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Before Adsense came along, there were
two ways for webmasters to make money.
The first way was with banner ads.
Banner ads paid in two ways.
The first way was per 1,000
impressions. The average rate varies but
it is usually about $20 CPM. So if a web
master got 10,000 hits on his web site he
would make $200.
The second way is per click. Again, the
amount paid can vary… but it's about
10-20 cents CPC.
One problem with banner ads is that
they suffer from horrible click-through
rates. You might be lucky to get 1%, but .5% or less is not unusual. This low
click-through is caused by "banner
blindness" which is a phenomenon where a
website visitor completely overlooks a
banner because they've seen them so many
times.
Another problem with banner ads is they
aren't always targeted. You could have ads
for car insurance on a site about
baseball.
The second way a webmaster could make
money with their web site was with
affiliate programs. Affiliate programs are
still popular today… but they too
have their problems.
The majority of affiliate programs pay
when a sale is completed. This means that
the webmaster doesn't get paid when a
banner ad or link is clicked unless that
click results in a sale. This obviously is
risky for the webmaster because there is
no guarantee that they will make any money
at all.
Introducing Google Adwords
Adwords, not to be confused with
Adsense, is Google's
pay-per-click service that places relevant
text-based ads on the Google search engine
only.
Adwords was revolutionary when it first
came out because it was the first time
advertisements were targeted according to
the content on the page. When someone
searched for "Baseball", they only saw ads
that were related to baseball.
And then there was Adsense
The next step Google took was to give
webmasters the ability to put AdWords ads
on their site. This program is called
Adsense.
The Google Adsense program offers web
sites of all sizes a way to easily
generate revenue through placement of
highly targeted ads within their content.
Google Adsense technology analyzes the
text on any given page and delivers ads
that are appropriate and relevant,
increasing the usefulness of the page and
the likelihood that those viewing it will
actually click on the advertising
presented there.
Unlike banner ads, Adsense consists of
text and links, not images. This helps
eliminate "banner blindness" because the
ads have the ability to blend in well with
the content. Click through rates on
Adsense ads can be as high as 40% or
more!
Another big difference between Adsense
ads and banner ads is the amount of money
paid for each click-through. Unlike banner
ads, a click on an adsense ad can be worth
as much as $50! Of course this is the
exception… not the rule. The average
click through is around 60 cents.
What does the future hold?
We believe Adsense has a bright future
because it doesn't suffer from the same
disadvantages as other forms of
advertising.
The only setback that Google has run
into with Adsense is the threat of click
fraud. Luckily it seems that they are
taking that seriously and have been
cracking down on anyone they believe to be
breaking the rules.
Another situation that could shakeup
Google Adsense is when Yahoo and Microsoft
create competing programs. Google
currently has a virtual monopoly on this
market. Although there are some smaller
companies that have similar services,
there are no serious competitors.
Most people speculate that it will be a
good thing for publishers when this
happens. Why? Because Google will have to
offer better service and a higher payout
rate if they intend to keep publishers
from switching to a competing service.
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