The other day I was pouring through various personal finance blogs and I paused at one of the bigger names. There it was, an affiliate link for a company that had contacted me many moons ago. The company I ultimately decided would be a very bad deal for both me and you the reader. That inspired this post, that you should always get a second opinion.
Nothing Concrete, But a Feeling of Unease and a Clearly Bad Deal
I won’t name the company here, not the least of which because I don’t really feel like being sued. Nothing they said in their pitch indicates they are out to screw customers. Really what I have is my thoughts on their pitch and an entirely uneasy feeling. Nothing concrete enough to publish a name.
Always Get a Second Opinion
But what I do want to do is make sure those out there in the community that are reading this take a step back. If the media, someone who owns a blog or podcast, or anyone else who runs a business suggests a product, do yourself a favor. Check it out independently, get a second opinion.
How Blogs and Sites Make Money
Most blogs make money in one of two ways. The first is how this site obviously makes money, the ads you see on the side of your screen. The reality is, those ads keep the lights on and keep this hobby revenue neutral for me. But they don’t bring in what I would call significant income.
Ads Are a Limited Revenue Source
Even blogs with much higher viewership then our own, if they are high income, are probably not making that money from simple ads. It’s just not lucrative enough to provide big bucks. A click on an ad might bring you 2-3 dollars. A page view might be a few cents. Even with 100,000 viewers a month you are probably only looking at 3-4K a month in ad revenue. So how do some bloggers make hundreds of thousands a year?
Affiliate Links, A More Lucrative Source
One such method is called affiliate links. Essentially company’s pay you funds sort of like a sales commission for bring them a customer. Now let me say outright, I have no problem with this approach in the correct context. I have even used the process myself.
But the way I use it, is you only ever get a pitch from me for something I would buy myself. Usually a book or something else I’m incorporating into my writing. Ie. the affiliate link is ancillary to the post and usually just referencing some service I am writing about. I also go out of my way to clearly denote the affiliate link, something that is a requirement by law.
Sponsored Posts with Affiliate Links
Some other sites also use sponsored posts where the post’s main goal is to drive a sale. Again if it is clearly identified then it is 100% legal. Also again if a site you like is doing so, take the time to get a second opinion. I have never done one of these myself, but if the service seemed like a good use of the audiences money I don’t necessarily take a dim view of this practice either.
The Offending Sponsored Post
Which brings us back to this particular, I guess I would call it, sponsored post. The ones that seem to be the most common in our space, outside the generic Amazon, are for financial products. This example was no different.
Signs of a Bad Investment
That example had all the hallmarks of a bad investment for most people. Things I look out for in a bad investment are:
Non-transparency: Say you can invest but it is very hard to get information on what you are investing in. Run away as these are usually scams.
High Fees: Let’s face it, if something requires you to spend a few percent in fees these days it’s probably not a good idea. You can invest in nearly every space for 1% or less. In cases like the stock market you can invest at near 0% fees. Those fees eat into principle rapidly.
Lack of a track record: A new investment type and a new investment company, what could go wrong? With a new investment type you have no way to understand what it will do in the multitude of potential market scenarios going forward. Worse with a new company you can’t even evaluate the company for trustworthiness and capability. Even the best investment will fail due to incompetence or corruption. Combined with non-transparency these are the two worst.
The Offending Investment Ticked All 4 Boxes, Run Away!
Honestly, the sponsored post was about an investment that hit all 4 criteria at once. A screaming no. I was a bit more professional to the pitching group with my no. I didn’t run the room screaming scam. But I did ensure to route future contact to spam folders. It appears that some bloggers either don’t have as high a standard as I do, or really don’t care about you, the readers, safety.
Due Your Due Diligence and Get that Second Opinion
I realize this is a bit of a rant post. But I feel like this message needs to be delivered regardless. Do your diligence any time someone recommends something you consider. Get that second opinion. Your wallet will thank you.