The Blog With the Strongest Business Model Is…

As I have been hinting at for over a week now, I thought it would be helpful to examine the different ways top bloggers make their money online.

When I began my research for this post, I thought I’d see them monetizing their sites with Adsense and a few affiliates, with some other categories thrown in.

Boy, was I wrong!

There really are a tremendous number of ways to make money online, and our top bloggers are living proof of that fact.

Even better, depending on your own background and interests, I’m guessing there are unique ways you alone can manage to monetize an online business by satisfying a niche need yourself.

Now in order to make the analyses and comparisons of the top bloggers apples-to-apples, I categorized the ways they make money online.

Here they are in descending order of strength (strongest to weakest):

1. Product or Service Sales – When a blogger sells their own products or services to readers or clients.

This is the strongest category because it demonstrates that the blogger has built a level of trust high enough (or a brand strong enough or audience engaged enough) that folks are willing to take out their credit card to pay for work they’ve done or information they’ve compiled.

2. Affiliate Commissions – When a blogger places affiliate ads or links on their site, encouraging readers to buy products they recommend.

This is the next strongest because it proves that readers trust your authority and opinion.

3. Other Advertising – When a blogger receives money from other businesses or bloggers in exchange for placement on their site.

This comes in at number three because it shows some strength (advertisers target sites with high predictable traffic with eager potential customers).

But this is also somewhat weak because it puts the blogger at the mercy of these companies’ ad spend, which itself is at the mercy of uncontrollable macroeconomic factors.

4. iPhone/Android Apps – When a blogger creates either a) apps that iPhone or Android users pay to use or b) free apps that they download which have ads running in the background.

Although this is a growing industry, if the app is paid for, it’s a one-time profit that’s usually tiny (after Apple takes its cut). Or if it’s a free app, it has to be addictive enough that a user will keep coming back to in order for the ads to monetize well.

5. Adsense – Lastly, we come to the Google Adsense program which probably needs no introduction if you’re reading this.

It’s the weakest category in my opinion because similar to the critique of “Other Advertising” above, you’re at the mercy of advertising spend.

What’s more, unless you’re really skilled at ad placement (and most niche publishers I’ve seen are not), the ads come across as spammy, meaning it’s unlikely readers will click the link. And if they don’t click, you don’t make money.

Even worse, it seems that with the latest rounds of Panda updates to Google’s algorithms, your site may now get penalized for overusing Adsense. So if this is your primary source of monetization, you’d be smart to diversify into other categories of revenue.

Lastly, most sites monetized with Adsense are developed using quick backlinking strategies that future changes to Google’s algorithms could render useless.

Combine all this volatility into one package, and you can see why Adsense — though potentially lucrative — ranks in last place.

Now let’s look at how the bloggers fare.

But instead of simply explaining what each top blogger does — and because I like the element of competition Monthly Income Report is trying to instill (and our bloggers appreciate it as well) — I ranked each of the bloggers according to the strength of their business model.

I think you’ll be surprised by the results.

But before I share them, you’re right to wonder…

How did I grade them?

I combined the percent of each blogger’s income coming from each category with the relative strength of that income segment to give each blogger a score. Then, I ranked them highest to lowest.

This allowed me to make all things equal (so that one blogger doesn’t get a boost simply because they have a higher dollar amount of income), to adequately and objectively grade their business model.

I’m sure this list may spark some controversy (and I had some reservations about publishing it). In fact, I thought maybe I should adjust my rankings based on how much I liked certain bloggers.

Ultimately, I decided it’d be better to simply publish the rankings as they are and see the discussion that arises.

Let me be clear: I’m not saying that someone in spot #10 isn’t any less an authority or isn’t doing a good job making money online (because that couldn’t be further from the truth).

I’m simply objectively looking at each business model as a whole, and comparing it to the other top bloggers.

What am I hoping to achieve?

Well, for one, I hope that some of the top bloggers find my analysis useful and give some thought to diversifying and strengthening their business even further (while sharing these developments with us.)

Secondly, I hope this analysis will give you some new ideas to use as you monetize your site.

After all, while money may not be the main motivation for your online presence (though there’s no shame if it is), making money from your site is important and can offset the costs you may be putting into your business.

Thirdly, I hope that it gets you thinking objectively about the strength of your online business model.

Do you have a weak business that’s one Panda update away from a 50% haircut in income? Maybe it’s time to start looking into other revenue streams…

You may not act immediately, but it should get you thinking like a CEO.

After all, Pat Flynn got to where he is today when he began to run his websites like they are businesses. Even though this seems obvious to us today, it wasn’t always that way for Pat.

By embracing the fact that you’re trying to make money from your online enterprise, you’ll start to think like a businessman or businesswoman and start to achieve amazing results.

Now for the rankings

I’m going to switch things up from how I normally report, and work backwards in David Letterman style.

One final disclaimer that just occurred to me is that this is strictly a qualitative analysis of the strength of these bloggers business models.

In the future, I’d like to publish a similar post from a quantitative perspective, looking at who’s generating higher profit margins (which, at the end of the day, can be more important that gross revenue — another topic I’ll add clarity to.)

Let’s get started.

#10 Spencer Haws of Niche Pursuits

Based on the strengths of different steams of revenue I outlined above, it probably comes as no surprise that Spencer is bringing up the rear. After all, 98% of his reported online earnings are from Adsense.

Don’t be mistaken — Spencer is a master at quickly building niche sites and monetizing them with Adsense (and has earned the number 2 spot on the Blogger Leaderboard because of this success).

Even so, he’s made it clear that he experiences volatility both in his sites’ rankings and the income earned.

Spencer does a good job diversifying away some of the volatility by continuing to build sites at a mind-boggling pace (31 new sites in September alone).

And of course, Spencer is no dummy when it comes to his business and has diversified even further with the launch of his keyword research tool, Long Tail Pro.

Unfortunately, at the time of this analysis, Spencer isn’t publicizing the amount of money he’s making from this product, so I can’t adjust his income portfolio because of it.

My guess is he’s making quite a bit of money, so I’m going to hedge his by saying Spencer probably deserves a ranking a bit higher than he’s got.

#9 Alex & Becker of The Link Back

Similar to Spencer, Alex & Becker have a business model built largely around a handful of niche sites monetized with Adsense.

They’ve got some other streams of revenue, with affiliate commissions and other advertising. Plus, they have a mobile app business in the works, so there is definitely some diversity starting to surface.

But, like with Spencer, there is a great deal of volatility in their earnings because of the nature of Adsense. Rankings go up and down, payments per click fluctuate, meaning business is unpredictable. Some stability with different sources of income would definitely be beneficial.

#8 Kirsty of Nerdy Nomad

Kirsty is undeniably living so many of our dreams — living abroad while building an online enterprise that’s funding her adventures.

And although she’s in spot #8, it’s not because of Adsense exposure like the last two bloggers.

She’s in spot #8 because her business is based 85% around the Other Advertising segment. And as I said above, this sort of business model puts you at the mercy of those who pay to advertise on your site.

And this has actually played out for Kirsty over the years…

Looking through some of her income reports from 2008 and 2009 (when companies were cutting back on advertising budgets to ensure liquidity in the face of a global financial meltdown), many efforts to boost her earnings were futile.

True, there really weren’t too many businesses immune to negative growth during that time. But it still illustrates my point that some tweaks could strengthen her business.

#7 Mike of The Financial Blogger

Mike, The Financial Blogger, runs a gamut of financial niche websites that target smaller niches (dividend-paying stocks, retirement for 20-somethings, etc.), in addition to a few sports sites.

Most of his money is made through selling ad space to partners. Because he operates in the financial space (and his day job is in the financial sector, meaning he’s versed in the lingo and knowledge), ads can be especially lucrative. That’s because the partners can easily make a good deal of money from these leads once they attract them as customers.

He also uses Adsense and some affiliates to monetize his sites. But for the most part, he’s in the same boat as the last three and could easily find ways to sell products of his own to readers seeking his advice.

#6 David of Travel Blog Success

Similar to Mike and Kirsty, David from Travel Blog Success makes three-quarters of his online income selling ad space on his sites, while taken a small amount of affiliate commissions.

More recently, Dave has begun selling slots in an online course that allows students to access his brain (and experience) as they build out a business model similar to his.

Although income from this segment is still fairly small, I think there’s a lot of room for growth here. After all, Dave is living the dream — traveling while making money online. I suspect there are thousands, if not millions, of people who have the same dream. As long as he can drive them to his course’s site, and convince them that the money will be well spent, he’ll have an even stronger business with more sustainability, along with even higher income.

#5 Pat of Smart Passive Income

This will probably be one of the most surprising and controversial rankings, so I’ll spend the most time explaining this.

Obviously Pat makes a huge amount of money online. He’s made over $375,000 in revenue in the past twelve months alone! That’s simply amazing.

Without question, he’s a master of his domain. He’s also the one blogger whose success inspires me the most and whose posts I find most useful.

Nevertheless, that doesn’t mean his business model couldn’t be even stronger.

First, some history…

Pat started making money online with his niche product site GreenExamAcademy.com. He had posted notes as he prepared to take the LEED exam (an architecture test to get certified in designing “green” buildings). After receiving feedback from readers, he realized he could make money from this information, so he turned it into a study guide he could sell online.

Now, Pat makes the bulk of his money via affiliate links on Smart Passive Income, recommending blogging products he’s used and enjoys. But he also dabbles in niche sites and iPhone apps.

Pat’s primary niche site is SecurityGuardTrainingHQ.com. It is, without a doubt, a master class of a website as far as niche sites monetized with Adsense goes. The site looks and feels like an authority, and the ads are tastefully displayed in a way that is effective without coming across as spammy.

I think this is why the site has been so successful for him (it’s currently bringing in nearly $2,000 a month). If you run niche sites or are contemplating getting into that sphere, you should spend several hours — days even — examining Pat’s niche site and model yours after his.

Pat is also a partner of LOLerapps, a venture where he and his colleague outsource the production of iPhone apps, then both sell and make advertising income from.

So with all these diverse sorts of income, you’re probably wondering…

How could Pat’s income stream be stronger?

It’s simple — with his huge audience (SPI has over 32,000 RSS readers, and more than 51,000 Twitter followers), Pat could sell to his customer base an informational product or service.

I’m certain Pat has thought of this, and is probably already in the midst of building out a product like this. (If he’s not, I’d love to sit down with him for an hour and chat about some ideas I have for him. So Pat, if you’re reading this, send me an email at [email protected] ASAP!)

If he prices a product like this right, it’ll catapult Pat into millionaire territory.

How so?

Given Pat’s history of providing strong, valuable content at his site, and the fact that his readers faithfully come back to him for wisdom and guidance, he could easily justify selling a product or service for $999. If only 5% of his audience buys (which is probably a conservative estimate given that level of engagement), that’s $1.6 million just out of the gates.

If he sets up a product that requires an annual subscription, this could transform his passive income stream into a multi-million-dollar-a-year business overnight.

So although Pat’s currently ranked at #5 on this list, if he plays his cards right, he’ll blow the rest of the top bloggers out of the water and unquestionably merit the #1 spot.

#4 Anton of Grand Online Profits

Anton and Pat were basically neck-and-neck in the rankings, so their spots could easily be reversed.

Anton, like most of these bloggers, builds niche sites. But unlike a lot of the other niche site builders, he monetizes them primarily through affiliate commissions, with a small amount coming via Adsense.

I’m a bit uncertain whether his classification might actually be what I’m categorizing as “Other Advertising.” If it is, his ranking here would certainly drop.

But from what I can gather, he’s making money through services like ClickBank, so it might actually be real affiliate commissions after all.

#3 Crystal of How I Make Money Blogging

Crystal (who I was unfamiliar with until recently) has a unique online business model that boosts her toward the top of this list.

She started off with a handful of sites that she was monetizing with external advertising. Eventually, she realized that her skill at finding ad partners and placing them on blogs might be a service other bloggers would be willing to pay for.

So she began offering a service whereby she manages the ad space on bloggers’ sites. It’s been quite lucrative — she made over $11,000 in October from this business segment alone. It’s especially impressive when coupled with her admission that, prior to making money online, she was bringing home just $35,000 a year.

As with all businesses that have high margins and low barriers to entry, it was inevitable that she’d face tough competition — and she’s admitted on her site that it already seems to be the case.

But so long as she is able to continue growing her client base, investing in and building out her empire (possibly with the help of virtual assistants) into a larger entity (I’m sure there are potential clients she still hasn’t even had the time to target yet), this definitely seems like it has solid long-term business potential.

#2 Trent of Online Income Lab

Trent from the Online Income Lab runs a remarkably diverse online business, which is how he got into spot #2.

The bulk of Trent’s money now comes from sales to his online course, Niche Site Mastery, where he guides subscribers through the ins and outs of building and monetizing niche sites.

He has also sold off some properties on Flippa, making a pretty penny from it.

And, of course, because the backbone of his business experience online is with setting up and operating niche sites, he also makes a decent amount of money monetizing sites with Adsense and affiliate commissions.

#1 Justin & Joe of Adsense Flippers

And lastly, clocking in at #1 are Justin and Joe, the Adsense Flippers. These guys make the bulk of their money building, monetizing, and then finally selling niche sites.

So how did two guys with Adsense in their blog’s name get to the top? What makes theirs such a great business?

First, they’ve clearly mastered the art of keyword research, SEO best practices, and quickly building sites. But they take this a step further…

Rather than remaining a slave to Google’s recurring algorithm changes, corporate ad spend budgets, and a variety of other factors, they sell off these properties for a couple of month’s revenue (sometimes even more).

This eliminates the risk from their partnership, and gives them regular sources of capital they can use to continue reinvesting in their business, building even more sites and repeating the process.

This can be a strong business model for you as well, once you’re able to leverage your expertise and can cheaply contract out the work to VAs. It’s especially true because while they’re building out these sites, they monetize them with Adsense (I also suspect they probably have a few core sites they hold on to), which makes up the remainder of their online income.

So there you have it!

Congrats to all these bloggers on what you’re currently achieve. And I hope that my insight can help your future become even more lucrative.

If you’re not on my Blogger Leaderboard, are reading this, and would like an objective analysis of your own business model, I encourage you to comment below and I’d be happy to help.

If you are one of the top bloggers above and would like to discuss my analysis further, or even get some ideas I have about how to better develop your business and grow your revenue, I invite you to email me at [email protected]. I’ve got even more ideas to make your blogs even more successful that weren’t posted above. So if you’re curious, write me and we can talk!

Again, I want to emphasize that this was merely a qualitative analysis. I’m hoping to do a quantitative analysis of profitability at some point in the near future too.

But you’ll be happy to know that this is not all that I have in the hopper!

Soon I plan to dive into the tools bloggers use, examine some of the most effective SEO tactics (along with what could get you blacklisted by Google), and also share with you other bloggers who — even though they don’t reveal their online income — are top-notch sources of advice that I enjoy reading.

There’s a TON of content on the way you simply can’t afford to miss.

To be among the first to read about each topic as they are published, simply drop your email address in the box below. And I’ll return the favor by sending you a message as soon as a new post is up.