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Can Adsense really work?

Posted by Michael Walsh (Check me out!) on March 19th, 2007
Tagged as: Asides, Copywriting, Gab Gab Gab, Internet Marketing, Long Tail, Search Engine Marketing

The thing about Internet Marketing, and by that I mean businesses set up to take advantage of the Internet’s vast, cash-spending audience is that the only ones that actually seem to make any serious money out of it are the ones selling the dream to others.

Like a 21^st Century Ponzi scheme on a mass scale, Internet Marketing fuels the promise of easy money by creating 2^nd and even 3^rd tier affiliate programs, each getting a “cut” out of the diminishing sales that pass their way.

The problem is that if you work at it (and leave your morals at home) you can actually make affiliate marketing turn a handsome profit. Want to know why those “free” pornography picture sites pop up whenever your 9-year old daughter uses Google for her geography project? Affiliate marketing.

It might not be ethical, but I know a man who knows a man that spends all day putting TGP codes into his various sites, generating an effortless $10,000 a month for himself in the process. No brainer that one.

Apart from subscriptions (we’ll get to that) there are times when I can’t help thinking that info products are the only thing outside the adult industry that actually “work”.

Take this article from the New York Times. It’s a fascinating piece about the earnings potential of Adsense sites that really puts things into perspective.

The article asks the question:

Let’s say you wanted to build an advertising-supported online media business that took in $50 million a year in revenue. How many users would you have to attract to get there?

OK $50 million a year sounds like an awful lot of cash, but only if you’re alone. If you’re a serious business, that’s probably where you’d aim.

So anyway, the results. According to the author of the report, Jeremy Liew, a venture capitalist at Lightspeed Venture Partners, the numbers are like a cold shower.

To make $50 million with a big staff-produced content-rich guitar site, sponsored by, say, Fender and Gibson, a site would have to generate more than 200 million page views a month, Mr. Liew estimated.

A site aimed at a specific demographic, like teenagers or Asian-Americans, would need to generate 800 million page views a month, by Mr. Liew’s reckoning.

And for a general-interest site, the ad rates go even lower, so traffic would need to be much higher to generate $50 million — about four billion page views a month, which would put it in the top 10 of all the sites on the Web.

I just had a quick look at B5Media’s (falling) Alexa ratings. Remember this is a project based on advertising revenue with, according to its home page: more than 170 blogs, 14 vertical channels and 2.5 million unique visitors a month.

UPDATE: Jeremy Wright from B5Media correctly pointed out that this graph only describes the visitors to theB5Media homepage and doesn’t reflect page views across all their blogs which are of course hosted on separate domains. Mea culpa.

Even with 2.5 million unique visitors per month, how the hell is B5Media making any money? Even if these “unique” visitors subscribe to more than one of B5Media’s blogs, we’re still a long way off that 200 million per month target. I must be missing something somewhere…

So where does that put me and my opinion? Nowhere new really. I have always been a little suspect of single income channels for online businesses as the numbers just don’t add up. But Jeremy Liew’s results certainly illustrate the daunting battle to remain financially viable faced by content-dependent Long Tail businesses.

I personally think that Adsense only works if combined with other sources of income, for example combining advertisements and affiliate programs within a paid subscription product. Sounds far fetched and you’d have to tone it down to avoid being slapped constantly by Google, but there are plenty of successful marketers doing this already. That way there is subscription revenue from one product and advertising and affiliate revenue from another that is seamlessly integrated into the first. What’s more, as the reader base actually wants to be there, integrating the two might also increase advertising CTR.

Just a thought, or at least it was as it’s the model I am developing for Web-Teach, but I’ll write more on this as I go along.

UPDATE 2: Jeremy also mentions that B5Media is planning to abandon Adsense as it isn’t a business model and I can’t say I blame them. Even with an average RPM like theirs you’re always going to need to be stretching it a bit too far to make any sense (sic) out of Adsense.

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