If your site is ad revenue-driven, realize that you won’t get rich from Google’s ad network — Google AdSense — unless you can deliver millions of pageviews. And if you are doing millions of pageviews, you should be able to monetize better. That does not mean you can’t make good money from ad networks, but don’t make the mistake of assuming that Google offers a perfect solution for everybody.
AdSense is a good product from a credible company, but in most cases for smaller sites, it pays a very low cost per thousand impressions (CPMs). On the plus side, Google offers great tools for tracking your payouts and an easy-to-use system to actually get paid. Google’s tools are superior to nearly every ad network, but — and it’s a big but — the rates it pays tend to be on the low side.
While Google AdSense pays a low rate, it’s important to remember that an ad network that’s bad for us (in most cases) may not always be bad for you. Ad networks, even ones as large as Google, sell ads to advertisers who want them displayed on a certain type of site. If AdSense, or any other network, has an advertiser looking for exactly the type of site you have, then it will pay more to serve those ads on your site. Timing is also important; for instance, election season almost always means higher CPMs with a flood of political ads.
So if your website caters to people who dress up as cats, and Google has an advertiser that makes human-size scratching posts, you may be in luck. To make the whole ad picture even more complicated, a network might do well short-term for a flukey reason such as the scenario just detailed, but it may not perform in general.
To get around that, you’ll want to work with more than one network and track which ones perform best for your site. Again, we recommend using Adsense, but only in the very beginning. It is easy to sign up for and implement. But there are many more options, and sometimes it can be very beneficial to use a network where you can set a high rate and then, if they can’t fill it, pass the ad space back to Google Adsense. Networks such as Souvrn, Pulse Point and Switch Ads all have the ability to set a minimum rate and pass back. Unlike with Google, you have to get approved for these networks, but 6-12 months out, this should be part of your ad strategy.
CPM rates can change dramatically from day to day. Your site is just another one in the mix for these networks, so everything is just supply and demand. For most Google Adsense websites, you can expect $.05-$.25 per 1,000 visitors. If you use the pass-back technique, you could ask for $1 per 1,000 visitors and it may be filled 10% of the time and then passed back. So just that one step could increase your revenue by 4-6% immediately.
The Customers Matter
Another mistake to avoid is allowing the ad networks to muck up your user experience. Every network with reps who talk to potential customers offers the “service” of helping you place their ads on your site. Their answer is always better real estate, more obtrusive ads, pop-ups, videos and lots of other things that will perform well for the advertiser while chasing away your visitors.
It’s important to maximize revenue, but you have to balance that with maintaining user experience. Turning your site into a clanging billboard may work in the short term, but will ultimately destroy your business.
In general, put yourself in the place of a potential visitor to your site and ask the following questions:
- Is whatever I’m about to show them worth them having to click through an interstitial or a pop-up ad?
- Will they know that before they decide to just leave?
If the answer to both questions is not “yes,” then avoid taking ads that make it hard to get to whatever you are offering. Similarly, keep your overall ad load low enough that your site remains pleasant to visit.
Ads are a balancing act. If you are trying to make all your money from ads, you may have to sacrifice user experience. If you are an e-commerce site, you may want to include one ad space (that doesn’t compete with you directly) for additional revenue.
Geography also has a big effect on CPM rates. U.S. traffic tends to be the most valuable, followed by European countries. If the majority of your traffic comes from emerging economies, expect a lower CPM rate.
It’s not all CPM
While we prefer CPM ads on most of our sites (because they pay regardless of whether someone actually clicks on the ad), certain types of sites do well with other types of ads. Don’t forget to consider these:
- Cost-Per-Click: CPC ads pay only when someone actually clicks on the ad (and yes, there is technology in place to prevent you from sitting at a computer all day and clicking the ads).
- Cost-Per-Action: CPA ads go deeper than CPC ads. Not only do you have to click them, you actually have to complete an action, which can range from entering an email to taking a survey or making a purchase. These ads can pay a lot more than CPC and CPM-based ads.
- Affiliate deals: These are ads where you get a percentage or a set fee if someone clicks through from your site and actually buys something. For example, Amazon offers affiliate deals, so if your site writes about books or other products Amazon sells, you can make money by offering links so people can actually buy the products. There are all sorts of affiliate deals out there for everything from web hosting to sex toys. You can also look into Share-A-Sale and Commission Junction for more affiliate options.
Picking an ad network requires a lot of legwork, but picking ad types requires even more. A CPC or CPC deal can be lucrative, but it can also bring visitors away from your site. The same is true for affiliate deals, so you have to balance the payout versus the risk of customers leaving.
CPC, CPA and affiliate deals can be incredibly lucrative, but they take more management than CPM-based ad spots. For example, we own a number of tech tutorial websites aimed at web developers. We got an offer to feature an affiliate deal for eco-friendly web hosting, which paid very well and had made a lot of money for someone we know.
The difference was that our friend had a website focused on creating your first website. The audience for that site was exactly the audience a web hosting company would need. Yet our sites spoke to developers, people who already had web hosts and weren’t likely to switch just because a new one was offering “green” hosting.
That’s where we avoided another mistake that can doom your web business. We did not stick with a failing monetization plan too long. We tested the hosting offer, saw it got a lot of clicks (but no sales for a reasonable period of time) and dropped it in favor of something else.
Building your monetization — the thing that will ultimately make your website a business — requires a lot of controlled failure. Experiment a lot and slowly figure out what works, when it works, and why it works. It’s an endless process that will remain important until the time when you can either directly sell ad space on your site or find a way to make money that is not tied directly to ad impressions and pageviews.If you're looking for some serious preparation for your interviews, I'd recommend this book written by a lead Google interviewer. It has 189 programming questions and solutions: