How Bloggers Make Money and How You Are Helping Them

I recently read something disturbing. AnnTaylor, the retailer, was recently fined by the Federal Trade Commission for violation of the FTCs Endorsement Guidelines. AnnTaylor had flown a group of 31 bloggers to an event where it previewed its 2010 summer collection. The bloggers were given a $500 AnnTaylor gift card in exchange for writing blog posts about the event within 24 hours. Some bloggers did not disclose that they received the gift card from AnnTaylor within their blog post about the event and, as a result, AnnTaylor was fined. (Feed Front Magazine, October 2010 page 21 in this online version)

Fact 1: Whether you know it or not, I am required by law, by FTC Endorsement Guidelines, to make it publicly known when I have a material connection to something I am endorsing on this site.

Fact 2: Whether you know it or not, I make a living through Pocket Your Dollars. This started out as a personal blog that I created to help some friends and family. Over time it grew in popularity and I learned some things about internet marketing so that it actually supports my family of four now.

Fact 3: If you want to see me riled up, then get me started talking about the need for more transparent disclosure of who is funding and paying for what across the blogosphere.

I have never hidden and will never hide the fact that I am compensated in various ways through this website (read about What’s In It For Me? and the Disclosure Statement for previous conversations about this). I mention it as part of my family’s story almost every time I do public speaking and we have talked about it online in times past as well. I am deeply committed to being fully transparent with you so that you trust my motives, my means and the end result your family enjoys.

The Double Bottom Line

I write Pocket Your Dollars with a commitment to a mission, which is to help you keep your money where it belongs. At the same time I have learned to run it as a business so that I can dedicate myself full-time to it. It is a win-win situation for everyone, in my opinion.

It reminds me a lot of the mindset I had as COO for a Minneapolis-based non-profit where we considered ourselves to have a double bottom line. We existed to meet a mission, much like Pocket Your Dollars exists to meet a mission. If that mission were evaluated for its return on investment we would be talking about a social return – how many people are being impacted, how much change are they experiencing, etc. At the same time, there is a financial bottom line or financial return on investment that needs to be simultaneously considered.

Often new employees of the non-profit where I worked were uncomfortable with how open we were organizationally to talk about how we earned income, beyond grants and freebie money, and as we would brainstorm about new and different ways we could sustain ourselves. Their thinking sounded a lot like, “but we are a non-profit and we exist to do good. We shouldn’t ask anyone, anywhere to pay for our services because we are a NON profit. We don’t work for a profit.” The leadership team would frequently explain that the NON profit part of non-profit referred to the fact that the Board of Directors of a non-profit cannot be paid (or profit) for their service on the Board, but without a measure of profit we would sink. Then we would ask, “how much good can we do in the world if we go under because we run out of money?”

That to say, there is an inherent tension and seeming oxymoron to the idea that community service and generating an income would operate in the same place at the same time. I do believe they can and do, as proven by the long-standing non-profit sector in this country, and by for-profit companies that focus on a mission to help others.

Pocket Your Dollars’ Social Bottom Line

Why do I blog? Do I blog to make money or do I blog because I am passionate about helping people pocket their dollars and move toward debt freedom? I blog because I love saving money and love helping people. Absolutely. Unequivocally. Hands down. Look, I blogged before I even knew you could make money online. In March 2009, when I launched this site, my heart’s desire was to help the people around me that were losing their houses and losing their jobs. I did it as a hobby blogging at night after my kids were in bed and early in the morning before I went to work my full-time job at a Minneapolis-based nonprofit.

My motive is to help. Pure and simple. My heart is grateful that my passion for saving money has become my vocation. Let’s put it this way, I’ve been in debt and I’ve been out of debt. Being out of debt is better and I want to help you experience that same freedom.

Like I said, there is a double bottom line with one component being the impact and change families across the country are experiencing as they connect with the content at Pocket Your Dollars. The financial bottom line exists as well and the AnnTaylor story prompted me to want to talk about that in even greater detail than I have before.

Pocket Your Dollars’ Financial Bottom Line

Pocket Your Dollars’ makes money in three ways. First, I am paid for public speaking. In 2010 that will encompass about 15% of Pocket Your Dollars’s gross revenues. About 45% of revenue comes from advertisers. The two largest advertisers on this site are Google, through their Google AdSense platform and Lifetime Moms, the digital arm of Lifetime TV. Each runs ads in a 300 pixel x 250 pixel window to the right of the content and in a few other places throughout the site. The remaining 40% of revenue is generated through affiliate marketing.

Affiliate marketing is an industry in and of itself, that I am just learning about. In essence, I am paid a commission or a referral fee, depending on the situation, when I send traffic to certain third-party sites. If you bear with a mildly techy explanation I’ll tell you exactly how this works. I use a special hyperlink provided to me by third-party websites that tell them that you came to their site from a link found on Pocket Your Dollars.com. They can tell if you complete an action – like buy a product, print a coupon or sign up for a newsletter. Based on my arrangement with the site I may be paid a commission for any variety of actions you take.

Even more interestingly, I may earn a commission if you return to a website at some future point that you initially visited through Pocket Your Dollars.com. Let’s illustrate this point with an example:

Let’s say I share a free MP3 that is available on Amazon.com. You go to Amazon, download the free music and go on your merry way. I make nothing from that free download because Amazon only pays me for sales generated on its site. Then, later that evening, you go online and type www.Amazon.com into your internet browser to buy something from Amazon that is totally unrelated to Pocket Your Dollars. Amazon is smart and knows that the last site that referred you to Amazon.com prior to you typing their name directly into your web browser was this one. As a result, they may pay me a commission even though you typed their url directly into your browser and bought something I have never mentioned here. (Note: the link I included to Amazon.com in this example is an affiliate link to Amazon’s homepage).

The Need for Greater Disclosure of Affiliate Relationships

Remember fact 3 from the start of this article, “If you want to see me riled up, then get me started talking about the need for more transparent disclosure of who is funding and paying for what across the blogosphere.” I get riled up when the topic of bloggers and their disclosure of material connections to the content they are writing about comes up because so few bloggers routinely indicate, at a per blog post level, when they are making money from the actions you take. That. Makes. Me. Mad.

If I dissect why this irritates me so much it is a couple of things:

1) Making money from something that is perceived as a selfless act of community service is a conflict of interest. It isn’t wrong to do, but it isn’t selfless either. Disclosing the instances when a blogger makes money is a way to mitigate against that conflict.

Take financial planners for instance. I work with one that earns commission. When we started working with him I asked him to disclose to me how he makes money. I wanted to understand that so I could know how it might influence the advice he gives me. I want the same from the blogs I read.

2) We aren’t talking chump change. Many “big name” bloggers are making A LOT of money. I won’t say how much, but I’ll tell you that it isn’t a little. It is A LOT, LOT, LOT. I don’t have a problem with people making boatloads of money, but if they are being perceived as struggling middle America families that are clipping coupons to get by and that isn’t the case, then I’m bothered. As for me, I am not yet making millions of dollars online, but I can support my family through this endeavor and am grateful for the opportunity to do so.

3)Â   Disclosure allows for choice. I’ll say it again, I am not opposed to people using affiliate marketing as a legitimate income stream, but I want to know when the actions I take online might generate commission for the person writing. When I started to blog and realized all the ways and times I had read content that I thought was shared just to help me, but came to find out that it had a commission associated with my click or purchase I felt a little duped. I would have liked the freedom to choose.

A mitigating factor against these three things would be greater disclosure from bloggers when they are publishing content that has the potential to generate money for them.

What’s The Answer?

It is all about trust. I want you to trust me and my motive. Super clear, super transparent disclosure in situations where I have something to gain from the content shared here is my effort to protect the trusting relationship we have established. In addition to disclosing affiliate relationships, we have established editorial guidelines that also help ensure the integrity of the content we produce. (I welcome other ideas on how to protect or strengthen the trust we have. Feel free to email them to me)

That is why, since January 2010 we have included a disclosure statement at the bottom of every blog post that could generate commission for Pocket Your Dollars.

But, lately I have wondered if that just isn’t enough.

A New Disclosure Statement

To date the disclosure statement has read “Disclosure: This post contains affiliate links. Read Pocket Your Dollars’ disclosure statement for more information.” This is nice, but it has bugged me for months since who even knows what “affiliate links” means? Therefore, I am changing the disclosure statement moving forward to be so plain and clear that everyone everywhere should understand and no one can ever question how I am connected to the content within this site.

The new disclosure statement will read, “Disclosure: Actions you take from the hyperlinks within this blog post may yield commissions for Pocket Your Dollars.com. See Pocket Your Dollars’ disclosure statement for more details.” How’s that for putting it all out there? (Is it still confusing? Do you have an aternate suggestion?)

Our Editorial Guidelines

Pocket Your Dollars has operated with a guiding principle that a deal isn’t a deal unless it is 75% off for quite some time. I don’t think I have ever publicly named it as an editorial guideline, but I am doing that now. Of course there are exceptions to the 75% off rule, like unheard of sales (maybe 60% off is an amazing price for a particular product) or a round-up of the best prices for hot items, which could save you time, especially related to Christmas shopping.

Setting a standard for the content helps ensure our integrity as we weed through hundreds of deals and offers and land on 6-10 per day to share with you.

We are sent hundreds of buy one, get one free deals and 20% off coupon codes from companies that want us, and you, to pay attention to their offers. They incentivize us to share these deals with you by offering a commission on the sales generated. We won’t do it. We want the precious time you invest reading Pocket Your Dollars.com to be focused on exceptional values versus commonplace offers.

In Summary

Pocket Your Dollars is a for-profit, mission-based organization that exists for the purpose of helping individuals and families pocket more of their dollars. I am amazed at how God has taught me how to turn the content I would have shared anyway into revenue-generating material so that I can focus full-time attention to reaching more families. As of this writing we are connecting with about 20,000 individuals each and every day through social media and that number continues to grow.

The single biggest asset of PocketYourDollars.com is the trusting relationship you and I have. You trust me to be helpful. You trust me to provide sound, honest and wise guidance. By God’s grace I will never violate that trust. I am humbled and honored that you have chosen to come here and that you come back again and again. Thank you. You have made this the most amazing journey in my life so far.

Your Thoughts?

I welcome your thoughts and comments on this topic, but do ask that we communicate respectfully even when we disagree. I reserve the right to delete any disrespectful comments.

**Disclosure: Actions you take from the hyperlinks within this blog post may yield commissions for Pocket Your Dollars.com. See Pocket Your Dollars’ disclosure statement for more details