How to set goals and make projections with Adsense earnings
by Randall McCarley
October 19th, 2007
Since the Adsense Tips from an Expert post, I’ve been paying attention to how much money Adsense is bringing in. Over the past couple of months, I’ve also been learning more about accounting. The combination of these two events is leading to new sources of profit for me and the inspiration behind many of the recent changes on this site.
I’ve been learning more about the Adsense program and how it works, experimenting with different methods of tracking and devising ways to project future earnings. Through this process I’ve stumbled quite a bit and discovered the numbers weren’t adding up… in other words the actual events didn’t match what my brain thought should be happening.
It looks like I’ve finally discovered a working system for tracking and projecting financial growth through Adsense. These are my tips from my limited experience, but I thought you may be interested in the things I look at and how I come to my conclusions.
Adsense is an earner but it is not a “get rich quick” scheme
I make a little money on Adsense each month. I have for years but it hasn’t been until recently that the income was worth looking at. I’m not ready to retire but steady growth and an understanding of what’s going on has encouraged me.
The growth is the key. By tracking everything at first and figuring out how all the bits of information relate to each other I have figured out how to encourage even more growth.
Unfortunately, the answer is to keep working at it!
What Google Shows You
Your basic Adsense report, or Overview, shows you the critical elements of your current standing: how much money you made today and your total earnings. These numbers are self-explanatory but the real money is revealed in the other figures.
Page Impressions: How many pages did your ads get displayed on? The more impressions the more likely someone will click through and you’ll get more money. Raw traffic drives this number.
Clicks: How many times did people actually click the ads? More clicks means more money.
Page CTR: This is probably the most important figure to pay attention to. Your click through rate is the percentage of people clicking an ad versus the page impressions. Pages with higher CTRs get higher-paying ads because Google follows the money and they are going to take advantage of a proven performer!
Page CTR = Clicks / Impressions
Page eCPM: This is supposedly how much you make per thousand impressions. Print advertisers understand this information but as far as I can tell with Adsense, it’s a bullshit figure. Google reps have claimed that if you placed an ad on your page this is the figure per month that you’d be able to charge for that space. This is not true as there are too many variables involved. If someone has a reason this should even be listed, please comment below.
Earnings: This is a break down of earnings per program or channel. When you work in multiple programs like Content, Search, Referrals and now Mobile you can see which programs are pulling through. Also, if you set up multiple channels you can see which ones are being more effective.
Set a goal
To become successful with anything I think it is important to set a goal and measure your progress toward it. After all if you don’t know where you are going, how will you ever know if you got there?
My goal is $6 per day.
That doesn’t sound like much but when I started this process a couple months ago I was averaging only 17 cents per day. At $6 per day I will get a check each month from Google and bring in around $2,200 extra each year. That will pay for a vacation or some nice jewelry for my wife!
And once I hit the $6 target, I’ll set a new goal. But for now, $6 per day is what I focus on.
What’s it going to take?
Here’s where the numbers really start kicking in and this is the hidden gems the Google report doesn’t reveal.
To make $6 per day I need to work backwards to see where I’m at and how to get where I want to go. I have a massive spreadsheet that I stare at daily to see what was happening and make sense of all the info but here’s the butter:
Impressions Needed = Daily Goal * Average Daily Adsense Impressions * Average Earnings Per Day
Average Daily Impressions = Total Impressions / Total number of days to get those impressions
Average Earnings Per Day = Total Earnings / Total number of days to get those earnings
Having a spreadsheet helps. For now you can use this one: Adsense Goal Worksheet (.xls).
Projecting Growth
On the worksheet the sample numbers stop in October because that how far we are into this year. But what if you want to get a good idea of your Adsense potential earnings?
You need to get an average and determine a ratio of your earnings. I could explain it all, but here is the worksheet I use: Adsense Projections Worksheet (.xls). It requires the same information that you used for the Goals worksheet - monthly impressions and monthly earnings.
With these numbers in place you can create projections based on “what if” scenarios and figure out what it is going to take to make it happen.
When it comes to Adsense you really have just a few options to increase your income:
- Target higher paying ads - a science in itself I have yet to master.
- Drive more traffic in hopes they will click more ads - This does not work proportionately. An extra 200% in traffic may only yield a 5% increase in clicks.
- Test different ad placements, formats and colors to improve the CTR - The profit is in the the CTR!
Watch out for wasted impressions
Wasted impressions are the ads that count in your impressions and effect your CTR even though the human viewer never sees them. I have examples on every page of this site that I need to fix. The first is the footer links which are under performing and dragging my averages down. The second is the box ads at the top of each post when you view a single page. Those ads are seen if the viewer clicks the headline link to the article but not if they click the “read the rest…” link when I use the “more” function for WordPress. I have a couple ideas I’m testing on other sites to see if there is a good solution. But check your own site to see if there are places where the impressions count even though the viewer is unlikely to see the ad.
Takeaways
- Guard your CTR
- When it comes to contextual ad placement, nobody beats Google
- Your Google reports only show you what has happened so far, it is up to you to determine what will happen next.
- Work for consistent growth.
- More unique visitors are good, more repeat visitors are good, more page views is best. Page views create impressions!
- If your ratio of unique visitors to return visits is low you are losing potential “reclickers” (especially on niche sites).
- If your page views per visitor are too low you are missing the opportunity to get those viewers to click an ad.
- Make sure your ads aren’t “hidden” and counting against you.
Next Article: The further devaluation of Google PR Previous Article: New Sacramento Edition of 14th Colony Launched
October 20th, 2007 at 10:02 pm
Good points although I would put much higher goal to motivate me through long term content and link building stages.
It takes at least 6 months to start getting some 5$ to $10 per day and you have to keep working.
I’d go with $50 per day which is only $1500 per month.
October 20th, 2007 at 11:23 pm
Thanks Tomaz. I try to keep my short-term goals a bit modest so I can celebrate a win when it happens. Your time line of 6 months looks about right from what I see. There’s a lot of work to be done in those 6 months so I will definitely be ready to celebrate!
After that, I bet my goal will be ~$35 per day as that would bring in $1K/month. We’ll see. I may decide it is just too much work and focus on more profitable things at that point or I may have a working system that I want to expand.
I assume most people sell something else or they have day jobs that cut into their time. I think Adsense is best as a buffer or a bonus, especially when starting out. My monthly goals for total revenue is much, much higher.
BTW I checked out your site and saw some of my favorite people visit there. You’ve got some great insider information there.
October 22nd, 2007 at 10:31 am
Nice overview Randall. I believe the M in eCPM stands for mille, which means 1,000 and not one million.
I have a question about CTR that I always wonder about. I see the recommendation to remove some ads in order to improve CTR a lot. Do you know if an increased CTR leads to higher payouts on ads? The reason I ask is because the advice to increase CTR in this way has always seemed somewhat artificial to me.
If
Clicks = CTR X Impressions
and we increase CTR solely by decreasing Impressions that doesn’t necessarily lead to more clicks. It obviously depends on how much of an increase and decrease we’re talking about.
Let’s say you have a page with 2 ad blocks and the page gets visited 500 times X 2 ad blocks = 1000 impressions.
So you get 1,000 impressions and it results in 50 clicks (all on one of the ad blocks) for a CTR of 5% to keep the numbers nice and simple.
You decide you want to increase the CTR so you remove the ad blocks that gets no clicks. Now you get 500 impressions and still get the same 50 clicks so your CTR goes up to 10%, but in the end it’s the same 50 clicks.
Isn’t that an artificial increase? It sounds better to say your CTR is higher, but has it really resulted in anything more meaningful?
I’m not saying I’m right here and if the higher CTR leads to a higher average cost per click then you’ve certainly improved your revenue from the ads. But I’ve always wondered about the advice to increase CTR at all costs as if CTR was the end goal.
Am I missing something? It wouldn’t be the first time something eluded me.
October 22nd, 2007 at 11:51 am
Steven, you are right about the “m” being mille. It’s a common mistake in the US to say million and an oversight on my part. I corrected it in the info above, thanks.
As to the CTR…
All the advice I’ve read has claimed that a higher CTR means a higher payout and it makes sense when you consider Google’s motivation. As altruistic as the Organic team presents themselves, the Ad team is clearly money-motivated. So if they have 200 ads that could be placed on a given page (because it fits that category) and 10 of those ads have higher payouts, they are going to look for the most profitable place to stick those ads. The sites with the highest CTR are the ones that are most profitable from Google’s perspective.
I said “read” because I am still learning myself and Michael Vandemar recently asked if I’d verified this “well known fact” and I realized that I had not.
However, I’m inclined to trust this advice because it comes from both Shoemoney and Mystery Mentor. I’ve also seen it mentioned in various eBooks.
I’m not really sure what you mean by an “artificial increase”. If you can cut down on the impressions that aren’t working and keep your CTR up… well, that just sounds more efficient to me. And efficiency is profitable.
October 23rd, 2007 at 10:28 am
Randall it makes sense that higher CTR leads to a higher payout. I guess I’ve only read this too and never really seen tangible proof offered. But it does make sense to me.
What I mean by ‘artificial increase’ is that I think sometimes we all get caught up in some of the metrics and start focusing on a metric without really thinking about whether or not it improves the end goal.
As an example you can look at traffic. I’m sure you’d agree that not all traffic is created equal. An obvious case is robotic traffic. It might show up in your stats, but I’ve yet to meet the robot that owns a credit card. Sometimes though you can see advice on how to increase traffic that isn’t meaningful so yeah it looks great to see the numbers go up in your stats, but in the end you haven’t made an extra dime or added a new subscriber or anything else meaningful.
With the CTR sometimes when I hear the advice on how to increase it, it doesn’t seem all that meaningful to me as far as the end goal. When I think of AdSense I see the money coming per click. If you assume that the average price of that click is not dependent on your CTR (and I admit it might be) then your money is a result of the number of clicks and not any increase or decrease in CTR.
Keeping with the assumption above the revenue from 10 clicks will always be the same on those same 10 clicks. Again I admit this is a big assumption and isn’t necessarily true. So if you’re going to make the same amount of money on those 10 clicks why in the end does it really matter if you got them because you were able to get 10 out of 10 people to click or 10 out of 100 to click.
I know there’s a lot more to the equation than what I’m describing here and I do think improving any conversion rate is important. But I still wonder if we all sometimes get caught up in increasing a metric in isolation when it’s only meaningful in the larger picture.
I hope I’m making sense. I may not be. This is one of those thoughts that’s been in my head for awhile and I’m not sure I’ve ever managed to express it right. I’ll have to think of a really good analogy or example for what I’m thinking.
October 23rd, 2007 at 11:29 am
Steven, you are assuming that the 10 clicks will pay out the same regardless of your impression count or CTR. The popular wisdom seems to be that those 10 clicks will pay higher if your CTR is higher. If you demonstrate to Google that you do more with less they will reward you. Is this true? I’ll find out eventually but for now I have to take the advice that was handed to me by someone a lot more involved than I have been.
I agree about not all traffic being equal and I think that untargeted traffic can even be damaging. *Over* optimized websites that come up for searches that aren’t really relevant waste the viewer’s time and create a negative brand impression.
One site like this for me is about.com. When I see them listed in the SERPs I jump to a different SE. I never find what I’m looking for their even though the keywords are in the titles and body content. It frustrates me to no end. And About dominates many areas of search, especially on Google.
I also agree that we can easily get caught up in the numbers and forget what those numbers represent. I was on a call with a former business partner of mine this morning and we were comparing notes on affiliate programs. He was telling me that he is involved with one where if he resells the product himself his take is 15% but if he gets the client to click the affiliate link on his site he gets 30%. That’s a big difference and when he sends customers to an affiliate link he has to do a lot less work. This obviously doesn’t make any sense. Accounting is important, but many accountants don’t seem to be able to connect logic and reality with the numbers and I fear that is what SEOs tend to do with log files and stats… I know I certainly get caught up from time to time!
PS. I changed the headline on this post. I’ve been reviewing my copywriting books and realized the old headline sucked.
October 23rd, 2007 at 11:06 pm
Randall that was definitely my assumption though all this. My initial question leading me through all this was to wonder if the increased CTR leads to higher pay out on the clicks. I know it’s the popular wisdom, but wasn’t sure if it was something wise of just popular.
I think you’re right though, that the payout would go up and I assume this is part of the mysterious smart pricing algorithm.
I’m with you on About.com. When I first hopped online I thought it was a great site and then I actually started reading it and reading other sites and now I stay away. Every so often I accidentally land there and curse under my breath.
I like the new headline. I need to work on my own more. Sometimes I think I nail one, but most of the time I think my headlines are more in the sucks zone.