How The Financial Diet Actually Makes Money

The past few months have been ones of heavy digital media turmoil, with multiple mass layoffs, closings, and much-discussed pivots to video content. Coming on the heels of the series we did for Medium discussing the nuances and benefits of being a niche media company, the environment feels frankly more bleak each day when considering the prospects of websites and digital outlets that want to reach any kind of scale. The simple, ugly truth is that consumers have all but abandoned the idea of paying for the media they consume, even if they consume it daily, and finding a model of monetization among the wreckage that works for even a modestly-large team feels increasingly impossible.

As I said in one of our Medium articles, there is a measure of comfort in our smallness, as we are frankly too piddly to be affected by any of the big sways in media, whether it’s the gold rush of social media traffic (and its inevitable ebb), the mass pivots to video, or the fundamental changes in how ads are shown on web pages. Yes, we feel distant echoes of what is going on in the bigger world, but our scale is insignificant in the face of these landscape shifts.

All of that said, while we are surviving (and perhaps, by some humble standards, thriving) in our smallness, the route for us is by no means easy. We are lucky in some ways, because our lane (personal finance for women) is not terribly cluttered, and tends to be favored by almost every algorithm out there. But bootstrapping any media company is fucking difficult, and we are still five young women (and the occasional contracted guy) making it all work as we go, which has meant long stretches without take-home pay for Lauren and I, among other things.

As I discussed on Twitter last night, the fact that consumers no longer feel any kind of moral or consumer obligation to pay for the media they regularly consume is a huge uphill battle. And yes, we feel that sting, knowing that — even by the most generous of projections — we stand to only convert about 1-2% of our active audience into subscribers. Not having a steady stream of revenue from our audience hurts us, like it hurts everyone. But we have still been able to make it work.

Still, though, there is so, so much that we did not know about the business of media going in, and I think that content creators in general — even if they aren’t planning on starting or monetizing their own thing — would be better suited to understand the nitty-gritty of how websites make money. And audiences, too, might benefit from knowing what it really entails when that prestige piece goes on their favorite site, or a lushly-animated video is released from their favorite channel. We are only one example, but we feel pretty standard in terms of niche media monetization, at least insofar as all of the channels of making money we use are pretty well-worn. If you are interested in how a site like ours makes money, this is how we do it, along with a little information about each:

  • Programmatic Ad Revenue. These are the display ads (banner ads) you see all over most websites, including ours. They can be anything from little bars along the side of the site all the way to those horrible full-page pop-ups that you have to click out of before you can go to a new page (those are called interstitials, and they are godawful). This is the baseline revenue for most sites, and as you may have guessed, one of the least lucrative (unless you are working in massive scale). The value of these is generally measured in what is called CPM, or Cost Per Mille, which generally means how much money you make every time a thousand eyeballs see that ad. And that number is extremely depressed across the web by many factors: the fact that there are so many fucking ad spots, the fact that we are essentially blind to them, the fact that people don’t engage with or even read most of the content they click on, the fact that it’s really hard to effectively target, etc. And while, yes, it is technically low-involvement and low-pressure up front (anyone can set up Google Adsense in an hour or so), in order to make any real money off of it, you have to basically “game” your CPM, which means dedicating a lot of time and effort to it, or paying a third party a commission to do that for you. There are all kinds of strategies for this, but long story short, unless you’re playing with big numbers, programmatic is never going to be your ticket to wealth. (And surprise! Sites like ours with loyal readerships are doubly screwed, as every time a person re-visits a site each day, their eyeballs get less valuable.) So despite its omnipresence on our site, for us, programmatic nets only about 20% of our overall revenue.
  • Pre-Roll Ads. These are the ads that play before a video, in our case on YouTube. These are very similar to programmatic, in that they are usually not custom-sold and are more dictated by the consumer’s internet history than anything else (they are also usually measured in CPM). But at least for the time being, they are generally more valuable than display ads, in large part because the user often has to engage with them in full or in part to get to their content, and because studies have shown that they are, generally speaking, more effective. They are also somewhat easier to target. (Brands love video for these and other reasons, which is what is driving many of these pivots, not the audience demands.) For us, our pre-roll ads have a substantially stronger CPM than our display ads, and because our engagement is very high on YouTube (our average watch time is over four minutes) and our content is so targeted, we are one of the channels for whom this model makes the most sense. Pre-roll now accounts for about 25% of our overall revenue.
  • Custom Content. This is anything a website makes custom for a client, from sponsored posts to branded Instagrams to shout-outs at the end of a video or podcast. For small sites like us, this is hugely valuable, because it’s most effective when reaching targeted, niche audiences so you can assure that every eyeball seeing it is the eyeball that matters to the client. And this is important, because brands pay relatively highly for this (though still nothing when compared to TV, or even radio). But to put it in context, if you were measuring a sponsored post in CPM based on your average traffic for that post, your return for doing one sponsored post versus just running regular banner ads around it can be literally hundreds of times the value. For us, and many sites like us, running custom content on text and video is the only real path to sustainability, and one of the only models that makes sense both for the client and the niche company, who is making the gamble that what they give up in scale will be made up for by their extremely precise audience and point of view. All that said, this is the kind of content that can prove a) most ethically compromising and b) most distasteful for audiences. So it’s a fine line that every publication and creator has to walk, and you are almost guaranteed to make some missteps along the way (every creator and publication is used to getting screamed at in the comments of a sponsored post, no matter how tastefully done). For us, though, custom content across TFD’s channels (including YouTube) is still around 35% of our overall revenue.
  • Affiliate Marketing. This is a kind of marketing that has become more and more popular over the years, and was initially hailed as a salve to waning programmatic and subscription numbers. (As you might know, much of the Kinja empire was based on affiliate marketing.) But what is it, exactly? Essentially, affiliate marketing is when a publication links to a product or service and takes some kind of commission off of that transaction. Sometimes they get a commission when the user clicks, sometimes only when they buy something, sometimes when they sign up for an email list or survey. It all totally varies, and is also at highly-varying levels of scumminess. The personal finance media field, for example, is bursting with extremely scummy affiliate models, websites with barely-readable content whose sole purpose is to drive huge numbers through search engines to pages about credit cards or loans in order to rack up affiliate dollars. We engage in it very sparingly (we’ve found that Amazon in particular is non-intrusive for our readers and works well for us), and are constantly looking for ways to integrate it without compromising our ethics. Long story short, affiliate marketing is one of the lowest-impact models in terms of time investment and real estate it takes up on your site, but it’s also easily one that erodes the most trust in your readers. As of today, it accounts for around 5% of our overall revenue.
  • Editorial Product. This is what encompasses basically all of the non-branded editorial product a site sells. This can be anything from original content commissioned by other outlets, to packages of content to be syndicated and redistributed across other channels, to books/TV/other media. There are some media outlets that put out a book a year, for example, or who license out part of their editorial brand, and find huge success with that. I would even put things like speaking gigs on the list, as it is technically selling your editorial brand as its own product, rather than commissioning it to be repurposed for someone else. A lot of smaller sites, individuals who have their own brand, and hyper-targeted media tend to make a lot of money in editorial product. For us, it really varies month-to-month (for example a book we sell would be a huge month, but that’s a one-off thing), but generally speaking, only around 10% of our revenue comes from editorial product.
  • Everything else. For us, this entails everything from e-commerce to licensing to consulting for brands and individuals. These are usually not recurring streams of revenue, but are the bucket in which everything else tends to fall. It’s generally around 5% of our income at the end of the day.

Now, as I’ve said, we are not destitute — this current model allows us to live well, and to grow humbly. But there are a few key takeaways here, and things that I think everyone would be better off understanding, both as consumers and creators of digital media: none of these ad models scales very well, particularly as wider and more demographically-diverse audiences drive down the value of most of these forms of revenue. And even if you are able to maintain a very niche, targeted audience around a particular subject at a bigger scale, the sheer costs of running any digital property increase substantially as you grow. (For reference: we pay just under $1,000 a month just to keep the site and all its little tools/necessities running, and we are fucking tiny.)

And even if you are able to make these models scale, the truth is that at any time, one of them can (and often has) come crashing down, and will force you to restructure essentially overnight. If CPMs suddenly, drastically dip, or if YouTube decides to cut off your ads because you have “adult” content, or if a major client pulls out over a random piece of content, your payroll could be upended in literally a matter of a month. And while all of the inherent variables of advertising-based revenue used to be offset at least somewhat by a solid, steady base of subscriber revenue, even the most robust subscriber models have taken massive hits in the past 20 years. Without that model to fall back on, even the most prestigious publications are weighing costs (a freelance piece that might be $2,000 to publish, between all staff and contracted man hours, even if it never appears in print) against benefit (that same freelance piece which earns back less than a quarter of that in ad revenue), and struggling to keep the strings together.

I am not saying any of this to excuse an industry that often follows the wrong trends and makes terrible business decisions, and which leaves countless talented, hardworking people dangling in the aftermath. There is certainly a lot of blame to go around in the boardrooms of digital media. But I can say firsthand that the underlying issue will remain the same unless there are fundamental, cultural shifts that we all need to be a part of: if we demand quality media, we must be willing to pay for it. Because of our tiny scale and our (relatively) diverse income streams, TFD is able to get by without having a subscription model at this time, but it is by no means something we’ve ruled out. Yet we also know that we will be up against a digital consumer who has gotten used to the idea of media costing nothing, and who remains blissfully unaware of how their favorite outlets are actually making ends meet (every time someone brags about using AdBlocker, I die a little inside). If we want to make the media ecosystem a stronger one for everyone, we must all be more lucid about the roles we play, and how we can personally contribute to seeing more of what we love, and what our society deserves.

This is just how one little outlet makes their money, and everyone’s model will look differently. But one thing is universally true: just because you aren’t paying for something doesn’t mean it’s free.

Image via Pexels

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  • Declan

    Chelsea Fagan: laying the truth bombs that blow my mind.
    This piece should earn some kind of award for digital media transparency.

  • Lauren

    I love this.

    My two cents: I truly do not mind sponsored content. I feel like there’s a measure of trust inherent in the internet people you chose to follow, and I trust TFD a lot, specifically because of articles like this. I’d rather see more sponsored content than more ads, because it’s still something for me to read and learn from, it involves a creative and thoughtful process on your end, and is much more interesting than having to click through a bunch of annoying ads. I know there is a *lot* of pushback on the internet against sponsored content, but it feels selfish to me. If you don’t trust bloggers to not lie to you even if it’s #spon, then why do you trust them any other time, and read their content at all?

    • Summer

      I think most people are fine with sponsored content as long as they feel the blogger/company is staying relatively true to their brand. The disdain starts to creep in when blogs start shilling products or services that have absolutely nothing to do with [or are perhaps at odds with] their core concepts and everything turns into something that reads or sounds like an infomercial. Of course there’s no way to make everyone happy, and some people are going to pitch a fit at the tiniest sign of monetization no matter how relevant and fair it is, but I think most of us are pretty fine with sponsored content. I certainly am, because there are admittedly several websites I consume and enjoy on a regular basis, but I’m not sure I’d actually pony up the cash for if they suddenly went behind a paywall.

      You’re totally right that creating GOOD sponsored content is way more interesting and potentially beneficial to the viewer than just seeing ads plastered everywhere.

      • stacy

        I agree, I don’t mind seeing ads, but in my personal opinion TFD would be one of those sites for me where the content isn’t strong enough that I’d pay for access – I would find other personal finance blogs. If ads are overwhelming or inappropriate, that’s a different story.

  • Anon

    Why not set up a Patreon account? I’m usually happy to kick in a few bucks a month for podcasts I like, for example. I imagine I’m not the only one.

    • Vivian

      I second this — TFD, if this is an avenue you have not yet explored, please do!

    • Third’ing this! I don’t have a lot, but I’d be happy to give TFD a couple of bucks a month in exchange for all the content that’s helped me be able to afford things like giving on Patreon. 😉

      • nancxpants

        Absolutely! Thanks to TFD I’m at a point where I’m secure enough to
        start pledging support to content I love and was literally looking last
        night to see if there was a way to give back directly to this community.

        • nancxpants, I think for now the best/easiest way to give back to them is maybe shopping at their merch site! ‘Til they create a Patreon that is. 🙂

          • nancxpants

            I know and I’ll probably end up getting a tote but I just don’t need more ~stuff~, you know? Plus that’s not something that can really be consistent/ongoing.

          • I totally get it. Trying to live a more minimalist life over here, too. Hopefully they start a Patreon or some sort of subscription service!

    • L L

      I totally agree. Was going to suggest this. I am still a student but when I graduate & get a stable full time job one day, I would definitely be on Patreon and happily paying for sites like TFD.

  • Kait

    Maybe I’m an oddball (I pay to have a newspaper delivered) but I wouldn’t mind paying for TFD content if the content were more consistently high quality. There’s a pretty wide range in the quality of content in terms of writing style/typos/kinds of stories that are posted. Some are really engaging and interesting, some are clearly written by people who are developing their skill sets. I happily send money to the NYT and WSJ each week because I know that I’m paying for quality.

    • Yes, definitely agree. I understand listicles get a lot of traffic but there are just too many to make TFD something I would consider subscribing to. If you got the content quality up a notch I would also be very willing to subscribe. Having thoughtful articles like this or some other pieces you have written are so interesting, engaging, and I usually learn something new. Really love TFD and wishing you and your team the best as the business grows!

  • @mrs_maley

    I must concur with the Patreon suggestion. I have been a consumer of TFD for several years and would absolutely contribute via Patreon. Additionally I feel you could create new revenue streams by way of affiliate marketing with Patreon levels. (i.e. collaborate with tax-preparing software or sites to offer discounted services for higher Patreon subscription levels). There are many, many ways to create new revenue besides membership with Patreon.

    The other suggestion I have is to begin to think about putting together a summit or seminar. Online events are low-cost and far less intimidating. And eventually, an in-person event could be something that starts with a small group of women by invitation only and expands into something that generates revenue.

    • Definitely on board with interesting Patreon integrations, & love the idea of a seminar!

    • Would SO love to attend a seminar!

    • Kari

      Yes! to the seminar. I would love to collaborate, too, with other followers of the site.

  • yeahokaypal

    Thanks for breaking this down. I think it’s so important for people, especially writers/freelancers, to understand how media companies (especially the little guys) make money. Some writers have expectations to get paid a very high rate for a piece of work that likely won’t make the company that much money. Not that the writers’ time and efforts shouldn’t be compensated fairly, but many have this mentality that an editor or company is being ‘mean’ or unfair by offering whatever rates they have. I’ve been on both sides of the spectrum as a writer and as an editor so I know it can be frustrating for both parties. Sorry, kind of went off on a tangent, but love how transparent you are about the reality of what it costs to have a media company and how you make it work financially.

  • Rebecca May

    Love the honesty, Chelsea! And a great reality check for people like me who just want to run away from their full time job and go digital contenting, haha!

  • Laura P.

    I mean this with not a shred of offense, so I hope it is not misinterpreted. I think it would be appropriate if you, as a financial website, acknowledged that you are able to do what you have done because at least two of you who are depending on the revenue have husbands and fiancés at home footing the bills for extended periods of time. I think I once read that Chelsea’s boyfriend did a lot of work on the site at some point or another too. You take pride in being a group of women doing this on your own, but you are being funded by the men in your lives. There’s nothing wrong with this! But you are able to thrive because you have privileges that a lot of other people don’t. I think it would be wise to acknowledge that at some point.

    • chelseafagan

      I am not exaggerating when I say that I think Lauren and I have explicitly talked about that in at *least* a dozen articles, videos, and interviews. We have never hid the extreme privilege of having partners (and savings) that allowed us to go periods of time without income. (Though to be clear, we have brought home a regular paycheck for some time now.) But here’s just one example of us https://uploads.disquscdn.com/images/dc48f99cc822ab7b7227183e44582b83d1771024b294ac8e1f639f2b16239949.png discussing this I got from a cursory Google:

    • Hi. Both Chelsea and Lauren have been quite frank about the luxury of having partners who help them both financially and on the business side of things, when necessary. I don’t see how it was particularly relevant for this article, but if you read others you’ll see they seldom shy away from that topic.

    • Emma

      Laura P – to be fair, you wouldn’t know any of the things you just listed in your comment if they hadn’t been transparent about them in the first place. Those things just weren’t the focus of this article.

  • Violaine

    I love that you shared this. Transparency is important and I appreciate that you are willing to share this with the readers 🙂

  • Evarosa1986

    I really love this insight in ways to earn money from a website.
    I still pay for my subscriptions, newspaper (quality costs money), I just supported a kickstarter project from an Illustrator, maybe it is old skool but quality and creativity costs money.

  • As always, thank you so much for your honesty in addressing the hard topics! I’d personally be willing to pay for a subscription (up to a certain price, based on my current income and budget), but I second (third? fourth? fifteenth???) the idea of a TFD Patreon account, either instead of or in addition to a subscription model. Can’t wait to see where you guys take TFD next!

  • Rebmac

    Echoing the idea of taking certain articles/features to a subscription based model! I would pay for access. Check out what Autostraddle (also small, bootstrappy and niche) is doing with their A+ content.