Why I Reinstalled Adsense on My Blog in 2010 – Reason #1

I’m giving Adsense another try on my Blog.

I gave Adsense a chance on my Blog a few years back, and ended up giving up on it after finding other monetization strategies more useful for my Blog audience.

However, the online landscape is always evolving and I’m giving Adsense another chance based on some recent research I’ve done on the subject.

Here is reason #1 why I’m giving AdSense another chance:

Secret Ninja Learnings From My PPC Affiliate Marketing Days

In 2009 I spent tens of thousands of dollars with Google AdWords, targeting the content network – in other words Adsense publishers. While I was learning the ins and outs of the AdWords platform as a way to buy and drive traffic for affiliate sites, I made a couple very important observations.

First of all, I realized that the AdWords landscape is very competitive and things are just getting more and more competitive. Affiliate margins are shrinking and CPC costs are going up. As CPC costs go up, margins for affiliates are shrinking while margins for AdSense publishers (and Google) are increasing.

Let’s use this example.

Imagine if I was paying $1.50/click on a PPC campaign running on the AdSense network.

Let’s say that this $1.50/click put me at the 2nd position in an AdSense box. If I tried to lower my CPC down to $1.45/click for example, I might fall to the 3rd position or the 4th position and may not even be seen at all. That’s how competitive things are on AdWords right now.  You can’t just go out there and buy $0.10/clicks anymore.

Of course, there are exceptions to this, but for the majority of the campaigns I ran as an affiliate, there was a lot of competition.

Now, on that $1.50/click CPC I may have only been earning about $1.65/click. Meaning, I may only be making a margin of $0.15/click on that as an affiliate.

On a few occasions, I remember thinking… “Man, I’m working so hard to make a $0.15/click spread on this and taking all the risk of trying to convert this traffic and make it work. However, the AdSense publisher is getting free traffic from SEO optimization efforts and look at their margins!”

Meaning, in the example above, with my margin of $0.15 I would be making $15 in profit for every 100 clicks.

However, how much is Google and the AdSense publisher making on those same clicks?

Well, here’s what we know.

We know that the clicks are costing $1.50/click so that means that Google and the AdSense publisher are splitting $150 from 100 clicks.

Last month, Google announced that they pay AdSense publishers 68% of the revenue share, so out of $150 that the AdWords affiliate spent to get 100 clicks the AdSense publisher makes $102.

That’s a lot more than the $15 I was making on the spread as an affiliate.

Once again, I want to stress that these numbers are just examples and each niche market and each campaign is different.  I understand that some affiliates are making 100% ROI or even higher on their AdWords costs, but that wasn’t me and most of the people I talk to in the industry have reported the same thing – shrinking of the profit margin for affiliates.

Of course this makes sense in the grand scheme of things because PPC affiliates are really just brokering traffic. They are buying traffic from one place and selling it to another, while trying to make a profit in the middle.

There is nothing wrong with that, but it makes sense that those kinds of margins will always erode as more competition shows up to play the affiliate game.

Anyway, while I was bidding on these keywords on the Content Network, I remember having the distinct feeling that I was on the wrong side of the fence. Google values and wants to reward content producers (like Bloggers), and not traffic brokers (ie. Affiliates).

Years ago, on that same $1.65 earning per click, the distribution might look like this:

  • Affiliate Earnings Per Click: $1.65/click
  • Affiliate Profit Per Click: $1.40/click
  • AdWords Cost Per Click : $0.25/click
  • AdSense Publisher Keeps: $0.17/click
  • Google Keeps: $0.08/click

Today that same campaign might look more like this:

  • Affiliate Earnings Per Click: $1.65/click
  • Affiliate Profit Per Click: $0.15/click
  • AdWords Cost Per Click : $1.50/click
  • AdSense Publisher Keeps: $1.02/click
  • Google Keeps: $0.48/click

These are not super accurate numbers from all across the board in all niche markets.

These are simply some observations I made from some of my previous campaigns. I could be totally off on the specific numbers but I do believe I am right about the trend – being that it is becoming way more lucrative being an Adsense Publisher / Content Producer than an AdWords affiliate.

Once again, I will re-iterate that to me this move to reward the content producers makes total sense.

The content publisher, (ie. Blogger) has to spend a lot of time producing good quality content so he should make a big chunk of that pie in my opinion.

It’s important to note here that the $1.65/click earnings I’m talking about here in the example is what the affiliate might get paid out from an affiliate network. Of course the affiliate network makes some money on top of that as well, and of course the original advertiser must be making more than $1.65/click if they are paying out that much as well.

Bottom Line: With AdWords competition growing, and CPC costs going up, good quality content publishers running AdSense stand to win.

Stay tuned for more reasons why you too may want to reconsider giving AdSense another try in 2010.

14 Responses to Why I Reinstalled Adsense on My Blog in 2010 – Reason #1

  • Nice breakdown on the numbers.

    The text is pretty small on your Adsense block, maybe you did that on purpose but I know “they” say the largest font is supposed to work better. Love your blog theme and the way it’s laid out. Oh yea, and your writing is nice too. ;)
    .-= Bill Bolmeier´s last blog ..The Adsense Report- An Interview with Cary Bergeron =-.

    • Paul Piotrowski says:

      @Bill: I don’t know why the text went so small! I selected the largest size when creating the Ad, but then Google made the font so small.

      Having said that, my 1st day of AdSense earnings was pretty good, so I think I’m going to leave things as-is for a week or two and gather some data. Them make some changes and see how it works.

  • Tyler Cruz says:

    I put AdSense back up as the main advertising on Movie-Vault.com a couple weeks ago because related affiliate offers were not converting at all, and ad network payouts are so thin these days with incredibly high default percentages and horrid targeting.

    I’ll never run AdSense on my blog though… I just feel that that inventory is MUCH more valuable promoting my own affiliate links to products or showing that the space is available for advertising.

    BTW: Don’t make me opt-out of the follow-up comments by e-mail :( Also, why is my “My Completed Income Tax Reports” blog post appearing here underneath the “submit comment” button?

  • Great post and I couldn’t agree more. Reward those who produce quality content that other people want. I’m a big fan of Adsense revenue for the long term, passive earning potential it can produce.
    .-= Cary Bergeron´s last blog ..May 2010 Adsense Earnings =-.

  • @Tyler: What do you mean by “Don’t make me opt out of follow-up comments by email”?

    Is the checkbox disappearing for you or something? Is it broken?

    The reason your latest blog post is appearing underneath the submit button is because I’m using a plugin called “Comment Luv”. Essentially, as a reward for leaving a comment the plugin fetches you latest blog post and leaves a link to it.

    It’s a fairly new plugin / system that has become very popular amongst bloggers, so that you can leave comments without trying to stuff keywords into your “Name” field, while at the same time getting deep links to your content pages on your Blog.

    As for AdSense, I’ve been watching the relevancy of my AdSense ads and have been very happy with them so far compared to when I tried AdSense on my Blog before. Google has changed their algorithm for ad targeting. I’ll be writing about that in my next Blog post.

  • Pingback: Why I Reinstalled Adsense on My Blog in 2010 – Reason #2 | Paulymath.com

  • used tires says:

    Adsense nowadays is definitely a whole new ballpark compared to what it was back in the day. That being said, adsense can work, and it can work really well. But in my opinion, it also depends on the website and particular niche. Personally, I think make money online niches, and those types of blogs tend to have a low CTR, the true test will be if you can get your CTR to be decent, if your CTR is good, then I think adsense will be very much worth it Paul. CTR comes hand in hand with ad positioning, so you will likely have to find the right balance between ad placement for CTR vs retention of readers.

    Till then,

    Jean
    .-= used tires´s last blog ..Used Tires Dealers Website =-.

    • @Jean: Check out my next post, where I talk about Reason #2 why I re-installed adsense. I think it might shed some light on the niche issue. Meaning, I no longer believe building a site in a “high CPC” niche is needed. Even niche markets like “make money online” will now make money. Why? Because the ads are now not being targeted based on content.

  • Pingback: Why I Reinstalled AdSense on My Blog in 2010 – Reason #3 | Paulymath.com

  • denemecelik says:

    Adsense nowadays is definitely a whole new ballpark compared to what it was back in the day. :/

  • Pingback: Why I Reinstalled AdSense on My Blog in 2010 – Reason #5 | Paulymath.com

  • daphne says:

    Adsense gives you more control over your search result and you can access more advanced features at google. It makes sense!

  • I put AdSense back up as the main advertising on Movie-Vault.com a couple weeks ago mainly because associated affiliate gives had been not converting at all, and ad network payouts are so thin these days with incredibly higher default percentages and horrid targeting.
    .-= internet phone providers´s last blog ..LifeLock Identity Theft Services =-.

  • RT Wolf says:

    Good post, Paul! I think you hit the nail on the head that affiliates are taking advantage of things that are becoming market inefficiencies. They may not have been market inefficiencies a while ago, but as google gets better at targeting and making things relevant, affiliates using adwords at least is becoming a market inefficiency. Market inefficiencies always disappear as people find out about it.

    All of that said, affiliation/JVs are still a great idea if you already have customers, cause then you’re just monetizing existing customers and amortizing cost of getting those customers across more products.

    Like Dan Kennedy says, your most important asset is customers (or readers or clients or whatever). People who have already bought from you and trust you are very likely to buy more from you, or from your affiliates/JV partners. Just means it’s gonna get a bit more difficult to make money from affiliates. No longer as easy as setup a few adwords.

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