The orig version of this article can be found at: http://www.HelpmeBuilda.com/newsletters/news010505.asp - and it contains graphics.
but none less here it is:
Adsense and Adwords Make a Million Lose a Million? In this months newsletter I’m going to deal with hot topic of moment. Everyone seems to be talking about how easy it is to make money with adsense using adwords - and it is.
Now there’s probably more than a few of you out there who perhaps know what one of two are but not both and I’m guessing that many of you don’t know how you can tie these two systems together in an attempt to make money – well don’t worry - that's what I'm going to explain today.
To start at start:
Q. What is Adsense? A. Adsense is Googles name for system that puts context sensitive ads on to your web pages (if you’ve included their script code). The idea behind this system is that if you run a site that has content on subject ‘cars’ then adsense adverts should be on subject of ‘cars’ – not ‘DIY’ or ‘Mortgages’.
Q. Why would I be interested in letting Google put adverts on my website? A. Because you get paid per click, not per result but by click. Payments range from a few cents to over $10 a click – pretty compelling reason.
So, in simple terms you now have an overview of adsense (please read rest of article before disappearing to register for an account). :-)
Q. What is Adwords? A. Adwords is opposite of adsense, it is in fact Googles system for allowing you to advertise on other peoples websites (using adsense as delivery mechanism).
Q. Why would I want to pay Google to advertise my site? A. There are many reasons why you might want to pay Google to advertise your site
Your site is brand new and not indexed yet You seem to be getting little or no traffic from search engines You want pre-qualified traffic for your service or product You want to make money with adsense I’ll be explaining that last point in detail so don’t worry.
It is worth considering those first three reasons in a little more detail (because they probably don’t make immediate sense to anyone who’s not overly familiar with internet marketing).
Site Indexing. When you have a brand new site that you’re really happy with and want to share with world you need to let people know it’s there. This is done in many ways such as link exchanges, banner ads, email, etc.
However one of cheapest ways of getting word out, if you’re not bothered about speed, is to get indexed by search engines (visited by and then added to their database). This will obviously involve a large search engine optimisation effort from you and be an ongoing process (because your competition will be doing same). This means that when people search for a certain word or phrase you might be seen (depends on your SEO).
Traffic If you are competing in a very crowded arena it might be hard or impossible for you to get on first page of Yahoo/Googles results for your chosen words or phrase, an example of this would be health and wellness market – there are over 120 million websites out there and some of them are VERY well done – so how are you going to beat them?
Pre-Qualified Traffic Traffic to a website is said to be pre-qualified if it has come from an advert for your subject area, a search engine search for your keyword/phrase or from a mailing list. By this example people who read my newsletter may be considered as being pre-qualified traffic on subject of starting/improving an online business.
Now that you have a basic understanding of what they are you may have guessed how people try to make money with them, but I’ll explain anyway (just to make sure we’re all on same page).
We buy cheap words in Adwords and display Adsense adverts for expensive words
You may think that this is an easy exercise but believe me it’s not.
Lets have a look at how this works in reality – note that word, not in our dreams, how does it ACTUALLY work.
If we develop a website with keyword 'Mortgage' in mind (because we are selling information or products within this subject area) then from screen shot below we see that to advertise with keyword 'Mortgage' it will cost a fortune! (screen shot taken from google adsense - these figures change daily - this is purely as an example)
We can see that average price per click is $12.78 - this is just for one click, not for a sale but just a visitor having clicked you advert to get to your site - and that's if we bid just over $39 a click, if you bid less you get less (if you bid 20 you get 2,400 hits and they cost $9.27). Obviously adsense vendor site will not see anything like this amount of money (Google doesn't say what portion of advertiser money you will actually get).
So if you know that these keywords are really expensive (and there are keywords that cost up 8 times this value) question should come to mind - how much could I make with an information site on this subject?