In this article, we are going to discuss some basic things that you should know before get starting to use Google AdSense to display and earn revenue from advertisements on your website. I’ll start by discussing some key concepts and terms related to both digital advertising and the digital publishing industry. Now let’s get started to learn Google AdSense, the basics.
Understanding Display Advertising
To make the most out of the Google AdSense tool. It’s first important to have an understanding of display advertising in general. How it works, the different ways of implementing it, and what its limitations are. At its core,
Display advertising is when certain areas of a website or blog are reserved and sold to advertisers for them to promote a particular product or service. The pricing and methods for determining the value of a display advertising can differ depending on the goals of the website owner.
Sold Web Ads Spots
Web ads spots can be sold for a monthly, quarterly, or annual flat rate. They can be sold based on the number of actions a particular ad receives. For example, a website owner might get paid for an ad when a user actually clicks on the ad and submits their email address for more information. This payment method generally benefits the advertiser more than the website owner. Ads can also be sold based on the number of clicks that they receive. That’s called CPC. Additionally, display ads can be sold based on the particular amount of views or impressions that an advertisement receives, this is called CPM.
Or cost per thousand impressions. And is the form of value determination used by Google AdSense. An impression is simply when a user navigates to a website and sees an advertisement. If a website owner has three advertisement spots on one page when a user navigates to that page. They’re actually creating three impressions for the website owner because three ad spots are being viewed. It’s important to understand the difference between a web page view and a web page impression.
This method of selling display ads tends to benefit the website owner more than other methods of display ad value determination. Actually, selling display ads on a website can be a tedious and time-consuming process. That is where Google Ad Sense comes into play. Google As Sense automatically chooses the highest paying advertisements to be displayed on a particular website, to maximize the revenue that a website owner can make.
Discovering ad Networks
What is the Internet “Ad Network?”
Now that we have an understanding of the different ways that the values of display ads can be determined, it’s important to understand what ad networks are.
A group of publishers earning revenue from ads displayed on their website and advertisers paying for the displayed ads.
Ad networks consist of both publishers that will display advertisements on their website, and advertisers that will pay for the ads.
Publishers within the ad network set aside specific areas within their website for ads to be displayed by advertisers. This is what we’ll be doing with Google AdSense. In an ad network, advertisers can choose the keywords and topics of websites that they’d like their ads to be displayed on. At the same time, they also specify the maximum bid price that they’re willing to pay for their ad. For a particular ad placement location on a website, the ad network will compare the bid price from all of the advertisers that would like their ad to be displayed in that spot.
That is the advertisers that specified that keywords, categories, and topics that are in line with the offered ad position. Of all of the advertisers that meet the criteria for the ad position, the one that has the highest maximum bid price set will win the bidding contest and their ad will be displayed in the spot on the website.
In turn, the publisher earns the maximum amount possible because that highest bidding advertiser is awarded the ad spot. This comparison and automatic bidding process happen for every single impression served on a website and occurs almost instantaneously. Google AdSense consists of multiple ad networks and therefore does a very good job of finding the highest paying advertiser for a particular spot on a website. It’s also important to understand that the ad network a publisher is using, basically acts as a salesperson, or middle man, and saves the publisher a lot of time by automatically comparing bids and offers from different advertisers.
Because of this, the ad network takes a cut of the earnings that a publisher makes by selling advertising on his or her website. Generally speaking, however, the cut that an ad network takes is less than the expenses a publisher would incur if he or she were selling advertisements directly.
Understanding Earning Power
How Much You Will Earn with Google AdSense?
Most people’s first question regarding Google Adsense is how much money will I earn? Although this is a very valid question, it’s quite difficult to answer because there are a lot of variables that come into play regarding earnings from Google Adsense. The two primary variables that determine how much you earn on Adsense are;
- The number of impressions that you receive and
- The quality and topic of your content.
If your earnings from Adsense were simply based on impressions and nothing else, it would be easy to gauge how much money you could expect to make.
We could say that for every 1,000 impressions you receive, you earn $10 and since your site receives 20,000 impressions a month, you’ll make $200 per month. The question then becomes why don’t all publishers receive the same amount of revenue per 1,000 impressions? The answer is that different advertisers are willing to pay different amounts depending on the topic and quality of the content on a website. Remember advertisers aren’t paying a flat rate to advertise on a website in an ad network. Advertisers are bidding on ad spots based on the topic and quality of the website.
For example, one ad network might include two different advertisers. One advertiser may be looking to promote an insurance policy via an advertisement on a website. And another advertiser might be looking to promote a toothbrush. These two advertisers probably have very different business models, profit margins, and in turn advertising budgets and strategies. If the insurance company sells one insurance policy, they’re probably making a pretty big profit. And therefore can afford to pay more for an advertisement. Let’s say that the insurance company is willing to pay $10 per 1,000 impressions.
The toothbrush company is probably making a much lower profit margin and therefore can’t afford to bid as high for internet advertisements. For this example that the toothbrush company is willing to pay $1 per 1,000 impressions. Now here’s where the publishers come into play with our two advertisers in mind, let’s say that we also have two different publishers. One publisher has a blog on legal advice and the other publisher has a website on dental health. Both publishers are using Google Adsense. Because advertisers only want to be displayed on websites that are relevant to their target market.
The insurance companies ad will probably bid for the spot on the legal advice blog. And the toothbrush companies ad will probably bid for the spot on the dental health blog. Both advertisers will probably be bidding against other advertisers in the same industry with similar bid prices. Let’s say that for both our insurance company and our toothbrush company that they are the highest bidders for the entire month for their respective websites. Also, let’s say that both websites receive the same amount of impressions for the particular month, 20,000.
Although the impressions are the same, the legal advice blog will earn $200 from the 20,000 impressions because the insurance company is paying $10 per 1,000 impressions. At the same time, the dental advice blog will only earn $20 from 20,000 impressions because their highest bidder is only willing to pay $1 for 1,000 impressions. From this example, you can see that although both websites received the same number of impressions, because of the difference in topics, one site is earning 10 times as much as the other site.
So what does this mean for you as a publisher when it comes to calculating your monthly earnings? It means that you’ll have to try out Adsense for at least a couple of months to get a better feel of how much money you’ll be making every month. If you don’t currently have a website and your goal of watching this video series is to find a way to make a fortune off of Google Adsense, then your best bet is probably to research which industries are willing to pay the most for internet advertising impressions. I’ll give you a hint, the legal industry, including insurance companies, spends a lot of money on online advertising.
Another high-paying industry is that of luxury products because they also have a very high-profit margin. Once you have an understanding of how much money you’ll make per 1,000 impressions, also known as RPM, based on the topic of your blog, then you can work on generating as many monthly impressions as possible to drive up your earnings.
Understanding Google AdSense Limitations
At this point, you may be starting to see some of the limitations of using Google AdSense. Again, you can make a full-time income off AdSense, but it’s not likely and it takes a lot of work and effort to receive enough impressions to do so. That being said, Google AdSense is best used as a supplemental form of revenue for your website and not necessarily the primary form of revenue. Also, remember that as a publisher, you’re letting Google AdSense automatically place advertisements on your website.
This means that you have a limited ability to review and approve ads before they appear on your site. Advertisers are also letting Google automatically place their ads on websites without a full thorough review. Because of this, advertisers are probably not willing to pay quite as much as if they had handpicked and approved specific websites that they know will attract their target audience. By using AdSense, you’re allowing Google to take a cut of your ad revenue. There may come a time where an advertiser will approach you as a publisher and be willing to pay more for your advertisement spots that are currently being populated with ads from Google AdSense.
If this time comes, it’s probably best to accept that advertiser’s offer and forego using AdSense in those spots for the duration of the advertiser’s ad campaign. In fact, just having Google AdSense on your website may attract direct offers from advertisers because they can see that ad spots are available on your site and that you’re willing to sell them. Google AdSense is a great tool and can provide a great deal of supplemental income for your web property, but don’t forget to address other opportunities and forms of monetization that may arise while you’re using Google AdSense.