Making Money Online... not

Can you use Adwords to generate Adsense income?

I don't think so!

Once you have become familiar with the Adwords and Adsense Google systems, you will, sooner or later, have the same clever idea that many other poeple have had.

Hang on, you think.. if the amount of Adsense earnings I generate is pretty much proportional to the amount of traffic reaching my site, can't I use Google Adwords to drive traffic to my site?

No.

Stop and think for a second. Yes, your adsense income depends on how much traffic visits your site. A not unheard of rate is something like $10 per thousand visitors to your site. The trouble with going to Adwords to generate this traffic is deeply flawed. Pretty much the minimum bid on a keyword in Adwords is something like 5 cents. Now, if one thousand people click on your advert that has cost you, yup, $50. You pay $50 in advertising costs to generate 1000 visitors, and those visitors earn you about $10 in revenue. You loose money. Quickly.

Of course, it doesn't quite work like that. Visitors are likely to look at other pages on your website. Say an average of 3 page views per visitor. So your $50 of costs now earns you $30 of Adsense revenue. Not bad, but still pretty hopeless.

The Adwords campaign will do one thing: Raise awareness of your website. This is of course, a good thing. Adwords can be useful to create awareness of your site when it is launch, and activity you might like to budget for, but you are not going to be able to rely on it for long term profit.

Like all online money making ideas, this one is just possible to pull off, if you carefully manage the keyword bids, and you make website optimisation efforts to ensure that visitors follow a lot of pages within your site, then there might be a profit margin in it. But, as with everything, all the niches are saturated with poeple doing just this, and it is impossible to gain a foothold.

The other factor is that your Adword adverts are going to appear next to, and compete with a lot of other advertisers in the same niche that you are advertising. Those same competing adverts are the ones that then appear in your adsense groups on your pages. Regardless of the actual cost per click of your niche you are faced with a problem. The average cost of the keywords that you pay for your adword campaign is going to be about the same as the cost paid by other adwords advertisers whose adverts appear in the adsense groups on your site.

In fact, it is even worse! Don't forget that you do not get the total value of the advertisers cost in Adsense revenue. You only get a percentage. The rest goes into Google's bank account.

This is simply expressed by saying that the AVERAGE cost per Click on your Adwords campaign must be less than the revenue per visitor (eCPM/1000) multiplied by the number of pages visited on average.

But, there is the flaw! One visitor will, in all likelyhood click on only one advert! So the above statement is invalid! The one way with can work is if you find a group of low cost keywords to use on your adwords, which drives traffic to your site, and that traffic then generates a greater adsense income because your website targets different, higher paying keywords.

The average cost per visitor from adwords must be less than the average adsense earnings per visitor. Difficult to do.

The final thing to consider: Even if you do hit upon a bunch of great cheap keywords for Adwords to drive traffic into your higher revenue per visitor website, you must consider the implications of what you are doing. By adding a large amount of advert driven traffic to your website, which, previously, relied upon a different primary source of traffic, you may change the character of the traffic. It is impossible to say what the outcome might be. The newer and different type of traffic may be more suited to your website, and therefore raise your average Adsense revenue per visitor, or, conversely, it migh lower it. You might have a website that is earning $100 per thousand visitors. That is 10 cents per visitor. So you do some crafty adwords campaigns that drive traffic to your website at the price of 7 cents per visitor. That is a clear profit of 3 cents per visitor. You will get higher overall adsense earnings. But, because the nature of the traffic has changed, you may find that this new traffic dramatically changes your average revenue per visitor, totally destroying your profit margin!

This all assumes that you aren't actually selling something on your website: In which case Adwords is great!!

All this theory applies to websites that generate revenue from Adsense, but applies equally well to websites that are linked to other affiliates - and indeed to website that actually sell things. If the cost per visitor of your Adwords campaign is less than the average profit per visitor to your website, then you need to be careful!