26 Sep How to make a 237% ROI on one Authority Site
Case Study: How we made a 237% ROI on one Authority Site
(via Spartan Traveler)
Why building an authority site is one of the best investments I’ve made.
How does one go about making money online? Or alternatively, what are the best investments one can make in online businesses?
I was recently surprised by my own answers to these questions. As one of the most basic ways to make money online, it didn’t occur to me until I saw the numbers that I was getting a 237% return on money invested (ROI) in building an authority site.
In other words, for ever $1 we spent on content in 2015 we made $3.37 back.You can get an idea of what this growth looks like from our internal dashboard above.
The rest of this post is about how this is possible, and how you can learn how to do the same.
One of the most common questions I get is: ‘how do you make money online’ and ‘how can I do that too?’
I’ve been purposefully vague on this site about the specifics, not necessarily to hide what I’m doing but more because it’s been a fluid progression from thing to thing and for a long-time was hard to pin down into one classification.
So here’s a partial answer: it all started with writing content and building websites.
When total beginners ask me “how can I get started working online” I usually answer:
- Get an account on Upwork.
- Start writing.
I’ll never forget the look on my girlfriend’s face when, in the midst of looking for a job locally (in Hungary), I told her to think about expanding her job search globally. Why would you restrict yourself to some pretty horrible options in your local area when you could land a job as a copywriter or virtual assistant for some busy executive in the USA? Fast forward a few months and she was cranking out content and receiving payments at a pace to exceed a salaried job here.
Content is still king on the internet, and many great business have been built on a solid content strategy.
Step 1 is learning how to write content. Step 2 is learning how to turn that content into an asset you own.
What Exactly is an Authority Website?
An authority website is just a high-quality, well-respected site on a topic, one that doesn’t cut corners and provides some real value.
And there’s a really important distinction here: there are two paths if you go down the road of building websites, which both have to do with Google (the primary, lowest maintenance, highest converting, long-term traffic source):
- White hat, meaning avoiding breaking Google’s terms of service, and
- Grey/Black Hat which means trying to game the system.
And in case you aren’t in the loop yet, here is the simple rule: any time you game a system you will eventually get caught.
I know a number of people who have lost large 6 figures in a single Google algorithm update. I’ve also personally been smacked in my early days for cheating, and I’ve watched a couple of my websites completely crash and burn.
With that in mind, I have no interest in doing any work that doesn’t build a long-term asset that will either make me money for a long time to come or can be sold later on. It’s ditch-digging where I know the ditch is going to be around for the foreseeable future. And it means we’re only talking about building high-quality, completely white-hat websites. It’s potentially slower and more difficult, but not necessarily when you factor in the cost of doing it wrong.
And the the hilarious punchline to many SEO discussions ends up being: “Well, you could always just try to create something of actual value…”. Make something great and people will link to it, and in the long run this is a lot easier than trying to game things (this applies to a lot more than online business).
Authority Sites vs Niche Sites vs Amazon Affiliate Sites
Many of you may be familiar with niche websites or Amazon Affiliate sites, which are often hyperfocused sites intended to dominate a specific keyword or product category. No doubt people are making big money off these and have for a long time. As I’ve mentioned before this is one of the first things I played around with online via Pat Flynn’s original niche site challenge.
The advantages of going niche can be increasing the chances of winning ranking on the keywords you’re after and the likelihood that site visitors will be willing to buy something, simply because it’s so focused on the topic.
The disadvantage of going too niche though the difficulty in getting white-hat links (especially if your site is pretty hollow on the content front) and pigeonholing yourself into a place where you have limited products or content options.
So here’s my litmus test for an authority site: can I get onto the front page of Reddit or get written about by a major newspaper with this site? There are many layers in between but that’s where I want to go.
Here are some details on what this kind of site can look like.
The Case Study: 237% Return With a Content Site
I was blown away when I finally did my 2015 taxes to see that every $1 we spent on content in 2015 we made a little over $3.37 back.
Here is what the actual numbers look like in 2015:
Writer Cost: $5,255.09
That’s technically a 237% return, which is quite frankly insane.
While I’ve commonly seen a 100% growth on overall business year to year the margins are much smaller, and it’s not quite as discreet, simple, and tangible as a standalone website like this.
Ok, fantastic numbers, but as usual this isn’t the whole story. I haven’t counted my time invested on the site, nor have I included staff and operating expenses like technology (e.g. hosting) either.
I actually spent very little time working directly on this project since it was managed by one of our full-time staff. Her time was split on this and other projects, so to fudge my personal investment in managing her we’ll just say she spent 100% of her time there.
Here’s what the complete numbers look like:
Writer Cost: $5,255.09
Staff Cost (site manager): $6,769.38
Other Costs (e.g. hosting): $720.00
Total Costs: $12,744.47
Even with all the costs added back in it still beats the hell out of any other investment I’ve made.
For reference, the S&P 500 returned an estimated 1.19% in 2015.
The beauty of running an authority site like this–as opposed to a typical staff-heavy business that forever requires a workforce to run-is how easily we can reduce costs and still make money. Once the posts and rankings are in place we could cut writer and staff costs by 80% or more and still earn a similar amount.
The original niche site I built back in 2012 still makes $500+ a month and I haven’t looked at it in years.
How we built our Authority Site
Since we hadn’t really written much content as of early 2015 (the site was started in very late 2014 with just a few posts to get it going) it’s easy to attribute the growth and revenue to the added content.
Over the course of 2015 we wrote about 127 posts. This means our average cost / post was about $41.38.
Here’s what the organic traffic looked like in 2015:
This isn’t mind-blowing traffic, but the key is building traffic that has some potential to convert later. More on that in a second. Also note it looks like it stalls out at the end but that’s just because Thanksgiving-December sucks in our market.
So how much link-building did we do: Exactly zero, from my memory.
All of our focus was writing the most detailed, highest quality content we could afford, and making sure we had a good monetization strategy in place.
It also involved some basic keyword research and a rough content plan, but this was honestly pretty loose.
How did we make so much on so little traffic?
Ok, so here is the catch that I can’t easily gloss-over. The site was monetized very effectively, primarily by lead-generation, which is both a business I run (with a partner) and was in place ahead of time.
I need to underscore the point here: we had a damn good way to monetize this site before we ever thought about building it. In other words, we were thinking about and working on the end game before we implemented a thing.
Here are some numbers on what the monetization looks like:
- Pageviews (2015): 110,678
- Revenue (2015): $17,172.34
- Estimated RPM: $155
That means we made $155 for every 1000 page loads on the site. Back when I ran a blog network we were lucky to hit $10 for the same amount.
We also ran one 300×250 Adsense ad unit on the page (which is factored in here), and played around with some lead magnets to collect email addresses.
So is this is a non-typical case? In the sense that it will be hard to monetize a website this effectively from the beginning? Absolutely. But can you build out a monetization strategy like this later on? Yes, I’ve seen others do it with spectacular results.
And obviously this underscores the point that if you already have the product to sell, a content strategy makes a lot of business sense.
The key though is planning, thinking, and understanding how you’ll go about selling things on the site later on. The industry term for this is basically ‘keyword research’, which means finding out just how much the words people type into Google are worth, and how likely you are to rank well for them.
But I know websites that did not have the endgame in place before getting started, and now make 10s or even 100s of thousands of dollars a year. Because they chose the right category and kept plugging away.
My first website came at is from this direction too: building first and monetizing later. After building my first niche website back in 2012 and seeing $3-$5 clicks on Adsense on the site my thinking went along the lines of ‘there must be a lot more money here than I’m getting’, and a lead-generation business was born.
How things are progressing in 2016
We’re having similar results in 2016 so far, with about 151% return for money invested in content on the site.
If you add up all costs we’re running at about 17.2% overall return.
Here are the numbers through August 2016:
Writer Cost: $7,895.77
Staff Cost: $7,827.31
Other Costs: $1,181.00
Total Costs: $16,904.08
Return %: 17.2%
On initial glance it seems like we’re doing a little worse this year, but looking more closely:
- We’re on pace to do over $30,000+ in revenue on the site this year, which is a solid bump from $17,742 last year. Our monthly goal by the end of the year is actually to hit about $9,000 a month.
- We’ve invested much more heavily in content, and our writer costs have increased (we’re always trying to increase quality).
- We’ve paid for some fancier tools and training, which you can find at the bottom of this post.
- We’ve invested more staff time in building out the site, which adds overhead.
Some Downsides to Authority Site Building
If you’re thinking ‘wait, this doesn’t look like that great of an investment’, I understand.
First of all, this is pretty gnarly, grinding work. What I mean by that is there is no instant gratification here of the kind you might get with doing PPC (like ‘well, I made $500 on my first day!’). I’d liken it more to going to the gym: set a time horizon of at least 6 months before you expect real results. Anything before that is a bonus.
In reality, it took us about a year of work to get things moving on the website in this case study. Think about that for a minute if you’re just starting out: you need to be able to cover a year’s worth of content, hosting, and all other expenses associated with the site before you make any real money. Obviously, results vary, but since most people (myself included) f#ck up their first site or two it make sense to be really conservative when planning.
A lot of people also can’t live in $3000-$5000 a year either (unless you’re a westerner really scraping by in Chiang Mai or Bali). One thing to keep in mind about the numbers above though is we were paying a full-time employee to work on the site, so if you were bootstrapping you could cut a lot of those costs out.
But this major lag-time in revenue earning is part of the reason I got out of the site building business a while back and got into something that scaled a bit faster (lead-generation). It’s interesting to see how, once day-to-day cashflow needs were covered, I’ve circled back to websites as an obvious long-term investment and asset building activity.
In terms of grinding it out, if you proceed down this path you’ll probably do most of the work in the beginning. This is one reason Spartan Traveler has not grown sequentially, since I write 100% of the posts (not advisable) they come out in fits and starts between projects.
But as a business, building an authority website is very simple without too many moving parts. And I like that.
Alright, so if you’ve read this far you’re probably in one of a few buckets:
- You already build sites like this and this is the equivalent of stats pr0n / procrastination.
- You’re new, and want to figure out how to get started.
- You’re sitting in an office somewhere trying to figure out how to get out of it.
I think the following resources will be useful no matter what stage you’re in:
Resources for Building Authority Sites
You don’t need that much gear to build authority sites, so choose wisely and upgrade only as needed.
- Authority Hacker Training – (Free and Paid) – This is the most thorough, well-organized, and high-quality training I’ve seen for building websites. I originally bought this for my staff member who is in charge of building the site and it’s been instrumental in taking her from a basic to advanced level of capability.
- Hosting by Digital Ocean – A little bit more technical than the entry level stuff but fast as hell and super scalable. You’ll regret other crappy shared hosting providers later.
- WordPress Theme by Thrive Themes – I use Thrive for everything now, including recently moving SpartanTraveler to it. More on that later.
- Thrive Content Builder (for Landing Pages) – Tools of choice for building custom pages in WordPress.
- Thrive Leads (for email capture) – This is a plugin by the same people that built Thrive Themes and you can see some of the results on this site (e.g. any optin box here). I’ll publish results here but needless to say it massively increases the number of emails you’ll get from a website.
- Active Campaign – This is what all online marketers I know personally use. It’s really powerful and really cheap to start (as low as $9).
- Ahrefs – For more advanced content and keyword research and tracking, this is hard to beat.
- And a few other sites you may want to check out: