Blog Monetisation

Admin: I've been quite sick this week and unfortunately, this post is later than I would've liked and could use some more editing. I may come back to rework it later. Hope you enjoy it nonetheless!

One of the most common questions I receive is bloggers asking about how they can make some money out of their blog. It’s a question that every FP reviewer has probably considered at some time or other, whether they have thought about getting some product samples to review or a full-on sponsorship. So today, I thought we could explore blog monetisation. 

The first question to consider is whether a blog is actually worth of compensation. There is an attitude that I’ve seen expressed — most recently here — that bloggers put time and energy into their sites and deserve some kind of return. In a sense, this is true: we blog because it gives us an outlet for our thoughts, a chance to meet other enthusiasts and participate in the community. That’s the return we get for investing our time into a site. 

But if we think about return in a financial sense, the attitude is dead wrong: readers will read your reviews if the content is interesting, relevant, and unique. Retailers will advertise on your site if it increases their sales. The amount of time the author puts into the site isn’t really a factor here. Some authors will successfully attract an audience and advertisers without putting much effort into their site; others will labour for hours over each post and not attract any sponsorships at all.

Personally, I don’t think any hobbyist should start a blog with the expectation of receiving sponsorship. It should be a labour of love and an expression of community. If it happens to attract an audience and advertising, well that’s just icing on the cake. The rest of this post is going to unpack sponsorship — how it works and how bloggers can position themselves to appeal more to sponsors — before considering a couple of alternative paths to monetisation. 

Before we get into this, I think it will be useful to distinguish between sponsorship and what I’ll call support. While sponsors provide a cash benefit to bloggers, supporters either give or loan product for review. Quite a lot of the blogs I read mention that the product was provided for review, but sponsorships are relatively rare. I can only think of a few blogs (The Pen Addict, Gourmet Pens, Pens! Paper! Pencils!, and the Well-Appointed Desk) and a couple of Youtube channels (The Pen Habit and SBRE Brown) that receive paid sponsorships. The most prolific sponsors appear to be JetPens and Pen Chalet, but Dutch retailers (including Appelboom, Fontoplumo, and La Couronne du Comte) also seem to be increasingly sponsoring blogs. Interestingly, I’ve only seen retailers sponsoring blogs — no brands or distributors.

For a blogger who wants to get some support or a sponsorship, the main question they need to consider is what they can offer to retailers. Any sort of support is costly to a retailer, even if it’s just a product that they are loaning out for review. There is, at the very least, the cost of return shipping, some allowance for the chance it might be damaged or lost, and the time involved in making these arrangements. I would say that loaning an advanced-level pen (US$100-200) for review would probably cost a retailer at least $50. That cost needs to be recouped through additional sales margins (not just extra sales) that the retailer would not have otherwise enjoyed. And those sales need to go through the supporting retailer; it’s pointless for a US retailer to provide a review unit if all the sales end up being made through Engeika.

In other words, of the entire audience who reads a review, some number of readers need to visit the retailer’s website, and some number of those need to end up purchasing products. The margin on those products — that is, the price the buyer pays minus the cost of the product and the retailer’s overhead — needs to be enough to cover the cost of providing a review unit. If those benefits aren’t greater than the retailer’s costs, there’s no reason for them to provide product or sponsorship. 

An example might help, and we’ll keep the numbers simple: if your post gets 10,000 readers, maybe 1% of those click through to the retailer’s website, and 1% of those end up making a purchase. That is one reader who is buying. The margin from their purchase is the absolute maximum that a retailer would be willing to pay to attract that buyer.

For a blogger seeking support, there’s a few ways to become more appealing to retailers but it all comes down to those variables: the audience size, the clickthrough rate, the purchase rate, and the value of the purchases/margin. Increasing a single variable might not necessarily increase the extra margin the retailer captures. For instance, a larger audience doesn’t necessarily translate into more sales: if your blog combines FPs and music, the music-oriented part of the audience will be totally worthless to any FP retailer. The variables are also interconnected for a single review (where a discount code might increase the purchase rate but it also reduces margins) and across reviews (where over-egging a retailer’s deals might increase the clickthrough rate in one post but permanently reduce it for future posts).

It’s also not necessary to maximise every variable: a small audience with a large clickthrough or purchase rate might be just as valuable as an enormous audience with a low purchase rate. A small audience and small purchase rate might still be lucrative for the blogger if the margins are quite large. I expect that a retailer would be somewhat indifferent to these variables; they would focus principally (perhaps exclusively) on the cost of advertising and the benefits of it.

Of course, a retailer can be indifferent but for a blogger, those variables are what determine their appeal to advertisers. Serious thought needs to be put into thinking about how the blog can be used to change those variables and this leads to my main suggestion for bloggers seeking income: specialise. There are an awful lot of blogs out there — I have 83 in my RSS feed at the moment, and know there are many more out there — but most of them are basically doing the same thing. Most are quite broad — reviewing a little bit of everything — but a specialist blog attracts a specialist audience, and that is going to have a lot of appeal for advertisers who share that speciality. 

Two types of specialisation strike me as being particularly valuable: brand and geography. Joshua Danley’s blog, The Pelikan’s Perch, is a great example of the first kind. The content for the blog is exclusively Pelikan: product reviews, product announcements, guides, tips, and community-building content. The audience for a blog like this would be overwhelmingly Pelikan aficionados. While this might attract a smaller audience size, I would imagine that the clickthrough rate is much higher than a general review blog and a specialty Pelikan retailer (such as Pelikan Pens UK) would find it far more valuable to sponsor Joshua than a general blog. There are some brands (eg Sailor, TWSBI, Visconti) that are just crying out for a specialist blog.  

Maybelline Tan’s blog, On Fountain Pens, is a good example of a blog that has something of a geographic specialisation. While she currently seems to aim the blog at attracting a global audience and a flavour of local (Singaporean) content, I imagine that this blog has a strong following in Singapore. If she focussed more on delivering content that appealed to that audience, the blog would be far more appealing to local retailers hoping to attract local buyers. The audience size for this would be small, but I imagine the clickthrough and purchase rate would be a lot higher than a generalist review blog. 

Other types of specialisation are possible, but it’s not obvious to me whether they would be as valuable. One example is specialising exclusively in ink, which would draw a lot of appeal from readers who have a strong focus in that area and could appeal to companies like Diamine, J. Herbin, or Noodlers. David Brennan’s blog, Too Many Inks, would be a prime candidate for that. I also suspect that specialising in high-margin products (premium pens) would be quite lucrative to any blogger that could do a good job at inducing one or two purchases per review. The old FP Geeks Youtube channel (now Nibsmith) almost seemed to be headed in this direction before the author, Dan Smith, joined Kenro; it was certainly a factor in my deciding to buy a Montblanc Heritage 1912 and Visconti Divina. I’m not sure whether Dan has much planned for the future, but this is a direction I’d consider if I were him. Matt at The Pen Habit could potentially do well by specialising in this way as well. 

So while specialisation could definitely lead to a more lucrative income stream, there are a few things that bloggers need to keep in mind: the trade-offs of accepting blog sponsors, the challenges of capturing the benefits that a blogger generates, and the superstar effect. 

First, advertising involves trade-offs. I think the trade-offs of accepting support (product samples or loans) have relatively minor trade-offs, in that readers only really need to gloss over one or two mentions of the retailer and maybe a disclaimer at the end of the post. Things step up a little with sponsorship, as prominent ad placement necessarily diminishes the user experience and the advertiser gets more mentions in posts. Multiple sponsors increases the clutter and further diminishes the user experience — I think most people would agree that it’s nicer to visit the Pen Addict’s site, with two sidebar ads and the occasional sponsored post, than a site like SBRE Brown, which is seriously cluttered with advertising and features imploring users to subscribe or share posts. It also means bloggers will feel increased pressure to keep up their audience rates, which means more frequent posting and heavier promotion through social media. I also suspect the pressure and stress of managing an income stream ruins some of the fun that can be had from blogging. 

Second, the lack of advertising from major brands and distributors seriously limits the market. If I see a nice Visconti in a review that’s sponsored by Appelboom, I might end up buying the pen — but I’d probably get it from Couronne du Comte, with whom I have a great relationship. There’s no reason for me to buy it from an unknown vendor. Even though the blogger has ‘caused’ a sale, that extra margin is not captured by Appelboom and they will not be willing to pay the reviewer for it. On the other hand, if the reviewer is sponsored by Visconti then it doesn’t matter if the purchase is through Couronne or Appelboom — the brand is capturing the benefits either way, and the reviewer would be compensated for this. 

Personally, I think it makes a lot more sense for brands and distributors to support blog reviews than retailers, but I’m not aware of any who do this. This may be because it’s relatively easy for retailers to track visits from a particular reviewer or to see how many users buy with a review-specific discount code. For brands, sales can go through dozens of retailers and it’s much harder for them to track which sales were generated from a particular blog. It might also be because most brands in the FP market are still adapting (slowly) to the growth of the online community and haven’t recognised the opportunity in supporting blogs yet. My hope is that a certain brand that is reasonably savvy (Pelikan) might recognise a certain blog that could be hugely beneficial to them (The Pelikan’s Perch) and we may see this mindset start to change in the future. 

The third thing to keep in mind is that there’s a possible superstar effect at play in the sponsorship market. This is a term we use in economics for a market where the top performers capture most of the benefits (sponsorship money) and the vast majority receive little or nothing. You see it in markets like acting (where Tom Cruise might make $30m for Mission Impossible 5 but most actors receive little and have to work second jobs) and sports (where LeBron James makes a $24m salary plus sponsorships, but an average sportsperson receives nothing at all). If you look at the sponsored blogs listed above, there are few of them and all have multiple sponsors (Gourmet Pens has the most listed, with eight). 

This suggests that a handful top bloggers in the FP world might — might — be able to make a living from their reviews. At the very least, they can earn quite a comfortable second income from the work. But the 10th most-read blogger might receive nothing. The average blogger definitely gets nothing. This isn’t unusual in a community where there isn’t much specialisation; readers converge on the highest-quality reviews and the advertisers follow suit. I suspect that if we do see more blog specialisation in the future, we will also see the superstar effect start to break down: more advertisers will join the market, and the audience will fragment somewhat. Generalist blogs will continue to be valued by advertisers, but will decline in their relative importance. 

So that covers monetisation from one side of the market, but two bloggers have begun experimenting with monetisation from the other side of the market: readers instead of advertisers. The Pen Habit and On Fountain Pens have both established Patreon accounts, where readers can choose to pay for content. This strikes me as a slightly more sophisticated version of the old ‘Donate via Paypal’ buttons, where the audience is billed per time period or per review. The sums aren’t significant. Currently, Matt receives up to* $68 per review and Maybelline $13 per month.

If I’m honest, I was actually surprised by how much Matt gets per video as there are a couple of big problems with this approach. The first is excludability. What is the incentive for readers (viewers) to make a contribution if they can get the content for free? Some might choose to donate, but it really is a donation — you aren’t getting anything in return. And if you’re donating money, it’s not obvious to me why it should go to a pen reviewer rather than a charity or some other organisation. 

For this approach to work, a blog needs to exclude readers who haven’t paid (free-riders) if they want to generate some revenue. They can either develop content that is exclusive to the patrons or go behind a paywall. Exclusive content is unlikely to have much appeal, as most bloggers are already doing their best and it’s unlikely they have some valuable ideas kept aside. 

Paywalls raise the second problem: saturation. There are dozens and dozens of FP blogs out there, each generating content that is relatively easily substituted. If any of them went behind a paywall, they would almost certainly lose their entire audience immediately. A paywall only works if the content is so unique and interesting that readers are willing to pay for it. And even if you had that, a paywall destroys the size of the audience, the prospect for much future growth, and most of the appeal to advertisers. 

So while I like the idea of reader-funded content, I just don’t think the economics add up. 

The only other option that I see for monetisation is using a blog and social media presence to develop and demonstrate skills that will have some appeal to an FP business, and hope that they hire you to handle this stuff on their behalf. The only example I know of this is when Dan Smith went to work for Kenro Industries, the US distributor for some of the Italian brands**. 

But I nonetheless believe that this will be more common in the future, as FP firms increasingly recognise the importance of the online market and how effective social media management can improve their businesses. Right now, I suspect that most of this is handled internally and there’s an assumption that these skills can be developed in-house. But clearly, there are some people who have a natural affinity for social media — they just know how to make interesting, engaging posts — and firms will eventually start to recognise they have a choice: they can use competent internal staff or they can engage with great communicators from outside the company. 

Once they realise there’s value in this — that they can communicate directly with an audience of potential customers and use that communication to improve their products and increase sales — then I think they will start to look at the bloggers and twitterers who stand out in the community. There will be opportunities for those guys to earn an income from those skills. On the one hand, this seems like something that isn’t likely to happen terribly soon; on the other hand, Goulet Pens’ success derives largely from its blog and Youtube channel. The proof that it can be effective is there for all to see, waiting for other firms to notice and learn. 

This post has turned out rather longer than expected and didn’t cover everything that I wanted it to, but I hope that it has been a useful insight into the economics of blog monetisation. I sincerely believe that the online community will grow in size and importance in the future, and should bring more blogs, more sponsorship, and more opportunities for people who can create unique and interesting content. And I’m very much looking forward to that. 

*This line was edited in line with Matt's comment below, to note he could earn 'up to' $68/review, not a flat rate.

**This line was edited to remove a claim that Dan had since left Kenro. This was not correct and I apologise for the error.