Ad-Space to Affiliate Sales: Monetization on a Sliding Scale
There are countless ways of making money online and I cannot cover them all in this post. However, in terms of monetizing a website, there are four very common methods: Renting out ad-space, using AdSense or similar contextual advertising, promoting CPA offers and promoting products as an affiliate.
These four methods are arranged neatly along a sliding scale and understanding them makes for a good foundation of knowledge about website monetization in general.
So, let’s go right ahead and examine these four methods.
Qualification vs. Payout
The “sliding scale” mentioned in the title has to do with how much you get paid for each of the monetization methods in relation to how difficult it is to qualify for payment. Here’s an illustration:
On the x-axis you see the four major methods, renting out ad-space, AdSense, CPA offers and affiliate sales. The labels going from “minimal” to “high” along the y-axis have two meanings: On the one hand, they describe the potential payout and on the other hand, they describe how hard it is to make the payout happen.
If that doesn’t immediately make sense, don’t worry, I’ll go into a bit more detail on each method right away:
Renting out Ad-Space
If you visit a lot of blogs, you’ve probably come across several that have small 125×125 pixel boxes in the sidebar, displaying ads. Sometimes, some of the boxes read “Your Ad Here!” or something along those lines. That usually means that the owner of the blog is renting out this space on his site for advertisers. A product owner or company can call them up and arrange to have their ad placed in one of the boxes for a set amount of time and a monthly fee.
Once the ad is set up, the blog owner gets paid no matter how effective the advertisement is. The only pre-requisite for getting paid, is that the blog continues to be visited by many people, but the payment stays the same regardless of whether the blog’s visitors actually click on the ads and/or end up buying something from the advertiser.
In other words, there’s no obstacle that you need to get your visitors across, in order to make money. The downside is that you won’t get paid a lot for renting out ad-space and you need a hell of a lot of visitors to make this kind of monetization lucrative at all.
By the way: Not all banners are rented out ad-space. A banner could also contain an affiliate link to a sales-offer or a CPA offer.
I’m sure you’ve seen many, many AdSense ads already. Whether you’ve clicked on any or not is a different story, but there’s no doubt that AdSense is a very popular way of monetizing a website. In case you don’t know what I’m talking about, here’s what AdSense ads usually look like:
Don’t bother clicking, by the way, it’s just an image.
AdSense is something you can plug into your site and it will automatically serve up these small text-ads that are relevant to your content. I.e. if you write something about cars, AdSense might display ads for car insurance offers.
Behind every AdSense ad, there’s a person or company paying for clicks. As an example, let’s say a visitor clicks on an insurace-related ad. The advertiser will pay Google a certain amount, for example $0.60 for that click. Google, in turn, will pay half of that to the person who’s site the ad was displayed on when it got the click.
Depending on the subject, these clicks can cost more or less and in turn, the ads on your site will not always net the same amount per click. Usually, you’ll get only a few cents per click, however.
You can easily make a few dollars by using AdSense on your site, even if you don’t get tons of visitors. You can potentially earn more per visitor compared to renting out ad-space, but the visitors need to actually click on the ads, otherwise you don’t get paid. So, the threshold is a bit higher, but you get more in return.
Selling products as an affiliate is a very simple concept: You send visitors to a sales-page with your special affiliate link, and every time one of those visitors makes a purchase, you get a cut of the price. This is basically your reward for sending the visitor to that product-page and making the sale possible.
What’s very attractive about affiliate sales is that the payouts can be very high. You will typically get paid between 50% and 75% of the purchase price (at least for info-products and downloads). If you are promoting an expensive info-product, you can earn up to hundreds of dollars every time someone buys through your affiliate link.
The downside is that you only get paid whenever someone makes a purchase. In other words, the threshold is very high and you’ll never see 100% of the people clicking on your affiliate links ending up buying the product (0.5% to 3% is more realistic).
CPA stands for Cost Per Action and the reason I saved this one for last is that, in a sense, CPA represents the “sweet spot” between AdSense and affiliate sales.
As the name implies, with CPA, you get paid whenever a visitor performs a certain action. The action required is specified by the advertiser. For example, for many offers you can make a CPA commission, by sending a visitor to a page where they have to enter their e-mail address (in other words, they sign up to a mailing list). Other offers require the visitors to fill out a survey-form.
As you can imagine, it’s easier to get someone to supply an e-mail address than it is to get someone to make a purchase. The payouts for CPA offers are typically quite a bit higher than what you get for AdSense clicks – usually in the range of a few dollars.
To get back to the above graph, with CPA, the threshold isn’t very high – visitors have to do more than just click, but they don’t have to spend actual money – and the potential payout is quite good.
So, Which Is Best?
You can’t really say that any one of these monetization methods is better than the others. That’s also something I wanted to illustrate in that graph: The two factors of potential payout and qualification for payout usually balance each other out fairly well.
Whether you get thousands of clicks for a few cents each or send thousands of visitors to a sales-page and only a small percentage of them buy the product, you’ll end up with similar profits.
You can optimize any of these methods to make you lots of money and I’m sure there are people making a full-time living on each one of them. Ultimately, it’s a question of what suits you best.
What monetization method do you prefer? Which ones have you tried and which ones would you like to try? Let me know down in the comments!