April 25, 2019

Ask IH: Monetization Strategy

Eric Abrahamsen @eabraham

I'm building a tool for Travel Bloggers to showcase their trips and help them build another revenue stream using Booking.com affiliate links (See link below for demo). I'm on the fence about using a monetization modal where I take a cut of the affiliate revenue vs charging by usage. My costs scale linearly with usage so both models will work. I feel like the affiliate model is more attractive for conversion due to lower friction but it might scare away higher traffic bloggers. Thoughts?

https://www.personaltravelblogs.com

#monetization

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    Would you say your value proposition is "I help bloggers make more engaging itineraries" or "I help bloggers improve their yield (revenue per thousand impressions)" ?

    I think you have the market defined correctly (large blogs vs. the small blogs). You may want to consider different options based on each segment's preferences and your value prop.

    If it's the quality content angle, you could do 2 versions:

    • A Lite version, no cost to creator but your affiliate account. They get the value prop at no cost and you attach a revenue source.
    • A Paid version, one-time $XX fee for the widget and they can insert their affiliate account. They get the value and they are the revenue source. In this scenario they would host the widget so you don't have the operating cost.

    If it's the yield optimization value prop you're most likely going to take a % of the upside, but brands will want to pay (or at least will evaluate you) based on the incremental performance improvement. So you could calculate their current yield (total revenue / impressions) and then take 30% of whatever increase they get from your tool.

    Example (forgive the made up numbers, I don't know what's typical):

    $10 CPM on a site with 100,000 impressions => $1,000/month
    Add your tool gets them a $12 CPM => $1,200/month
    You take 30% of the increase so (1,200 - 1,000)*.3 => $60

    Hope this helps give you some things to think about. Feel free to reply with any questions. Good luck.

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      Interesting, thank you for taking the time to respond in detail. I have to refine my value proposition.

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    I always wonder this kind of thing - could you not simply use affiliate revenue and cap the max amount? Say up to 200/month or whatever is a reasonable threshold, you'd have the best of both worlds.

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    I would pick the affiliate revenue so I don't have to be worried about sales, but that always depends...

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