What happens when you take three young men who know little about business and hand them a valuable web property? There are only two options: they run with it and create a successful publishing company, or they run it into the ground and forget about it. I’m thankful that my partners and I ended up in the former group.
For the past six years we’ve run an increasingly popular site in the baseball niche. Trust me when I say that sites about a single baseball team aren’t the most ripe for revenue opportunities.
Though all three of us had day jobs when we started, and continue with other projects today, we were able to dedicate enough time and effort to the publishing company to make it a relative success. In reflection, I wish we’d learned these four lessons a bit earlier than we did. Perhaps we’d be in a different, more successful, position today.
In any case, young web publishers can take heed of these lessons and steer correctly where we went off path.
Understand your model
Like so many new and naive bloggers, we didn’t understand the business model. We thought of content as our product, and ads as a monetization method. While that might be true on the surface, it doesn’t hit at the true nature of web publishing. We spent the first few years trying to beef up content, thinking that those efforts would lead to bigger ad paydays. Those hours might not have been wasted, but they also didn’t help our business.
Since no one pays to read web content, it is not a product. It is a marketing tool designed to attract attention. Ad networks were paying us not for our content, but for our readers. That made us a middleman of sorts. But we aren’t the only middleman in that transaction. There is also the ad network. Once we realized that, our outlook changed.
One reason many publishing ventures don’t make money, is because of this dual-middleman situation. Worse, publishers aren’t the middlemen who make cash change hands. Those are the ad networks, and they take more than their fair share of the sale. Publishers are left with the smallest piece of the pie, despite putting in rigorous effort to attract the customers that the advertisers want.
Understanding the dual-middleman situation didn’t lead to an increase in income, at least not directly. But it did urge us to start thinking about our business differently. And that made a long-term difference.
Track everything closely
When you have three partners who have day jobs, you will probably end up cutting corners. From experience, we’ve learned that there is one area where you absolutely cannot skimp: accounting. If you rely on third parties to store your income data, you are doing yourself a disservice. You might not realize it at first, but you will when it comes time to sell.
Since we managed so many income streams, we considered it a nuisance to pull income data from each of them and lay it out in a single application. They all kept our data and sent us tax forms, so we didn’t think much of it. Money came in, taxes got paid, and everything seemed in order.
Earlier this year we started exploring a sale, but met resistance when the buyer asked for our historical revenue data. The ad network that served the plurality of our income only kept data for the past year. One of the other networks we used shut down. Yet another destroyed our data, since we hadn’t used them in three years. This certainly complicated the sale process.
Using something as simple and inexpensive as QuickBooks small business accounting software would have saved us in the sale process. It also would have made our tax preparation easier. Whenever I talk to young publishing companies in our field, I emphasize this point above all others. Keep track of your own income. Relying on others will only lead to frustration down the road.
We chose multiple streams of revenue over a single one, because there is really no single quality revenue source for web publishers. While many publishers find that Google Adsense works well enough for them, we found other networks that catered better to our niche. The reality soon became clear: we would need to always seek out new revenue opportunities.
Space on the web might be theoretically infinite, but space on your homepage is not. Because we were exploring so many revenue streams, we had to make constant changes. How would we know if we were making the right move, if replacing Ad A with Ad B was the right decision? We had to constantly reevaluate our income.
This wasn’t based on just income, of course. We had to evaluate on a number of factors, including traffic, time on site, page view to unique visitor ratio, and others. Every time we made a change, we had to note all relevant statistics at the time, and then compare them to the new metrics after a month.
The result was an environment of constant reevaluation. After all, one poor decision could cost us hundreds in monthly revenue. When you’re battling with increased costs, including greatly increased web hosting costs, those hundreds of dollars make a huge difference. We only stayed a float for a time there because of our commitment to reevaluation.
Run extensive tests
This goes hand-in-hand with constant reevaluation, but also deserves a mention on its own. The idea of capturing vital statistics, changing something, and then reevaluating doesn’t apply just to ad spots. It applies to other forms of revenue generation, and even the site as a whole. We wouldn’t have gotten very far if we didn’t run tests.
When we wanted to change our site design to something more modern, we were a bit afraid of the reaction. We’d grown our site extensively with our original design and didn’t want to alienate our readers. To evaluate the viability of our new design, we used a WordPress plugin to run A/B tests. That experiment gave us confidence that our redesign would go over well with most readers.
With revenue this came in handy as well. At one point we wanted to replace some of our display ads with click-through affiliate ads. We hooked up with a prominent supplier of such ads and inserted the code on our site. After seeing a click-through rate of under 0.01 percent (not a typo) in the first month, we ditched the effort. And, of course, we ran experiments with ever new ad network we found, searching for the highest possible payout.
For modern web publishers, creating multiple revenue streams is a must. Only the biggest blogs can afford a dedicated ad sales team, leaving even mid-tier blogs with nothing but ad network slop. For every good one there are a dozen bad ones, so managing those streams takes plenty of time and effort. Through the years our ability to understand the true nature of the publishing business model, keep track of our own income, and run extensive tests and reevaluations allowed us to stay ahead of the curve. They’re lessons all young publishing startups can learn from.
Joe Pawlikowski writes and edits for several blogs, mostly focusing on business and technology. His Yankees blog, River Avenue Blues, has grown to the top of its field since its inception in 2007.