Posts Tagged ‘tax deduction’

4 Approaches to Making Money from Blogging

Monday, January 12th, 2009

So, you’ve heard that people can make money from blogging, but you’re wondering “how exactly does that work, and what approach would suit your blog?”.

Text Links

You have a website which has outgoing links, other websites want to rank with search engines, and one of the main measures for page rank is the number and quality of incoming links. So, there is money to be made from selling links on your site, and the advertiser is generally not that bothered if nobody ever clicks on the link.

This can be a reasonable source of income both from aggregators and private sales, but it doesn’t scale that well — after a certain point, you can’t earn more money as your blog grows. The main downside is that it is not at all popular with search engines and you may find your own ranking in searches is lowered as a result.

Ad Networks

You have a website which has visitors who click on links on your website. Other websites are are willing to pay for visitors. There is money to be made from selling advertising space on your website, you either get paid when someone views an ad, or when they click on it.

Making money this way requires a reasonably sized audience, and search engine traffic is considered to click more on adverts than regular readers or subscribers. Ad network income generally scales very well, and it is possible to make this the cornerstone of a money making strategy reliant on a single blog in the right sort of niche. The downside is that unless your website is very large, you’re unlikely to make private sales and will be reliant on an ad aggregator (e.g. Adsense, ). In practice this means that you will give up a fair amount of control over which ads are shown, and there can be restrictive terms and conditions.

Affiliate Links

You have a website where you mention products and services. Other companies are willing to pay commission for leads, inquiries or sales. There is money to be made by linking to the product or service if your visitors are likely to click on the link and follow up with a purchase.

Affiliate links scale well, and there is the potential for using both aggregators and private arrangements. You generally have complete control over which affiliate links are shown on your blog, and existing readers and subscribers are more likely to click on affiliate links than straight advertising. The downside is that making money from affiliate links depends strongly on the niche you are working in. There needs to be an obvious relationship between the topics you write about, and some products or services. So, for example review blogs do very well from affiliate sales, as can blogs related to expensive hobbies, but if you rarely mention specific products or services then you will probably struggle.

Consulting and Sales

You have some skill or product that you wish to sell. Your blog is strongly related to this skill or products. Other people will pay money for your skill or products.

You need to have genuine skills or a product to sell that people are interested in. Your blog needs to be strongly positioned towards making sales, in fact becomes somewhat of a sideline. You need to research any legal issues thoroughly before offering consulting, and ensure that you have back office systems set up for dealing with clients or completing sales. This works very well with business to business internet sales (e.g. selling WordPress themes, or blog consulting services) and fairly well with anything that can be done remotely, it is much harder to do if your skill requires you to be actually present. The biggest downside is that this is not passive income — you’ll actually have to work for the money, as well as blog.

Issues to Consider

You need to have the right set up in order to make money. Some free blog networks like WordPress.com don’t allow their bloggers to run advertising so check your terms and conditions. It is generally easiest to grow your blog’s income with self-hosted web hosting and your own domain name, but other approaches have worked for some people.

It’s possible to use a mix of approaches to making money, but be careful. If you are selling a product or skill then you might not want to use Adsense for example because the ads that come up are likely to be for competitors. As mentioned, selling text links can have a negative impact on your search engine visitors which are the primary source of income for most of the other forms of advertising.

Invariably, making money means paying taxes on the net income. Check out the regulations in your area, but you can usually make deductions for legitimate business expenses like hosting, domain names and Internet access. If you have a tax advisor or accountant already, you should contact them with your plans, often tax departments have phone lines you can call for advice on issues.

Finally, the standing of your blog is always dependent of having good content, and your credibility can be harmed by having a blog design with intrusive advertising. Don’t shoot yourself in the foot by letting your desire to make money overcome your common sense.

Best of luck, and here’s to your first million (or at least hundred)!