You've heard of sites like NerdWallet and The Penny Hoarder, but do you know how much money these sites make from working with financial services brands? Lots.
We're going to take a look at how these sites earn their revenue primarily from affiliate marketing. They primarily work with financial services products and services or ways to make money. This can include brands like Airbnb, Uber, Lemonade Insurance, Aspiration App, Coinbase, and so on. There are hundreds if not thousands of brands across these categories that are hungry to acquire new customers.
Personal finance sites are able to capture the attention of readers and turn this trust into recommendations of new products and services to try out.
Let's jump in and look at how exactly these sites are able to earn millions in affiliate revenue.
What's affiliate marketing and why are financial services affiliate programs so lucrative?
We've discussed what affiliate marketing is many times across The Creator Investor, so we won't go in deep, but it's basically brands working with affiliates (or partners) on a performance basis. Brands are willing to pay an affiliate a commission for a lead or new customer. Since they are paying after someone has signed up, it's a low-risk marketing channel for the brands.
For a creator trying to build and monetize a site, it's a great way to earn revenue by referring users to products or services. You, the site owner, earn a commission when the user takes action, like making a purchase or signing up for a service. For instance, for the brands above, you might get a commission for convincing someone to sign up as an Airbnb host, become a dasher with DoorDash, or create and fund their Coinbase account.
These publishers are doing exactly that.
For instance, The Penny Hoarder has an Uber affiliate link on its site. If a reader clicks on that link and signs up for Uber, The Penny Hoarder earns a commission. You can google "Uber Penny Hoarder" and see tons of articles. If you play around with the links on the article that lead to the Uber driver sign-up page, you'll see the link has some parameters like "source=TPHMedia". These URL parameters added to the link let the Uber performance marketing team know that the leads came from The Penny Hoarder (known as TPH Media) and form the plumbing for how Uber would know to pay The Penny Hoarder.
Here's another example. Coinbase, which is a cryptocurrency exchange where you can buy and sell digital currency like Bitcoin, Ethereum, and Litecoin, used to have a massive affiliate program. Why they shut it down recently and what that might say about the company is a topic for another post.
The Coinbase affiliate program, before it was shut down, used to pay out $10 in Bitcoin for every new customer who signs up and buys or sells $100 worth of cryptocurrency. So, if The Penny Hoarder refers a new customer to Coinbase and that person bought or sold $100 worth of cryptocurrency, The Penny Hoarder earns $10 in commission. (Realistically, Coinbase would not be paying Coinbase in Bitcoin. Likewise, they would be paying TPH a lot more than $10 per lead. Maybe $100.)
These are just a few examples, but there are hundreds of affiliate programs available. And personal finance websites are the leading partners in these programs.
So how much do sites like The Penny Hoarder earn?
The amount of money that these websites earn varies. But, in general, they are earning a lot more than most other types of websites because of their focus on financial services products. Likewise, because they are working on an affiliate basis and they are good are converting users through their recommendations, they are able to earn a lot more than sites that are just making money from display ads primarily.
Major publishers like Forbes and The Huffington Post earn primarily from display revenue. For them, they need to create more and more content and drive visitors to the site to be able to show them ads. Meanwhile, The Penny Hoarder, Making Sense of Cents, Clever Girl Finance, etc., all of these sites can make more money per 1,000 visitors if they successfully get their audience to sign up for a new credit card or a new insurance product.
However, it's not just about affiliates as a revenue channel.
Affiliates for personal finances together is the holy grail. If you, as a creator, can actually build a following that is interested in hearing what you have to say about financial services products, that's when you can strike hot. This is because financial services products have a high value to the brands.
When you sign up for a new credit card, a new internet service, a new insurance plan, etc. you're paying a lot in interest or monthly fees for at least a year, if not years. Who wants to switch their cable or auto insurance once you've already got set up with one?
These companies know that the lifetime value, often abbreviated as LTV in the marketing world, is very high for these products. As a result, they are willing to pay a lot of money to acquire these customers knowing they'll be around a long time. They have large data science teams that can pretty accurately gauge how much a user is worth.
The way that these brands think about it is that they would rather pay out a high affiliate commission to somebody who can drive a new customer that will actually use the product, as opposed to just paying for a bunch of ads and hoping that people click on them. Which one would you rather bet on? Paying for ads or paying for a new customer that actually signs up?
Deep Dive into The Penny Hoarder's Financials
Let's talk a bit more about one of the leaders in the space, The Penny Hoarder. Here are some interesting data points to mull over.
In 2017, The Penny Hoarder reported earning about $20 million in revenue with 95% of it coming from affiliate commissions. A few years later, in 2021, they were acquired by System1 for $100 million dollars. Around the time they got bought, The Penny Hoarder, which was started by Kyle Taylor in his 20s, had tens of millions of monthly visitors and between 50 to 100 employees.
For other media entities to drive $100 million in revenue, they would likely need much larger teams or to produce much more content and have significantly higher monthly visitors. In fact, mainstream publishers are starting to appreciate how affiliate revenue can be meaningful incremental revenue for them and they are building out affiliate teams now. For instance, Buzzfeed has a large affiliate team, and so do Forbes, CNN, and Mashable. Most of them didn't a few years ago.
However, part of the reason that The Penny Hoarder has done so well is not just because they are a personal finance-oriented affiliate site, but rather they have always also been very sophisticated in creating content that converts. The writing team at TPH is likely writing 100s of articles a month. They are also very methodical in what articles show up on the home page. There are even articles that talk about how they often A/B test the first few paragraphs of an article to see what is getting readers to continue reading more.
That means that based on how engaged readers are with the first few paragraphs, they might even take the article down and replace those paragraphs and relaunch it. That's a pretty sophisticated content delivery system that might be hard to implement unless you're a $10 million dollar plus company!
Let's Talk About Smaller Personal Finance Bloggers, like Making Sense of Cents
Making Sense of Cents was started by Michelle Schroeder-Gardner in 2011. It is a very popular personal finance blog with over 1 million monthly visitors. Michelle has been able to generate significant revenue from her blog through affiliate marketing, sponsorships, and ads.
In 2017, they wrote in a blog post series where she shared her actual income from the site, that she was earning right around $100K per month from the site. Not bad for a side hustle, right?
Well, by 2018, she reported making $150,000 per month. By 2019, she said that her goal was to make $500,000 per month by 2020. By the end of 2020, she surpassed her goal and was making over $700,000 per month from Making Sense of Cents.
While both Kyle from The Penny Hoarder and Michelle started off as individuals who wanted to share financial knowledge, Michelle's story is more relatable to creators. The Penny Hoarder blew up quickly and become a massive entity that was bought out by a larger company. But more importantly, The Penny Hoarder never leaned into Kyle's story as a person.
Making Sense of Cents did lean heavily into Michelle's own story. It wasn't a faceless entity with a large writing staff but rather Michelle's followers and community that organically grew larger and larger and took a life of its own.
Making Sense of Cents is a much more personable brand and even though the site is so big now, Michelle started off similar to where you are today if you decided to embark on building your own personal finance blog. The takeaway should be that you can be earning $700K a month in a few years if you start now.
The Giant Elephant in the Room: CreditKarma
If Michelle is the story of a creator that became massively successful, then the complete opposite of this personal finance affiliate website world is Credit Karma.
Credit Karma started in 2007 and was one of the first big companies to enter the space. They have always been a tech-first company and were even one of Y Combinator's first companies. Unlike a content-driven site with a creator personality attached to it, Credit Karma offered some technology-based tools to help consumers like a free credit score.
Instead of growing slowly and organically, they expanded rapidly into all verticals. Today, they are a behemoth in the space and have over 100 million members.
A few years ago, they were acquired by Intuit for $7.1 billion. Around the time, they were likely earning around $500 million dollars in affiliate commissions and advertising revenue from financial services advertisers.
To get to this scale, they not only expanded to countless categories, but they were also one of the first companies to offer free credit scores and quickly moved into offering tax services, personal loans, and more.
Learning from Credit Karma
The takeaway from Credit Karma is that if you're thinking about building a personal finance affiliate site, it doesn't necessarily have to be just another content blog. You could lean into technology and create some unique tools or products that can help consumers in their financial journey. This is obviously harder to do but it can also be a huge differentiator in a crowded landscape.
One more Personal Finance Affiliate Site to Talk about: NerdWallet
Like Credit Karma, NerdWallet is a large and successful company. In fact, it's probably safe to assume these two publishers are one of the top 10 affiliates in any given affiliate program for a financial services brand. These are the Uber and Lyft of the personal finance space, although, unlike ridesharing, there are tons more players.
NerdWallet has raised over $500 million from investors like Andreessen Horowitz and has been valued as high as $2 billion. In 2019, they reported about $185 million in revenue.
NerdWallet has always been a content-driven company and has always focused on helping consumers make better financial decisions. Similar to Credit Karma, they started off in the credit card space and then quickly moved into other areas like personal loans, investing, and more.
For NerdWallet, one of their biggest differentiators is that they have always been very data-driven in their approach. They have a team of over 100 people that are constantly analyzing the financial landscape and updating their recommendations accordingly.
In addition to this, they also have a massive team of writers that create all of the content on the site. This allows them to cover an incredible amount of topics and keep the site updated with the latest information.
It's hard to extract meaningful takeaways from The Penny Hoarder, Credit Karma, or NerdWallet for a small single creator as these companies are massive entities now. However, it's inspiring to remember that they were all once ideas and started by individuals that were looking to create valuable content or services for their audiences. Michelle is a better role model for a creator interested in building a passive income through a personal finance site. However, there's something to glean from all of these examples.
It's all about Creator Audience and Conversion
In the end, these sites all made or make a lot of money because they have access to a large targeted audience that they can convince to sign up for various high-value services and products. That's the 101 behind financial services affiliate sites.
This should make creators wonder in today's world, in 2022, how they can achieve the same thing with what's new in today's world. The obvious answers include actually becoming a financial services-oriented creator on a platform like TikTok or YouTube. In fact, if brands like Aspiration, Coinbase, and Masterworks are paying sites like TPH and NerdWallet a lot of money, they are also paying creators thousands of dollars.
Charli D'amelio, one of the most famous TikTokers, who until recently had the most followers on all of TikTok, is an investor in Step, a fintech banking app for teens. Charli's investment in Step and her willingness to promote the product is also an example of a partnership between a financial services brand and a creator, although a very custom and high-touch one.
Likewise, some famous TikTokers that earn money from promoting fintech apps include Josh Richards and Bryce Xavier. And these are just the mainstream TikTokers; there are thousands of smaller creators that have tapped into this as well. The world has changed a lot in the past few years and it's only going to continue to change.
Are Brand Deals Drying Up? Does this Affect Financial Services Creators?
If we dig in a bit deeper into creators that work with financial services brands, we'll find that the brands are working with creators on a mix of brand deals, affiliates, and often even hybrid deal structures.
With lots of looming conversations around brands cutting their brand spend, this could impact creators as well. Most likely, this will hit smaller creators the hardest as they will have less of a safety net to rely on while bigger creators with more subscribers and followers will be able to weather the storm better.
There's also a chance that financial services brands actually cut back brand spending, but keep their affiliate programs running. However, if Coinbase's recent shutting down of their affiliate program is a sign of what's to come, creators might not want to even rely on affiliate commissions. However, most likely, Coinbase shutting their affiliate program is not something to extrapolate an insight about all financial services companies. Most likely, Coinbase competitors like Binance and Gemini will step into woe over all of Coinbase's affiliates. That's what happened when Amazon reduced its commission rates in early covid. Competing DTC brands stepped in and offered affiliates higher rates to drive traffic to their sites instead of to Amazon. One advertiser's loss is someone else's gain.
On one hand, many financial brands are still doing quite well despite the current economic conditions. On the other hand, some may start to tighten their belts which could lead to less money being spent on creator partnerships. But, in most scenarios, affiliate partnerships should remain intact. If you're looking to find affiliate programs to promtoe as a creator, read our review of Swipehouse.
Financial Services Brands and YouTube Monetization
One thing that's worth highlighting is that, outside of creating a site like Making Sense of Cents, Clever Girl Finance, or The Savvy Couple, creators that are earning a lot of money promoting financial services products and services today are mostly YouTubers. This is for a handful of reasons.
- Attribution: Attribution is brands being able to know where a person heard about their brand or product. Since YouTube allows for affiliate links in the video description, it's a better fit for performance marketing teams that want to pay a creator $5K and be able to see how many people signed up from that creator's links.
- Long Content: Brands know that when viewers are on YouTube, they are there to watch 10-minute long videos usually compared to a 10-second TikTok. As a result, a YouTube creator has a stronger relationship with their audience often and is able to convince them to try out new products or services. Brands prefer this over quick brand exposure on TikTok or Instagram.
- Evergreen Content: The shelf life of content on YouTube is much longer than an Instagram post or a TikTok. That is, the YouTube view will keep getting views and ideally bring new customers to the brand, whereas the TikTok and Instagram posts might get 99% of their lifetime views in the first month.
- Search Content: Brands want users to find creator videos (and review articles) that talk about their product when a user searches for them on Google. Unfortunately, Instagram posts and TikTok videos are less likely to show up in these queries. Although there's movement on this from Google trying to index TikTok content, right now, it's not fool-proof.
However, of all these reasons, it's the attribution pieces that is often driving brands to choose to work with YouTube creators over TikTok. The ability to add evergreen links that can continue to drive traffic over a long period of time is valuable to brands.
If you're just starting off and interested in building a channel in the financial services niche, YouTube should be your best bet. In fact, of all the opportunities to make money as a creator, making money from Youtube is likely the most realistic and doable.
The Final Word: Lots of Money at Play
To sum it all up, there is a lot of money to be made in the financial services affiliate space. There's a reason massive publishers like NerdWallet and Credit Karma exist and print money. But, there are also thousands of smaller sites that earn recurring income. That includes affiliates like Making Sense of Cents, but thousands of others that are even smaller as well.
As always, starting with the basics and the foundation means focusing on building an audience that you can help make better financial decisions. This can be done through a YouTube channel, a TikTok account, a blog, a podcast, or any other type of content platform. Once you have an audience, that's when it makes sense to explore who are the best financial services brands to partner with for your given audience.
Most importantly, keep in mind that the landscape is constantly changing, so one day the NerdWallets and Credit Karmas of the world could be replaced by massive creator channels on TikTok and Youtube.
Could it be you?
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