Importance of diversifying the side gig income

My “Retire Early” plan relies heavily on the fact that my side gig will provide our household with a significant income in the years to come (until we reach full FI). As I was bragging just a few days ago, my side gig actually brings in much more than it really needs to, at least for now (my numbers are based on a trailing 12 months sum).

But things can change fast. My side gig (which is a website. Not this one) brings in money through advertising (adsense and the like) as well as affiliates marketing (mostly from Amazon Affiliates).

A few years ago, I was devastated when Google Adsense decided to remove my website from their program, after more than 5 years serving their ads without a problem. At the time, Adsense easily represented 90% of the revenue on my site, so being out was a guarantee the site would die. I remember being panicked and working very hard on that specific week to 1) ensure I would have other ads networks to diversify the income source moving forward and 2) put my site back in compliance with Adsense’s policies (Note: they never tell you exactly what’s wrong, so you have to do a lot of guesses and cleanup. In my case, I removed a lot of controversial content that was user generated).

Ultimately, my site was accepted back with Adsense, but I had learned 2 lessons. 1)It’s foolish to rely only on one ad network as source of income for a website, as you are dependent on their policies, and you could lose all income overnight. 2) There are few high quality ad networks like Adsense available, so even if you ensure you diversify the networks you work with, losing a high quality source of income such as Adsense still sucks.

Since that day, my site has been receiving more diversified income from Google Adsense, Amazon CPM ads, and Ezoic (which I reviewed here), which are 3 high quality ad networks. Additionally, around that time I increased my use of Amazon Affiliates as another source of income.

I had contemplated stopping my contract with Ezoic lately, as for all the benefits they bring, the loss of control on some aspects of my site’s design were annoying to me. I am glad I didn’t do it.

In March this year, Amazon updated their affiliates commission fees. Specifically, they lowered them for many categories of items. Although the actual impact depends on what a given website was promoting from Amazon, in my case I could confirm over the past few months that my revenue from Amazon affiliates has been slashed in half, for the same amount of sales (in other words, my average commission fee has been divided by two). If Amazon Affiliates had been my only source of revenue, it would have been the end for my website.

Thankfully now that I’m reasonably diversified, the overall impact was not dramatic. Still, my side gig’s revenue has significantly declined since that change of fees in the Amazon Associates policy in March 2017. Again, there’s nothing I can do about it: their program, their rules. The best I can do is diversify to minimize the impact of such (unpredictable but bound to happen) changes.

Last week however, I saw that my revenue from their ads program (Amazon CPM Ads) was down to zero every day for almost a week. When I contacted their customer service today, I was told that my website is not approved for Amazon CPM Ads. Which was odd, since I have been part of that program for years. When probing a bit more with the Customer Service representative, it seems my site has been banned from their service as of last week, and I have yet to receive the email giving me the bad news. The Customer Service rep recommended that I wait for the email, understand the reasons (if any), make necessary changes to my website, and appeal if I can.

Once again, this is a blow to my side income: Although ads are still being served by Adsense (meaning my Adsense revenue has gone up roughly at the same time the Amazon CPM Ads revenue has gone down), there’s a loss here as the Amazon CPM ads program is made in a way that they would ensure better money that my average Adsense revenue.

Long story short, it seems like I’ll be losing a bit more revenue this month, and my side gig’s income for this month is now dangerously approaching the lower limit at which point it will not match my goals to sustain our RE target. There’s still some buffer, but not much.

I am glad neither Adsense nor Amazon are the only sources of income for my side gig anymore, as I would be panicking much more than I am right now. I’ll still try to work on understanding what’s going on, but at least there’s no urgency, in particular thanks to the fact that I’m still using another ad network, Ezoic.

This is also why I’m always concerned about financial blogs that rely 90% on one specific affiliate network (cough, bluehost or personal capital) for their revenue. Things could rapidly go sour for these people, if these companies suddenly decided to change their affiliates program structure or fees.

This kind of diversification obviously echoes the need for diversification in one’s portfolio. A few years ago, when Adsense was my only source of income for that website, any issue with the ads would have been a disaster. Today, it just means a small (but significant) decrease in my income, hopefully for a small amount of time until I figure things out.

Of course, in the long run, my goal is that the income from the side gig is not required anymore, and will just be “gravy” we can save or use as we can see fit.

2 Comments
  1. Senior Crown
  2. Mr. Tako

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