Overview of Adsense
- Google Adsense is an advertising service that allows anyone with a website to display targeted ads and make money
- Adsense is free and straight forward to set up
- It is a good example of passive income
- Earnings are calculated based on the number of users viewing your website (impressions) and the number of clicks on the displayed ads (clicks)
- You need a lot of traffic to make money
- Adsense earnings fluctuate on a monthly basis and should not be relied upon as a main source of income
The Adsense program, which is owned by Google, has been running since 2003 and is the largest advertising network in the world. It offers website owners the opportunity to get paid for displaying adverts on their webpages (as long as the Adsense terms and conditions are met). All you need to do is:
- Make sure you comply with the Adsense program policies
- Apply to the Adsense program and wait for approval
- Adsense will automatically find and display the highest paying targeted adverts based on each user’s browsing history. Google share out 68% of the revenue they earn from displayed adverts.
Some tips to make sure your Adsense application is approved:
- You should have lots of original, useful content – don’t bother applying until you have at least 20 pages of helpful content. If you are writing articles, as a general guideline, longer articles perform better in search engine rankings and get shared more by readers, so aim for at least 500 words per article.
- The age of your website can be important depending on your location. Adsense requires websites from China and India to be at least 6 months old, presumably due to large numbers of low quality websites from these regions.
- Make sure your website is focused on a particular topic or niche – advertisers (and therefore Google) are looking for a targeted audience so they are unlikely to be interested in a generic blog that covers a bunch of random topics
- Design a website with a clear layout. Make it easy to navigate and ensure there are no broken links.
Why is Adsense so popular?
Because it is a good example of passive income. Once you have done the initial hard work of creating a high quality website that receives a lot of traffic, Adsense will be generating income for you on autopilot, while you sleep. No further input is needed from you other than maintaining your website and making sure you continue to receive traffic.
How much money can you make from Adsense?
In order to answer this question you need to understand exactly how earnings are calculated from displaying ads. Advertisers can choose from 2 different models when they want to display adverts using Adsense:
- CPC (Cost Per Click)
The CPC model is the most commonly used model. Here, the advertiser pays every time someone clicks on the displayed advert. With this model, the percentage of people viewing the ad that actually click on it (known as Click-Through Rate, or CTR) becomes important. As a rough guide, you can assume that only 1% of people viewing an ad will actually click on it.
- CPM (Cost Per 1000 impressions – if you were wondering, the “M” is the Roman numeral for 1000).
Each time one person views one webpage, this is known as an impression. Using the CPM model, the advertiser pays for every 1000 impressions displaying their advert, regardless of whether anyone clicks on the ad or not.
For the CPC model, your earnings = number of impressions x Click-Through Rate (CTR) x CPC
For the CPM model, your earnings = Per 1000 impressions x CPM
Exactly how much advertisers are willing to pay (the CPC or CPM) is highly variable and depends on the popularity and competitiveness of a particular niche. Some of the highest paying niches include:
- Financial (eg. loans, lortgages)
- University degrees
- Web hosting
The CPC/CPM rates could be anything from $0.01 to more than $5, making it almost impossible to answer the question “how much money can you make from Adsense?”
I have created some Adsense calculators below allowing you to play with “what-if” scenarios:
|[CP_CALCULATED_FIELDS id="7"]||[CP_CALCULATED_FIELDS id="8"]|
- 3288 total impressions per day, assuming a Cost Per Click of $0.10 and a Click-Through Rate of 1%; or
- 1644 total impressions per day, assuming a CPM model of $2
The bottom line is that you need a lot of traffic to your website (thousands of visitors per day) in order to make money from Adsense.
Disadvantages of Adsense
- Adsense earnings are not stable and will vary from month to month. This could be due to seasonal trends or natural fluctuations in the demand for advertising (eg. retailers will advertise heavily in the run up to Christmas but the demand will probably drop off in the new year).
- Google carefully monitor the frequency of people clicking on Adsense adverts and will ban accounts if they have even the slightest suspicion that there could be fraudulent clicking.
- People are becoming so used to adverts being displayed on webpages that they are simply ignoring them and refusing to click on them – behaviour known as “banner blindness”. Even worse than this are the growing number of web users so fed up with ads that they are installing ad-blocking software. This software will automatically prevent ads from being displayed, making it impossible to generate any income.
- Supply greatly exceeds demand. The number of web site owners hoping to make money from displaying Adsense ads greatly outnumbers the number of advertisers. Inevitably, as this trend continues, only the best websites will be able to survive on Adsense revenue alone – lower quality websites are going to get squeezed out.
These are big reasons why it is not a good idea to rely solely on Adsense as a source of online income, instead it should be thought of as a supplementary form of income.
- Vibrant Media