Friday, December 3, 2010

Why AdSense Revenue Fluctuates

Many people start a blog or website with the simple intention of becoming a millionaire. As we are constantly reminded of those individuals who became extremely rich off of the internet, we are led to believe that that we too can create the next smash hit. Profiteers surround us enticing us to purchase their book or CD and learn the secret to making an easy living on the internet. Money, money, everywhere!

All we have to do is create a blog or website, place AdSense ads and a few affiliate links on our site, and the money will begin to pour in!

But for those of us who followed our dreams, we quickly discovered that earning income from our blog or website is not that easy. Rarely do we receive affiliate commissions and the the Google income is disappointing. We wonder: What am I doing wrong? or What should I do differently?

The purpose of this article is to help aspiring bloggers and site owners understand their revenue stream and to properly set their expectations of success by answering this comment inspired article.

Like Colin of ** SEXY LEGS AND BODY! ** indicated in a recent comment, he is "trying to get his blog to be cost effective and raise good money with ... AdSense", but he has noticed his revenue fluctuating and it is often disappointing. He questioned "What can be the problem?"

To answer this question, it is necessary to describe:
  • How AdSense works,
  • Click-through rates, and
  • The internet competition.

First, deriving income from AdSense is relatively easy. All we have to do is to have an account, and place the snippets of AdSense code on our site or sidebars. Like magic, Google will parse the content of our pages and display appropriately related ads. There are two basic types of ads which Google may display, and we, the publishers, do not get to choose which one.
  • CPM ads which are paid by the number of impressions shown, and
  • PPC ads which are paid whenever an ad is clicked.
Revenue from CPM ads is derived on a display basis. The typical threshold is 1,000 impressions, and each ad has its own payout structure. Some may pay $0.01 per 1K while others may pay $5.00 per 1K (or even more). This is great if you have a large number of daily visitors.

Revenue from PPC ads is obtained only when someone clicks on the ad. It doesn't matter how many times the ad is displayed. Payout for each clicking action can vary from a minimum of $0.01 to $5 or more. For the most part, the majority of ads that Google displays on your site will be the PPC type because it is most advantageous to advertisers.

The amount of money that Google assigns to each ad placement (whether  CPM or PPC) is determined through an auction process.  In general, you will be paid more when both the quality of your website or blog increases and the number of your daily visitors increase.

However, for any given site, the ad revenue will fluctuate on a daily, weekly, monthly, or seasonal basis. This fluctuation is a function of the advertisers, and not you, the publisher. For example, many advertisers establish a daily or monthly budget for their ads. When this threshold is reached, their ad may be replaced with a lesser paying ad. Further, the advertiser may have set geographic, hourly, age or gender based criteria. This means that some visitors will be exposed to higher paying ads while others see lower paying ads. Additionally, the content of your site may be seasonal. If so, you may receive high income during different seasons of the year.

This all means that, aside from the content you display, you will have no control over the revenue that is produced.

Second, click-through rates affect the amount of income you receive. In general, blogs and websites receive different types of click-through traffic.

Websites tend to provide products to consumers who are searching for an individual product or piece of information. Thus, most often, these visitors are directed to websites through site searches. Since the visitor is searching for something, they tend to follow the various link paths displayed, including the advertisements on your site.

Conversely, blogs tend to provide social information: articles, stories, advice and other reading material. Visitors locate your site through other forms of social media like Facebook and advertising networks. Once your site becomes one of their favorites, they will tend to visit repeatedly. The trick here is to create as many network paths to your site as possible.

In general, the average click-through rate for website banner ads is 0.2% - 0.4%. By comparison, the average click-through rate for blogs is only 0.08% (about 3/5 - 4/5 lower).

With such low click-through rates on the internet in general, you cannot expect to receive many clicks on your site. If your blog receives 1,000 visitors a day, you can only expect to earn 1 click per day. Thus, you will either need a lot of time or a lot of visitors to earn a substantial sum of money from AdSense.

Lastly, be aware of the your Internet competition. According to the Netcraft December 2010 Web Survey there are 255 million websites and approximately 100 million of these are active.

Similiarly, today's BlogPulse indicates that there are over 151 million blogs.

So, when you consider the size and vastness of the internet population providers, it is easy to understand that the chances of your individual website of blog becoming influential and highly profitable are extremely small.

Once you understand how AdSense advertisement earnings are allocated, the expected click-through rates, and your competition, you may become disillusioned and frustrated. However, this information is provided to help you set your earning expectations.

Owning a blog or website is fun, but it requires a lot of time and hard work to succeed. To overcome the long odds of failure, you must:
  • Establish a reliable reputation,
  • Provide a unique product,
  • Advertise, and
  • Participate on the net.
Establishing your reputation and product are up to you. You have to update your content often, respond to inquiries, stay focused and positive, verify your sources, and be truthful.

If you have a budget, advertising is a must. If you are allowed, market your site in Google AdWords or Microsoft Advertising.

You can also join various advertising networks. Both Adgitize and CMF Ads provide low cost advertising vehicles in which you can earn profitable income at the same time. Additionally, these are great networks for increasing your daily traffic. Also consider joining theBlogFrog and Facebook. Submit your content to Zemanta. By expanding your social visibility, you can increase visitor count and establish a reliable reputation

Through these measures, your site may become more profitable and your AdSense revenue more stable.

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  1. Nice article. Very well explained. It would be nice if you can also give other methods for those whose blogs get rejected by Google Adsense.

  2. Great article! I picked up on the "Zemanta" reference and have now downloaded it. I'm totally impressed. I guess I'd better check out "The Blog Frog" as I'll be deleting BlogCatalog.

  3. @Prasanna - Thanks for the feedback on this article. I'll go some research & thinking about other methods as you requested & get back to you.

    @Shari - Thank your for the positive comment. I do think that theBlogFrog has grown & is worth joining. Question: Why are you deleting BlogCatalog?

  4. Hi John,

    I'm not pleased with their new format. I also don't see any traffic from there.

  5. Hi John, thanks a million for an excellent and extremely informative post. Thanks also for the mention of my site, I do appreciate it.
    I feel a lot better now, at least I now know it is not something major that I am doing wrong. I have joined BlogFrog, Blogged, Heylog, twitter, etc. I agree with you, it looks like BF is going places. I get some traffic from them.

    Thanks again, I am going to also try Zemanta.

    Hope your week is going well.


  6. was here through Adgitize Forum. Very informative. :)

  7. Thanks Liz, I appreciate the visit and for your taking the time to comment. Merry Christmas!


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