HOW MUCH DOES ADSENSE PAY?

 

Introduction:

Every website I visited to research this page avoided giving an estimate for how much someone will earn if they use Google's Adsense on their website. The reason given was that every site is unique, making such predictions difficult. To do so someone would have to record the earnings from hundreds of widely different sites over a long time to come up with an approximate average. Fortunately, I have such a site.

My website, waynesthisandthat.com, consists of over 450 web pages covering more than 350 different subjects. I posted Adsense ads on all of them and monitored the total earnings for four years. For this webpage, I used the earnings from the ten best months: March through November of 2010. Some of these pages were good fits to Adsense's contextual ad system that selects ads that match the topic of that page. For example: The webpage on growing ranunculus bulbs was a perfect sales vehicle. People logging onto it were interested in growing these beautiful flowers, the page extolled their virtues and provided many pictures how how attractive they were, whetting their desire to purchase them. The bulbs were inexpensive, opening the door to impulse purchases. Finally, there are many sources for the bulbs so there were always advertisers available. Google's Adsense contextual robot had not problem finding appropriate ads for this page because the words "ranunculus" and "flowering bulbs" were used repeatedly. Earnings from this page correlate to well designed webpages intended to earn lots of money. On the other hand, my page on ultra-fast images of nuclear detonations was so far removed from any marketable products that Adsense found it impossible to find ads that matched its content.

Most of the pages were halfway between these two extremes. Altogether, the 450 pages represent a reasonable cross section of Internet websites. As such, the average collective earnings from them should provide a ballpark estimate on what to expect Adsense to pay. While it's unlikely that such an average will be exactly how much Adsense will pay you to put advertisements on your particular website, it should be close enough to give you an idea.

 

How Much Does Adsense Pay:

There are several metrics for describing Internet earnings: CPC (cost per click), CPM (cost per thousand impressions [ad displays]), CPI (cost per impression) and the list go. I found these term confusing because as a publisher, someone who creates a webpage then allows Adsense to put ads on it, I wasn't interested in the cost to an advertiser for putting his ads on my page, but how much I was going to earn. Also, when trying to decide if Adsense was something I wanted to do the only metric I had was the number of pageviews various pages averaged per month. What I wanted, and am assuming visitors to this page want, is a way to estimate earnings based on pageviews, or IPP (income per pageview.) To get an idea of what this number might be for average webpages, I divided the total earnings for the 450 pages on my site by the total number of page views.

Here are the total pageviews and monthly earnings from March to November 2010 for the hundreds of webpages used for this analysis:

PAGEVIEWS____________EARNINGS

265,000...............................$212
251,000...............................$173
261,000...............................$182
225,000...............................$144
237,000...............................$189
246,000...............................$211
241,000...............................$209
257,000...............................$181
250,000...............................$198

Dividing the total earnings ($1,699) by the total pageviews (2,233,000) reveals that the pages on the website earned an average of $0.00076 per page view. So, if you have an average webpage and it gets 400,000 pageviews a month, you might expect to earn something around $304.

Actually, I would expect you to earn more. Here's why.

I don't recall what my average click through rate was, but my lingering impression is that it was between 0.6 and 0.9-percent. That means that only one out of every 167 to 111 people logging onto one of the site's pages clicked on an Adsense ad they found there. This is extremely poor. Most references suggest rates are closer to 1.0 for pages with poor advertising potential, such as the atom bomb page, to 3.0 for very good pages like the one about rununculuses.

Let's consider some examples.

Suppose you created a webpage about the restoration of your 1957 Chevy. People logging onto that page would do so because they are doing something like that themselves and are looking for information on how to do it. Your page provided information on the tools, techniques and materials you used. Adsense's context robot would have any easy job finding ads for similar tools and materials so your click through rate (CTR) would probably be 2.0 to 3.0-percent, assuming the page had a lot of good content and images that convinced your viewers that you know what you were talking about. If that's the case you might expect to earn something around three and a half times my average CTR. Let's select 2.5 as your CTR. But, because yours is a single webpage with a low Google ranking, it only gets 2,000 views per month, thus yielding 0.00076 x 2000 x (2.5/0.75) = $5.07 a month. If that sound terrible, wait until you read the following very real example:

One of my most popular pages is Victorian Servant Hierarchy and Wages. This page consistently earns the number one ranking by Google, Yahoo and Bing and averages 20,000 pageviews a month. Sounds good. But consider, the only people logging onto that page as those looking for historical information, not to purchase anything. Worse still, the closest contextual match Adsense could find was for home cleaning services. The CTR was effectively 0.0 yielding $0.00 income per month... and that from a single page getting 20,000 pageviews.

So, look at your pages as if you were Adsense's contextual robot. Do they present material that is easy to match to many saleable products from many different sources? Does you page make people want to buy them? If so then estimate a CTR of 3.0-percent. If you page is about an interesting subject but does not correlate well to marketable products, assume you CTR will be 0.5 or less. Then apply the following formula for each page:

$0.00076 x (your estimated CTR/my average CTR of 0.75-percent) x pageviews per month = anticipated earnings.

You may earn more. Maybe less. But this should provide a rough ballpark to help you decide if you want to deal with the hassles of participating in Adsense or any other type of monetization program.

What hassles are those? Read on...

 

Adsense and Taxes:

The Adsense income report that comes attached to your checks will state that the money is classed as "non-employee compensation." This means you are not an employee of Adsense or Google. In other words, you are self employed. All your income has to be reported on your tax return and supplemented with at least two self-employment tax schedules. Because Adsense is poorly defined for figuring out how to classify it on these forms, I was always uneasy about if I'd filled them out correctly. Even though I always paid H&R Block to process my taxes, the Adsense program was so different from all other forms of self employment that I worried all year long that I'd made some mistake and the IRS was going nail me with an audit. And as we all know, the IRS doesn't care it you thought you did it right. You are responsible for any and all mistakes regardless of their causes.

These concerns haunted me and took away much of the joy of the Adsense earnings.

Additionally, the IRS seems to go after self employed people like a pack of hungry wolves. If your annual Adsense earnings after any website deductions such as hosting fees is less than $400, then you don't have to turn in any forms. If it's one dollar over $400 you could end up paying over $100 in social security, medicare, regular federal taxes and states taxes.

It seemed like every time I had a good year the government ending up taking 28-percent of it.

 

Adsense and the Small Business Administration:

As big a problem as the taxes were, the issue of legally being a small business was a nightmare.

States have laws stating that if you are a small business, you have to get certain licenses and permits. This varies so greatly from state to state that it's impossible to formulate a rule of thumb. For example: One reference claimed that if your small business's annual income was under $12,000 and was located in Washington state, you didn't need any permits or licenses. But, if you have the good fortune to live in Los Angeles county in California you've hit the jackpot. No matter how little you earn, you will need at least 16 different licenses and permits from 13 different agencies. Assuming you're a one-person website, then the total outlay for these will be something on the order of $211, much of which has to be paid annually.

For information about your particular state's requirements, try www.cityapplications.com/business-licenses.html.

Most Adsense users ignore small business permits and licenses and hope they get away with it. The odds are they will. But if they get caught the penalties could be extreme. Even if you don't get caught, the concern that you might may haunt you and decrease the satisfaction of earning money off your site.

 

Dealing with Adsense:

Do a Google search for problems with Adsense and you'll find yourself wading in countless testimonials about Adsense's Draconian approach to customer service. If fact Adsense is so automated that they don't have a customer service program. If something bad happens, such as your receiving an email stating that you've violated one of Adsense's policies and are being banned, the appeal process is almost fully automated. You fill out a form, many times without enough flexibility to describe your particular issue, turn it in and a day later get a form reply stating that your appeal has been considered and rejected.

The cold, mechanical manner in which this takes place and the lack of options for working an appeal leaves one with a feeling of frustrated impotence. I know. It happened to me.

I first signed up with Adsense in 2007. I misunderstood Adsense's prohibition about asking people to click on the links and innocently included such statements close to many of the ads. A few weeks later I received and email stating that this was a policy violation and I had three days to correct the problem or be banned. I immediately apologized and spent the next three days removing all the offending statements. I never heard back from Adsense and assumed they had scanned all my pages and determined I was in compliance with their requirements. Everything went fine for the next four years. The in early 2011 I received another email stating that they had detected another one of the improper statements and I had three days to remove it. Since I had not added any more of these statements it must have been an old one Adsense and I had missed. This is not surprising in as much as there were 500 ads scattered throughout over 350 pages. Making matters worse was that I was on vacation when the warning came in and didn't read it until a week had passed. Adsense banned me and there was nothing I could do about it.

Four years later, I tried reapplying and was rejected, as always, with a curt form letter. While there are a few exceptions of people figuring out how to beat the system, for the vast majority of people it's: banned for once... banned for life.

It's a sad story and one that thousands of previous Adsense subscribers have experienced. Adsense's attitude seems to be one of arrogance. They have the best game in town and don't have to waste time being concerned with their customer's needs... at least that's what it looks like from our point of view. But what about looking at the situation from Adsense's point of view.

From the moment Adsense went on-line, thousands of unscrupulous people all over the world stared figuring out how to cheat the system. They created click-bots that would repeated click on ads to drive their earnings up. Groups formed where people would click on your ads if you clicked on theirs. Individuals asked their friends to click on ads. They even logged on to their site at public libraries and clicked on the ads from there. From day one Adsense was under attack, and because of the overwhelming number of people trying the "game" the system, tracking down the guilty was impossible.

Adsense's only method of self preservation was to impose a set of very strict rules. Break one of them and you're out. To be honest, I can't fault them for that.

And what about Adsene's lack of customer support? Why don't they have enough people to work each case?

Consider, there are hundreds of thousands of small web sites that only earn $100 or so a month. To hire enough staff to support them all in a personal manner would cost so much that it would put Adsense out of business. Most estimates suggest that Adsense charges 32-percent as a commision to put an ad on your website. Let's say Joe's Custom Spray Paint Cans, Inc. pays Adsense $1.00 per click. Someone visiting your page clicks on Joe's ad. Adsense gets $.32 and you get $.68. But if Adsense got rid of all of its automated review system and hired 1,000 case workers to help you through any problems you might be having, then the cost of their salaries has to come from somewhere. That's right... your 68-percent. Instead of that you might only be earning 20-percent or even less.

I wish I hadn't made the mistakes I made with Adsense. I wish I hadn't been on vacation when the second email arrived. But I accept that they were my mistakes that got me banned. I wish Adsense had a better customer service system. But I can't complain about what they used and enjoy the high percentage I earned from them at the same time. The two are tied together.

So please keep this in mind if you have problems with Adsense and try to look at things from their perspective.

 

Should You Use Adsense:

Estimate your annual income based on your best guess for how many total pageviews you expect to get over the next year. If it's over $400 after provable deductions, take away 28-percent for taxes. Deduct from that any permit and license fees you feel you need to pay. Next, consider how many hours it's going to be to add the Adsense HTML snippets to your pages, how many hours you're going to spend filling out extra tax form and collecting all the support paperwork needed to back them up in case of an audit. Divide the estimated income by the number of hours and ask yourself if that hourly wage is worth all the effort.

The answer is different for everyone. Some people are overjoyed to earn a few dollars a year even though it takes up many hours of work. For them it's like fishing; spending ten hours and hundreds of dollars on equipment is worth it even if they only come home with $5 worth of fish. Others look at things differently. If they have other avenues of converting their time into dollars that pay better than Adsense, it might not be a good match for them.

Personally, I enjoyed it. If Adsense called me today and asked me to rejoin I'd jump at it. The only thing holding me back from pursuing one of Adsense's competitors are the uncertainty over the issues of permits and licenses. If my website's pageview rate ever tops 10,00 per day (it's at 7,000 right now) I might consider it.

 

 

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