into pulling this off, which means that there’s a lot that can and often does go wrong. That’s why it’s so important to ensure that you’ve chosen a hosting provider who knows what they’re doing.

Liquid Web has been hosting WordPress blogs and WooCommerce shops for years, and we’ve developed infrastructure and processes to ensure that your site runs smoothly no matter which monetization strategy you employ. We also have one of the best WordPress support teams in the industry, who day after day go out of their way to ensure that our customers are happy with their results. So I encourage you to check out Liquid Web’s WordPress hosting offering today. I guarantee that you’ll be happy that you did.

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