Web Business Marketing Blog

As user of the Adsense advertising service, I tried out the other side, using Adsense as a publisher (a.o. on this blog). While I must say that Google’s revenue sharing practice with its content network seems fair, this is how the math of revenue generation works out:

• There’s a dramatic difference in the traffic observed by Adsense, and the one reported by analytical packages such as Awstats. I presume this is because Adsense counts only visits of a minimum duration. In my case, the difference is a factor 10, but for this sake of this post, let’s take a factor 3.
• The next factor determining revenue is click-through rate (CTR). Shall we agree that 1% is already a very good rate?
• Finally, the revenue per click: let’s make it 0.25 $ for a subject with a salient internet presence.

Now you can work out the math. For a dollar of daily revenue, you need an average of 1,200 visitors. Scale as you want. Problogger reports 6-digit revenue figures from blogging, with Adsense the #1 source. It must mean 100,000s of daily visitors.

In business marketing with its highly targeted approach, 100,000s daily visitors is not a tall order - it’s nearly impossible. A tenth of that would already be an outstanding result. Moreover, the kind of hype marketing one would need to do to obtain 6-digit numbers in daily visitors may do your brand not much good.

Changing hats again from publisher to advertiser, does it make sense to advertise on the web? Well, in this case, the unforgiving Adsense math works to your advantage. Staying with the above example (and assuming a hypothesis of 50% revenue sharing from Google to the advertiser), one dollar of advertising spend gives you 2 visits to your site and 600 impressions.

However, with a CTR of 0.1%, it would be still 2 visits, but now 6,000 impressions. If you’re budget is not unlimited, this is probably one of the most cost-effective mechanisms you can use for building a branded presence on the internet.