Where I Went Wrong

This episode of “The Amazing Tale“ is all about renting referrals and not being able to tell earnings from spending.

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As my PTC Project has progressed, I’ve been presenting you with the essential numbers on blogging day — how much I’ve earned, how much I’ve been able to cashout, and how much I’ve spent. Just like this:

But I never actually visualized my expenses vs. income in a chart, until today, and I think that was a poor business decision.

Why? Because actually seeing day-to-day spending against day-to-day earnings is revealing, to say the least. Here’s the chart:

In any startup operation, it’s normal for expenses to exceed income. No problem there, I am following the typical startup playbook.

But what I am just now beginning to understand — now that I have this chart — is that earnings from renting referrals masks actual losses from renting referrals! How much of that looming expenditure, do you suppose, is attributable to renting referrals and managing and maintaining them over time? Quite a lot, as it turns out.

THE BEAR WASN’T TRACKING

Knowing if you are making money or losing money from Referral Renting (RR) is devilishly difficult. We took a first look at this way back on Day 13 in a post titled “Is It Profitable?“ That provided some careful analysis to determine that my initial RR activity was not yet profitable. In that blog post I also outlined two things I could do to make my RR costs profitable.

After that, I just assumed that annual upgrades and auto-renewing my rented referrals would assure profitability. But by Day 201 I had growing concerns that I was “Overbought on Referrals.” In that post, I outlined the rental management plan I could implement to improve the RR profit (loss) situation. That was 100 days ago.

And then I kinda-sorta followed this plan, but guess what? I wasn’t tracking anything. So I really had no way of knowing whether the profit (loss) situation was improving. Oooops.

So now when I look at that chart, above, I wonder how much of that spending was related to renting referrals, and how much was spent on advertising and on upgrades. Fortunately I did have the foresight to separate out and track my advertising spending. Good going there, Mr. Tame Bear.

Total spent on advertising: $452.70

In this chart, my ad spending is in red. Then there’s the total expenses graph, in brown, and total income in green. Total expenses includes the ad spending, plus upgrade costs and rental management costs.

I did keep a record of how much I paid for upgrades…

• Day 7 – ClixSense Annual Upgrade: $17
• Day 26 – NerdBux Annual Upgrade: $50
• Day 32 – NeoBux Annual Upgrade: $90
• Day 78 – Ojooo Upgrade: $39 (one month premium+)
• Day 108 – Ojooo Annual Upgrade: $39
• Day 111 – ProBux Annual Upgrade: $80
• Day 123 – NerdBux Lifetime Upgrade: $47 (just a few months before NerdBux went bye-bye)
• Day 275 – ScarletClicks Annual Upgrade: $70

Total spent on upgrades: $432.00 Turns out my upgrade costs were just about the same as my advertising costs.

Now, if I subtract ad spending and upgrade spending from my total expenses, I can see how much has been going to RRs, including all my efforts to manage rentals, to separate the good from the bad, to try to keep my “office cubicles” at full capacity, and to extend the rental periods. The costs to manage rentals, all told, was surprisingly large. Here is another chart that shows the actual breakdown of total income into advertising, upgrades, and PTC rental management costs.

PTC RENTAL MANAGEMENT COSTS

Wow, my costs for managing Rented Referrals far exceeds either ad spending or the cost of upgrades!

Total Spending ($2,037.00) – Ad Costs ($452.70) – Upgrade Costs ($432.00) = PTC Rental Management Costs ($1,152.30)

But until I actually worked my spending records into charts like this, I was unable to see how much more I was spending on the RRs.

Finally, I have one more chart to show you. This is my PTC Income vs just the RR spending…

Any time that rent is more than income, I am losing money! Dangit! (Imagine a real tree-thrashing grass throwing ripping through the underbrush Tame Bear Rant happening about now.) And now it is clear to me that up until about Day 250 my Referral Rental expenses were always greater than Income. That’s no good.

Renting referrals early-on in my project looks great on the earnings side, because some of those rentals are indeed bringing me more earnings, but without that last chart I was not able to see whether my rental management was actually working — or not!

At about Day 200 I suspended nearly all my rental expenditures. (Remember, by then I was beginning to suspect I was “Overbought on Referrals.”) By about Day 250 my income had caught up to the rental management expense. But I still had advertising expenses and upgrade expenses, so at this point I am nowhere close to break-even. Until income catches up to total expenses, I am in the hole.

NEXT STEPS

Today is Day 302 of Tame Bear’s “Amazing Tale.” At this point what I think I’ll do next is allow all my rentals to expire in order to discover what my “natural earnings” are from my own clicks and from the clicks of my direct referrals. (Remember, I am committed to clicking every ad at every site in my portfolio every day, and I strongly urge you to do the same in order to maximize your own income.)

Letting all my rented referrals expire will take some time, because I’ve extended some referrals pretty far out in the future. Perhaps by end of Year One I’ll be able to see how this rental attrition is going.

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If you are already starting to build your own direct referral engine with list building and a blog, then I hope this lesson speeds you much faster than me on the way to your own Paid-To-Click profits!
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