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Welcome to Day 2 of your AdSense Insider course.

First an apology: there's a bit of math ahead!

Yesterday we looked at AdWords and learnt how AdSense is Google’s AdWords syndication program that posts AdWords ads on content-targeted websites:

Ads about binoculars appear on web pages with information about binoculars on them.

It makes sense doesn't it!

Today we are going to look at the factors that affect how much money you will get from Google if you sign up (and are accepted for) the AdSense program, paying detailed attention to those areas that are controllable - because many aren't.

The AdSense revenue equation

Revenue is generated for you when someone clicks on an AdSense ad on your site. Google charges the advertiser for the click thru and shares this revenue with you.

The amount you earn from an ad is given by the following equation

Income PER AD =

Click through price (also known as Cost Per Click)
X Fractional pay out
X Click through rate
X Page traffic
X Appearance frequency

The COST PER CLICK is the price the advertiser is bidding to place an ad under the AdWords program and is determined by a complex real time automatic auction process: Google advertisers set a maximum price they are prepared to bid for keywords and they usually pay less than this.

The lowest bid in the UK is 4p and in the USA is 5c so if you get clicks on these ads you're not going to make much money.

The FRACTIONAL PAYOUT RATE is the percentage of its revenues that Google pays out to AdSense partners. THIS FIGURE IS NOT DISCLOSED BY GOOGLE. However, anecdotal evidence suggest the payout rate is good and competitive systems such as 7search.com payout around the 50% mark.

CLICK THROUGH RATE is the number of times the ad is clicked on divided by the number of times it is displayed (“impressions”).

PAGE TRAFFIC is the number of times people visit your web page.

APPEARANCE FREQUENCY is the number of times a particular ad appears on your page (remember that ads are rotated by Google automatically and successful ads are shown more often.)

To repeat: this is income PER advertisement, so to calculate your total AdSense income you need to evaluate this equation for each ad on all your web pages and add up the results.

By the way, Google saves you the bother and tells you the answer in the reports it gives you.

But already the complexity of the process is apparent and of these factors, some are completely out of your control: Fractional payout rate and Appearance frequency being two.

So let’s look at those three factors that are at least partially within your control.

Next: Cost Per Click

posted by Ahmad Faiz Besah @ 3:26 AM