An adsense:adwords merry-go-round

Money from one streaming into the other?

[abbeyvet]

We run a couple of small spend adword ads. They give us a good return. Adsense though (in its first week) is earning way more than we spend at adwords, by a factor of 6 or so. So, I decided we may as well plough some of it back, added some new ad campaigns and significantly increased our daily adwords spend.

The result? We got more traffic and the click through rate on adsense increased quite a bit (maybe coincidence, but quite significantly), so we earned even more with adsense. Significantly more sales too.

So we will ramp up the adwords spend some more....and on it goes. I plan to try to keep the adwords spend more or less the same as the adsense earnings.

I am no econimist, I don't quite understand where that ends, or what the implications of it would be in terms of the cost of clicks and so on. It is really a sort of money-go-round but with the benefit to us that sales increase quite a bit and the advertising is (sort of) costing us nothing.

This site has never had affiliate links, there are no banner ads or indeed any advertising apart from adsense, which seemed to fit it in a way no previous form of advertising did.

[Chndru]

we will ramp up the adwords spend some more

That's precisely wat G wants advertisers to do!

[Stride]

It sure would be nice if we could apply our adsense earnings directly to our adwords budget. Instead, it's currently sent to us and taxed by the government and we can only send what remains back to google.

How 'bout we all send google an email and get this feature added :)

[bcc1234]

Instead, it's currently sent to us and taxed by the government and we can only send what remains back to google.

I'm not an accountant, but if you make $100 and spend $100 then your net profit is $0 and you don't pay taxes on a $0.
If you make $150 and spend $100, then you pay taxes off that remaining $50.

[abbeyvet]

My point really was that I will effectively be reducing my spend at Google, not increasing it.

What I will be doing is diverting earnings from adsense to adwords, while the money I previously spent on adwords will now go elsewhere.

In my case this means I will be increasing my clicks through adwords, but exclusively using money paid to me by other advertisers, via Google. The money I previously added to the total adwords pot will no longer be there.

Currently what I plan to do is have last weeks earnings from adsense, less tax, as this weeks spending limit at adwords, on a rolling basis.

As you say it would be really nice to be able to do this automatically, but the net effect is the same.

[vitaplease]

Abbeyvet,

enjoy it while it lasts, the Google Ad-market is not working efficiently yet. If it would be, advertisers advertising on your pages would buy those adwords themselves directly.

What you are doing is similar to "Arbitrage": related thread: Generating cyclical revenue [webmasterworld.com]

You can also buy Overture ads and sell Adsense.

A market in which prices fully reflect all available information is called "efficient".

The "Efficient Market Hypothesis"

I think Eugene F. Fama "posted" about it first:
[sjcny.edu...]

[John_Shaw]

Instead, it's currently sent to us and taxed by the government and we can only send what remains back to google

First, I am not an account or lawyer. Seek professional advice on tax matters.

That said, I treat my web site as part of my business--I am a consultant and have business income. For a long time my web site was just a cost. I gave away information, no real advertising for my services, just technical information to make it appear that I knew something ;} The site was simply an expense, and that expense included Adwords and Overture advertising for it. Now, with Adsense, the site is actually making a profit. So I will pay tax on the income from AdSense and deduct the cost, including Adwords and Overture. Economically, it won't make any difference if Google applies some of your AdSense earnings to Adwords costs, or if you deposit the check and then pay Adwords directly.

If you can get 10 cent Adwords ads for you site and you earn more than 10 cents for every visitor, you will make a profit by using Adwords. However, 10 cents for every vistor is the equilivant of a cpm of $100, very high but not impossible. If you had such a topic for your site I suspect that the Adwords cost would be much higher than 10 cents.

Using Adwords or Overture would make sense if you are starting a new site and want to build up visitors quickly. However, in the long run you should expect most of your views to come from other sources.

[Webwork]

I wonder, in terms of how well it is all working, what percent of your visitors are return visitors?

Might there come a point where the system starts to show diminishing ROI based upon the returning (loyal) visitors mentally filtering out the once novel (hmmm, I think I'll check this out)Adsense ads?

P.S. Nice to see you in the neighborhood AV. WW is a world apart from OF (Not saying better; just different worlds). You are amongst the very brightest and best contributors to the OF forum. WW is lucky to witness your arrival.

Ahem, this all assumes that you ARE Abbeyvet from OF.....

Jeff

[abbeyvet]

enjoy it while it lasts

I intend to!

Happily I think this site falls into the neat position of being about 60% information, 40% commercial, which may make it the sort of site where this kind of thing will work very much in our favour. Time will tell.

Ahem, this all assumes that you ARE Abbeyvet from OF

One and the same. :)

Thank you for the flattering welcome, but I have been hanging out here for a long time - I read a lot but do not post much so keep getting purged and having to rejoin! :)