Adsense/Adwords - make a million lose a million?

Now there’s probably more than a few of you out there who perhaps know what one of the two are but not both and I’m guessing that many of you don’t know how you can tie these two systems together in an attempt to make money – well don’t worry - that's what I'm going to explain today.

To start at the start:

Q. What is Adsense? A. Adsense is Googles name for the system that puts context sensitive ads on to your web pages (if you’ve included their script code). The idea behind this system is that if you run a site that has content on subject ‘cars’ then the adsense adverts should be on the subject of ‘cars’ – not ‘DIY’ or ‘Mortgages’.

Q. Why would I be interested in letting Google put adverts on my website? A. Because you get paid per click, not per result but by click. Payments range from a few cents to over $10 a click – pretty compelling reason.

So, in simple terms you now have an overview of adsense (please read the rest of the article before disappearing to register for an account). :-)

Q. What is Adwords? A. Adwords is the opposite of adsense, it is in fact Googles system for allowing you to advertise on other peoples websites (using adsense as the delivery mechanism).

Q. Why would I want to pay Google to advertise my site? A. There are many reasons why you might want to pay Google to advertise your site

Your site is brand new and not indexed yet You seem to be getting little or no traffic from the search engines You want pre-qualified traffic for your service or product You want to make money with adsense I’ll be explaining that last point in detail so don’t worry.

It is worth considering those first three reasons in a little more detail (because they probably don’t make immediate sense to anyone who’s not overly familiar with internet marketing).

Site Indexing. When you have a brand new site that you’re really happy with and want to share with the world you need to let people know it’s there. This is done in many ways such as link exchanges, banner ads, email, etc.

However one of the cheapest ways of getting the word out, if you’re not bothered about speed, is to get indexed by the search engines (visited by and then added to their database). This will obviously involve a large search engine optimisation effort from you and be an ongoing process (because your competition will be doing the same). This means that when people search for a certain word or phrase you might be seen (depends on your SEO).

Traffic If you are competing in a very crowded arena it might be hard or impossible for you to get on the first page of Yahoo/Googles results for your chosen words or phrase, an example of this would be the health and wellness market – there are over 120 million websites out there and some of them are VERY well done – so how are you going to beat them?

Pre-Qualified Traffic Traffic to a website is said to be pre-qualified if it has come from an advert for your subject area, a search engine search for your keyword/phrase or from a mailing list. By this example people who read my newsletter may be considered as being pre-qualified traffic on the subject of starting/improving an online business.

Now that you have a basic understanding of what they are you may have guessed how people try to make money with them, but I’ll explain anyway (just to make sure we’re all on the same page).

We buy cheap words in Adwords and display Adsense adverts for expensive words

You may think that this is an easy exercise but believe me it’s not.

Lets have a look at how this works in reality – note that word, not in our dreams, how does it ACTUALLY work.

If we develop a website with the keyword 'Mortgage' in mind (because we are selling information or products within this subject area) then from the screen shot below we see that to advertise with the keyword 'Mortgage' it will cost a fortune! (screen shot taken from google adsense - these figures change daily - this is purely as an example)

We can see that the average price per click is $12.78 - this is just for one click, not for a sale but just a visitor having clicked you advert to get to your site - and that's if we bid just over $39 a click, if you bid less you get less (if you bid 20 you get 2,400 hits and they cost $9.27).Obviously the adsense vendor site will not see anything like this amount of money (Google doesn't say what portion of the advertiser money you will actually get).

So if you know that these keywords are really expensive (and there are keywords that cost up 8 times this value) the question should come to mind - how much could I make with an information site on this subject?

Well lets see.If we assume that you want to target expensive words with cheap words you might use the following:

As you can see we have selected three 'cheap' phrases that will deliver targetted visitors (remember that this is only an example - don't rush off and do this as you will lose a shed load of money!).So from the example above we see that for a total cost of $40 we can get 76 visitors and if we assume that the 'mortgage' keyword pays $1 a hit then we'll be in profit by $36 a day.

Isn't that nice, not a quick way to get rich but free money ........................dear sweet Jesus, if only it were that simple! This is why I said DON'T rush off and implement this example.

If this was all there is to it there would be a lot more millionaires out there. There is one aspect of this example that has not been covered. We've assumed that everyone seeing the advert for the cheap keywords will want to click on the more expensive keyword adverts - they don't and they wont.

In general terms a good conversion rate for adsense is 5% (this is considered a GOOD conversion rate), so lets have a look at that example again.

Total hits = 76Cost per hit = $0.53Price per expensive hit = $1Click through rate (CTR) 5%

hits * ctr * $1 = $3.80Cost - profit = Bugger!

Oops! - you just emptied your bank account.

As yo can see from this example it's only when you sit down and really work out what everythings worth that you realise that you can lose big time.So, this example shows you how NOT to do it, it doesn't mean that in general it doesn't work, it does mean that you need to carefully select you keywords (the ones you're paying for and targetting) and develop a site for them.

This then begs the question How do you go about choosing the right keywords and markets?There are a couple of ways of doing this, first you can sit down and think of a few areas that seem to be really popular, for example mortgages, loans, forex trading. You can then go to somewhere like word tracker (they have a free trial service via our link - top right, completely free) which you can use to see how many people are actually searching for a given phrase - this then will tell you if there is sufficient interest to make it worth while. You then go and create your site and content. this then allows you to zoom in on one particular area, one niche if you like - but there is a better way.

The second way of getting yourself up and running with a money making adsense campaign is quicker and easier.You start by going out and finding all of the public domain articles that you can and saving them to your hard drive - ensuring that you also save the authors ID and link text (fair is fair). Once you have a reasonable collection of documents you then apply them to you web page (you have a single page and just save multiple copies of it with different names using the free content).Each one of these pages should have your adsense account script embedded and then it's just a case of getting indexed.

For both of these methods you still need to perform your own search engine optimisation.

This of course is also not an over night solution.if you are the impatient type you get yourslf a piece of software that will take your content and mass produce web pages for you and perform the required search engine optimisation for you (so in other words a turn key solution). This then leaves you with only the task of getting a domain name and hosting account to perform manually.This solution can obviously be expanded upon to include many different niche areas within one site, thus ensuring that the software does all of your SEO across the entire site and that all of your pages get listed.

Once you have your site completely up and running you can simply buy some very cheap pay per click advertising to get pre targetted traffic to your niche pages (doesn't have to be from Google - can be from findwhat or another smaller service or a big boy like overture).

For the impatient amongst you there might still be the question of cost, i.e. what does one of these all singing all dancing solutions cost? Simply put it depends, I know that there are a variety of solutions out there ranging from $50 a month up to $150 a month - and these are effectively rental systems, these systems have a variety of functionality but none seem to auto SEO for you.

If this strikes you as an interesting way to make money - but you don't want to shell out on expensive software, or worse still 'rent' software, you might like to consider the 'Cash Sense' system (which is in beta test at the moment).

More information on Cash Sense is available at http://www.Cash-Sense.com Until the next time, have fun.

Disclaimer: Adsense and Adwords are copyrighted trademarks of Google, adwords figures are shown here as an example only.