My AdSense average eCPM is $4.00. That means I make $0.004 from each impression. So naturally I figured there is no way I could earn enough money to make up for paying the minimum of $0.03 per click for AdWords. That is, until I saw that my AdWords visitors view a whopping 14 pages/visit for some targeted keywords, 7 times more than my normal visitors. No wonder I make most of my money in the early morning when my AdWords ads show.
Cost for advertising (in $) divided by Cost per click (in $) =Number of visitors inbound to my site x CTR on ads on my site (in %) =Number of Clicks away from my site x Earning per click =Revenue generated from acquired visitors minus Cost for advertising =Profit (Loss if negative) for my site
So, for example:
$10 spent for Adwords divided by 0.05$ CPC =200 visitors to my site x 3% click-through-rate =6 clicks away from my site x 0.30 average revenue per click =1.80 earnings from Adsense minus 10.00 cost for Adwords =-8.20 Profit/Loss