(The Internet Business Ideas Guide #3 (Part 2))

My previous post on Google Adsense explained how anyone can set up a website for the purpose of generating income from Google Adsense. Through my experience, the more web traffic you get, the greater number of clicks you’ll have on your Adsense ads.

Another factor that affects your profits with Google Adsense is the value of the ads displayed on your site. Ads driven by keywords with high demand will likely have higher Cost-Per-Clicks as compared to keywords with little or no demand. Thus, to optimize on your Adsense profits, you’ll need to identify keywords that attract a significant number of advertisers, with an average or low number of Adsense publishers.

Using Cost-Per-Click (CPC) to determine Adsense per-click value

Contrary to popular belief, the Adwords CPC value for a keyword does not necessarily translate to your Adsense per-click revenue. For one thing, a keyword with a high CPC value may have no bidders. Another factor would be the type of visitors visiting the site – site visitors that are too technical or knowledgeable in the subject area may be less likely to click on the Ads shown.

Discovering your estimated earnings per click

1. Find high cost-per-click keywords

Get a list of keywords you are interested to optimize for your Google Adsense website or blog. Find the CPC for each through Google’s Traffic Estimator

For comparison purposes, it’s best that you copy the average CPC and the estimated
clicks per day for each keyword into a spreadsheet. This way, you are able to make a smart comparison for each keyword you are considering.

2. Use CPC to estimate your earnings per click

Now, the estimated CPC that you get from Google’s Traffic Estimator also comes with an estimated ranking. The high CPC values that you see are likely to be for the highest ranking ad only. As a rule of thumb, multiplying the CPC by 30% will give you the estimated per click Adsense earning for the top ranking ad.

3. Estimating CPC for lower ranked ads

Ad ranking is not determined by the maximum CPC set by the advertiser alone. Other factors that affect ad ranking are the Quality Score and the Conversion Rate of that ad. As these two factors are highly variable, we can’t use them for our estimates.

What we can do however, is to continue using Google’s Traffic Estimator to determine the CPC gap between ads in the top 3 positions and the ads ranked between 4 and 6.

To do this, continuously lower the max CPC value on the Traffic Estimator (leave Daily Budget blank), until you see the Estimated Ad Position value change from 1 – 3 to 4 – 6. In the example below, the maximum estimated CPC for the keyword “sell online” is $1.20 for ad positions of 4 – 6.

With this, your guess for an average CPC for the keyword “sell online” would be $1.20 and above. Also, with 30% of the CPC estimated to be your earnings per click, you can expect to earn about $0.40 or more per click for this keyword.

The importance of ad placement

Ad positions are also important in determining the number of clicks you get. Optimum locations for Adsense ads would be:

• Close to or within the main content area of a page. Readers who are reading your content would be more likely to view the ads your page.
• Near to navigational or menu bars. Again, readers come here to find links to other pages on your webpage or blog.
• At the end of the main content area. Readers who finish reading your article or post are more likely to click on links related to your topic.
• The top fold of a site or a blog. This is the landing area where your readers
  get the first impression of your website.

The importance of optimum
Ad Sizes