Why Adsense May Not Be the Best Solution For You…
Before I get into this, understand that most of my income DOES NOT come from adsense. However, what I am going to discuss IS universal from a business and marketing perspective. Understand this and you can better understand what you need to achieve your goals, financially speaking.
I was talking with a reader recently who had a goal of making $3k with adsense within 3 months. He asked if it was possible and explained that currently, he was making roughly $5 a day currently.
To make $3,000 a month, he would effectively have to raise his daily earnings to roughly $100 a day.
Is is plausible within that short amount of time? It is. But how would you effectively know what is possible and what isn’t in terms of adsense? Your metrics would be one way. Determining the ceiling of your market would be another.
People who use adsense use the wrong metrics when judging how well they are doing…
There are only two metrics that mean anything in terms of adsense (or any other offer you list). Many adsense publishers tend to think in terms of volume of traffic. While it is important, there are two metrics will could help you lower the amount of traffic you think you need while raising the bar, so to speak, and increase their bottom line.
- Click Through Rate
- CPM (cost per 1,000)
The CTR is obvious. If you aren’t getting a good click through rate, chances are the adsense ads (or your offer) isn’t targeted enough to generate clicks. In the case of adsense, this could be a lack of advertisers for your conversation/keyword (in which case, you would get either those hated PSA’s or a vertical).
The problem with adsense, at least in this case, is that if the ads aren’t targeted enough, you won’t get click through’s and the click through’s themself won’t be worth much to you, the publisher.
Enter the CPM. The CPM will give you an overall view of how much Google (and those who advertise using adwords) considers your site, value wise.
Knowing your CPM combined with your CTR can give you an approximate value on how much traffic you need to attain your goals.
I will keep this simple. If your CPM is $25 and you are getting 1,000 visitors a day to your site, in order to make $100 a day, you would need 4,000 visitors.
Why would the CTR matter? Because if your click through rate is 4% and you raise it just 1% (through testing and tracking), you will effectively raise your CPM and therefore be able to lower the amount of traffic you need.
Makes sense, right? And yet, most publishers look at it from a dollar viewpoint without understanding knowing where the top of their market is.
Adsense is probably NOT the way to go in most cases
What? Is this possible? What the heck am I saying, right? Listen, you can make a ton of money with adsense. This is true. The problem with adsense is the CPM generally is so low, that monetizing with something else will almost always be better than simply mindlessly slapping down some code and taking whatever Google will give you.
Adsense is the easier way, sure. But in most cases, it isn’t the best. Let me explain….
Adwords advertisers play with real money. The purpose of them spending money on advertising is because they want to make money. These guys, provided they aren’t using the initial product as a loss leader, have to know things like ROI. That is an oversimplification but bear with me….
In other words, they usually have tracked their campaigns and figured out that X amount of clicks will happen before they make a sale. They also know that if they are paying $1 for a click and the product they are selling is $47, that they need at least one sale for every 47 clicks to break even. Makes sense so far, right?
Usually, a successful adwords campaign will start general with a plethora of keywords and then, over time, will pair down to keywords that actually convert. The reasoning is simple. Toss out the junk, non-converting keywords and stick with the tried and true converting keywords. Typically, these keywords will pay more to the adsense publisher BECAUSE they convert better for the advertiser.
If you search hard enough in your niche, you will start to see the same adwords advertisers over and over again, over the long haul. If you spot these, you know what is making money….after all, they wouldn’t incessantly just keep dumping money into google without the payoff.
So, if you have done your research for your market, watched what the advertisers are advertising and you find that 2 of the 5 ads in your niche “stick”, then it means that that advertiser is making money.
Their Ad Copy is working…..
Their landing page is working too….
Your next step? Cut out the middle man (in this case, Google)….
Check to see if the advertiser has an affiliate program. If they do, sign up. Now use their ad copy (which you have carefully watched) and place it on your site.
Now for the math….
You have a site with google adsense. Your CPM is $20 and your CTR is 4%. In other words, for every 1,000 visits, you are getting 40 Clicks making each click worth .50 cents.
The advertiser isn’t going to give you the conversion data but you can kind of figure it out on your own by looking at their campaigns. Let’s assume that you have watched their campaign using keyword spy or some other advertising monitoring device. And let’s assume that you have figured out that they have paired down their buy words over a period of time to a small grouping.
Let’s also assume that their affiliate program is paying $20 per sale.
Assuming that the product you selected was targeted for your niche, just 1 sale out of 1,000 people would match the value that google has assigned your site. If the offer is converting at 4%, that would mean that 1 in 25 people who viewed the offer would bite.
If your CTR is 5%, that would mean that your CPM for that offer would double the amount that Google paid you. (50 clicks = approx. 2 sales @ $20 per sale).
Sounds logical, right? So why don’t more people do this? Because they are lazy.
The big picture
Rather than cutting things down microscopically, I tend to like to think in terms of yearly differences. The reason is because a few pennies here and there tend to be discounted. For instance, if the effect of doing the work to increase your CTR by a percent, is only $20 per month, you may look at it and say why bother?
But if you look at it from a yearly perspective, you start to see the significance…..
What looks more pertinent?
- $20 a month extra?
- $240 a year extra?
So, math time once again and then I am done….
Your adsense CPM is $20. Each month, you average 3,000 uniques, which equate to $60 check each month.
Instead you do the leg work on your market, find the advertisers that are making the real money (based on longevity of the ad and its placement on the google network) and carefully select the ones that are proven.
Your ad CPM is $30. (going lower with the number) With 3,000 uniques a month, the company cuts you a check of $90 each month.
Let’s put it into a bigger perspective now….
Yearly, you could get $720 from Google……..
OR……
$1080 by cutting the middle man out of the mix….($340 dollar difference).
Now, you tell me….what is better and will generate a bigger return? Just something to chew on…..
15 Responses to “Why Adsense May Not Be the Best Solution For You…”
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Perfect. I am moving in this direction myself, and have come around to looking at Adsense as a niche testing tool as much as an income source. Not only are there better earnings from affiliate offers – I sometimes actually sell products and ship them myself (heresy!). That takes the margin WAY up, usually to about 40% of the list price.
BTW – like the new look, and love the more frequent posting. Keep it coming, there is a dearth of real world info out here.
Leo,
Really good post, I am guilty of focusing too much on Adsense. I do have other sources of online income selling sites and web hosting so I usually take the lazy route and use Adsense on my content sites.
DaveH,
Good to see you here.
Leo
I’ve been following you for some moths now and enjoy all your posts. The good thing is that every time you do have something to say that is different from what all other ‘internet marketers’ are saying.
maybe in a future post you can explain how to track down a campaign and identify which google ads are worthy..
keep up the good work (and frequent posting!)
@ DaveH
Thanks…the look may change a little more as I get more comfortable with this new theme. As for me posting more often, I will most likely continue to do so as long as it doesn’t affect my money. What can I say? I honestly love talking about what I talk about. And it is far more entertaining than another post on prostatitis (or worse still, an actual campaign on that, lol)
@ Derrick
Nothing wrong with using adsense. The point of this article was to get people to look at the possibilities IF you use advertisers data from adwords. The off line world has been utilizing magazine ads for years to determine what is working and what isn’t. And I am not talking about the ads from big companies that are “branding” themselves….I am talking about the classsifieds in the back…Find the ads that are in there month in and month out and chances are you have found a potential business…..
Thanks myln. Maybe I will. Just take a look at Keyword Spy….you will find enough data to keep you busy for a while….;)
Leo is showing his old school chops with the comment above on magazine ads. The usual technique is to run different ads with a different response code, which can be the “coupon number” or even a different 800 number for the respondent to call. The modern way is of course separate landing pages for different adwords ads.
With regards to identifying which ads are money makers and not just there for testing, you go to the library and look at back issues “Hey, the same Pocket Fisherman ad for 8 months in Field & Stream..” then 2 different ones, then a new one – guess which one won.
Thanks for this post Leo,
I woke up this morning thinking about adsense and low and behold you had another great post. It is so refreshing to have someone explain the theory behind all the work that is done online.
One thing that I was wondering about was the affect of CTR over several sites. I have one site that usually runs 1-2% and the others are over 10%. I have also noticed I get paid more on a click at hubpages than I do on the same keyword at my site. Could that one site be affecting what I am paid because Google calculates all my sites together?
I have been thinking about taking adsense off of the poor showing site but I still make a few dollars a day with it while I work on other sites.
@DaveH
That is exactly what I was talking about. Everyone gets so entranced with new, shiny things….new strategies and techniques that will supposedly automate your business and propel it into the stars. What they don’t realize is that the old is the new. Old school tactics still work and will work with any new technology in the future because in the end, there is one thing that doesn’t change- Us.
I have been in the Adsense camp ever since I started my journey in IM world 3 years ago. Leo has written about the affiliate world transition before and I was motivated but was “busy” optimizing my Adsense sites. Every time I went CJ or Clickbank, I got overwhelmed by looking at the volume of products to choose from and it stayed at the bottom of my priority list. I am going to look at them again and I will also read up on how to choose products. Thanks Leo… you da man!
@ Zeeray
If adsense works for you and you want to try making money as an affiliate, try it but work what works best for you. I am not trying to try to pull away folks from the adsense camp…just trying to offer alternatives.
For me personally, I don’t like depending on organic search. If it hiccups, it makes me and my livelihood vulnerable.
Leo,
Serious question here. I have been making $5000 to $8000 a month from Adsense. This month looks like I may actually go over $10,000. Do you think there is a dollar amount that Google will start to take a closer look at me and the sites I own? Part of me doesn’t want to pass that $10,000 mark for that reason but that is just my paranoia.
Obviously, Adsense has been good for my sites
@ Seth
I would imagine as long as you are complying with Google’s TOS and as long as your pages aren’t MFA’s, I would say that you don’t have a thing to worry about. The 10k/month mark is impressive.
Just to let you know, I am not coming down on adsense. Obviously, you are doing something right. The only point I am making is that (as Grizzly found out), in some cases where the market is a social market, affiliate marketing can outpace traditional contextual ads in gains. Of course, the biggest money could be creating your own products and selling them direct or building a list and continuously selling to them. Then again, both of those require far more advanced marketing strategies. SEO and ranking organically is pretty much a straight shot once you understand how it works. Throwing adsense onto a niche is totally brainless as it requires absolutely no thought as to what the market may be interested in buying.
In the end, the ones who are on the other end of the clicks win more because most of the time, they collect customers while the adsense marketer simply collects **clicks**. I could go on and on about lifetime customer value and how once someone buys from you once, the chances increase greatly that they will buy from you again. I could state the case of how building a list through permission marketing, done right, could double your ROI easily. Those things are the true marketing elements that adsense marketers don’t worry themselves over.
When it is all finished, you have to ask yourself, what do you want more?….a paycheck from google OR a way to build a business that doesn’t necessarily have to rely on the whims and fickleness of a search engine.
Still, once again, 10k is very impressive.
Alright, thanks. I don’t know how long it will last but it is fun to look at my Adsense account everyday right now.
Hi Leo,
I’m glad I found your site, the info here is very good. I’ve been concentrating on Adsense but not really getting enough traffic so have been making very little. I agree with your point that cutting out the middle man may be a better way to go.