I saw an interesting article via Slashdot today on how much bloggers make. Couldn’t resist throwing in my two cents. The numbers below are based on a wide range of websites that I’ve either run myself, or helped in the creation thereof.

To reiterate something that Evan Carmichael frequently talks about, the amount earned from Google Adwords is equal to the number of click-throughs, multiplied by the dollarvalue of a click-through. Sounds obvious enough, but there’s a huge divergence in the quality of ads, and that is somewhat dependant on the blogger themselves, since Google tries to place ads topically. You’ll see what I mean below.

Let’s talk about traffic quickly first. Building traffic to a website takes a lot of hard work and tremendous patience, which is why many website owners simple throw up their hands and accept whatever comes their way (or try to drive revenue by paying for traffic themselves – which is a tricky proposition for a blog). I’ve seen many websites that have built up to the low thousands of unique visitors per day though, through a ton of sweat equity. Anything beyond that may be a black swan event, so let’s set that as the upper bar of what the average individual can achieve through hard labour.

The value of an ad on a website is largely driven by topic and industry. There are people making higher than average rates using other ad placement systems (or by selling ad space themselves), but Google AdSense is the most accessible system to the average blogger, so let’s use some examples from there. The majority of click-throughs that I get on this site (and others I’ve run in the past) varies between $0.10 and $2.00. In one extreme example, I think I once received $5 for a single click-through. I know of specific topics that pay significantly higher (life insurance being one such).

Click-through rates tend to depend a lot on where people place ads on a page. Having high quality ads can help as well, but since Google tries to tie ads into the contents of a page, bloggers have some control over the sorts of things that generally appear. Spending some time experimenting with placement can have a large payoff. Editor’s Note: I’m guilty here; I do have ads, but I really can’t be bothered where they show up, since ad revenue isn’t what I’m after.

Therefore, the expected average earnings for a statistically significant number of hard-working bloggers could be calculated as being in the following range:

Low End: Assume 1000 visitors per day, 3% click-through rate and $0.10 per click = $3/day or $90/month.

High End: Assume 5% click-through rate and $1 per click = $50/day or $1500/month.

Bear in mind that the above figures are for somebody with average knowledge of how search engines work, a good work ethic, a willingness to experiment, and the patience to build things up over time. I don’t know how many people this covers.

Like I said before though, there’s a black swan or power law effect that’s at work here. What will typically happen is that the vast majority of bloggers will earn next to nothing through ad revenue, a small but well defined set will make enough to make it worthwhile to do full time, and a tiny (and exceptionally well-known) group will make a fortune. Similar to other kinds of creative efforts right? Think authors or musicians.

Disclaimers (I think they’re needed here):

a) I use Google AdWords on this site. I’ve made $10 in the past 6 months. I’m too busy with other things to care too much. I’ve run sites that made $50 to $100 per month in the past, with minimal effort on my part.

b) I know of several people who make a decent living blogging (by decent I mean more than I make!). There are some interesting differentiators between them and other bloggers. They all approach it as a business. Most of them seem to have found ways to make other people do the hard work for them. They also all find real-world outlets (i.e. seminars, consulting, selling product) that neatly tie in to their blogs, in such a way as to create a reinforcing upward spiral of activity. Believe it or not, only a few of the ones I know are “famous” or are active mainstream journalists. The people I know aren’t a big enough set to be statistically significant.