Adwords and adsense, am I understanding right?

[brakkar]

Hello,
please tell me if my reasoning is correct.

1. Adwords ads are displayed by adsense on webmaster's sites.

2. The more a topic has adwords advertisers, the highest the cost per click is since they are actively competing and increasing their CPC to be on top of the ads.

3. The more a topic is popular among adwords advertisers, the more the webmater will earn money per click if his site is about the hot topic and using adsense.

Thanks in advance,
Brakkar

[buckworks]

Your reasoning is fine as far as it goes, but you also need to factor in the number of websites that deal with similar topics.

If there are lots of sites and lots of ad inventory in the same category, the lower-bidding advertisers will get more exposure, so what you'd earn per click might be lower than you'd expect.

On the other hand, a niche that has fewer advertisers might do well for you if there are also fewer sites dealing with the same topic.