Forum Moderators: martinibuster
Here is what I have so far. Assuming I am using averages for all the values I can tell how much I earn from google by the formula:
Earnings = impressions * click through ratio(CTR) * earnings per click (EPC)
Impressions are all me and based on how well my site performs and is not in any way unknown. I can work on improving it and measure every little thing I do.
CTR is something "I" cannot estimate. It will depend on the website type, I imagine. What CTR, or range, for a site that people came to looking for information on a particular topic (there will be multiple topics) might I plug into my business plan?
The earnings per click are 70% of what google makes/charges is this true?
Also how can I estimate this number for a given topic. It is easy to tell what it will cost at google adwords to place 1-3 or 4-6 or 7-10 on a given keyword, are any of these good numbers to use as average?
for example consider the search phrase "roth ira"
If you let google adwords suggest a number yesterday they said $8.22 to $10.57 per click and that you will get 61-85 clicks a day. OK so this is rediculous, I have no idea how they come up with it but then I picked various numbers and here is a table of the results. By the way I did it again today and get a different result from yesterday.
For "roth ira"
my max CPC : estimated clicks/day : estimated avg CPC : estimated position
unlimited yesterday : 61-85 : $8.22-$10.57 : 1-3
unlimited today : 48-66 : $4.75-$6.88 : 1-3
$3 : 30-49 : $1.24-$1.86 : 1-3
$2 : 28-45 : $0.88-$1.32 : 1-3
$1.50 : 27-43 : $0.62-$0.93 : 1-3
$1.25 : 26-42 : $0.56-$0.84 : 1-3
$1.00 : 25-41 : $0.47-$0.70 : 1-3
$0.90 : 25-40 : $0.43-$0.64 : 1-3
$0.80 : 24-39 : $0.36-$0.59 : 1-3
$0.70 : 24-39 : $0.33-$0.55 : 1-3
$0.60 : 23-38 : $0.31-$0.51 : 1-3
$0.50 : 22-37 : $0.24-$0.44 : 1-3
$0.40 : 20-35 : $0.18-$0.37 : 1-3
$0.30 : 19-33 : $0.14-$0.29 : 1-3
$0.25 : 18-30 : $0.11-$0.25 : 1-3
$0.20 : 15-28 : $0.09-$0.20 : 4-6
$0.15 : 13-26 : $0.07-$0.15 : 4-6
$0.10 : 10-22 : $0.05-$0.10 : 4-6
OK first thing is if you look at all the pay-per-click ads on the side of google there are 43 advertisers for "roth ira". Besides none of this data making sense... (e.g. how can there be 43 advertisers and you rank 1-3 or 4-6 for any amount of money?)
What numbers would I plug in my average earnings per click (EPC) to get the most realistic numbers assuming I had a page that was "best fit" with searching on the phrase "roth ira" on google.
Any insight into what numbers to use or what other methods I might consider instead?
Please tackle any little piece or large part as your mood strikes. Thanks
I see that you're already getting a great deal of response to your questions - that's great.
>>Any insight into what numbers to use or what other methods I might consider instead?
You might want to consider running some Monte Carlo simulations to get a better forecast for this particular business model. This way you'll have an understanding not only the potential money you can make, but also the risk you're undertaking.
Everyone seems to be offering you a range of ideas - Monte Carlo simulations are perfect for this type of information - you've just got to decide on the probabilities of occurance and your half way there!
Brian I think in some ways you are going about it in the wrong way
Work out the cost of aquiring 1000 visitors through
PPC
banner advertising
Link Purchase ( not for for PR Value ) but direct visitors
When you have got a figure for PPC then devide by 50% ( smartpricing and advertisers having lower bids on content ) then use 70% of that 50% G CUT
so lets say 1 click costs you between 0.50 and $1.00 on adwords the possible amount you would recieve as a publisher could well be 0.35 now lets work on the assumption your adsense targetting is good and you recieve 12% clickthrough
ie 120 clicks X 0.35 == $42.00 ECPM
cost for 1000 visitors = cost between $500.00 and $1,000
Webmasters may not like the fact that it can take much longer to get Free SE traffic but it does there are ways round but often they can be expensive ( not as expensive as adwords ) but still fairly high cost and could trigger penalties at a later date which makes the domain and work toast
So here is an idea for your business plan
$10,000 -- to $15,000 for promotion working on the principle that the investment is to attract visitors and will only provide returns if searchers like what they find in which case free traffic and links will start to come in , at that point any returns from adsense will help to recover the start up costs but should be considered a bonus not a guarentee , then as SE traffic starts to kick in after 3 to 12 months providing your estimate of how useful searchers would find your site the traffic will build
Sorry to seem unhelpful but you are looking at this the wrong way
Invest for attracting visitors with your effort and budget and if you have it right a return on your investment will follow
through adsense or any other of the possible alternatives
steve
You really are not grasping what we are all telling you!
This is not about footfall in a shopping mall, this is about the absolute uncertainty of an Adsense Publisher.
Get this one in your head...you will be a PUBLISHER! I am not being degrogatory, just understand that what you are considering, I guesstimate, is being a brochure site for your products?
Right, that was 10 years ago and loads have tried, succeeded, failed, etc, if I'm wrong ok, however I am now going to give you couple of more figures to digest:
What is your CTR (for all ads on a site)?From 1% to 32%.
One site I have that has averaged 30% for the past 2 years this month has tanked to 19%! Why? I haven't a clue. Another, in the same niche has gone from 29% to 31.2%.
My overall average is around 5% which I consider VERY acceptable however others may disagree but that depends totally upon their niche and your niche is going to have people clicking all over the place for comparisons UNLESS you have a very secure anchor tag line!
By that I mean, how are you going to keep people on your site to warrant taking your advice/product and returining because you are offering something better than anyone else?
What is your EPC for google adsense?From USD 0.01 to USD 2.07
Great one this...from January 1st 2006 until March 12th across all sites the EPC (Earning Per Click) was very consistent and stable, since then the EPC has been consistently 15% lower!
Do NOT try and build a business model on the unknown, you are asking for grief.
E. & O.E.
And just to cover my derriere..."Your mileage may vary":-)
BUT, I think using them only makes sense if you're planning to re-evaluate quite soon after getting starting, and if you're not spending a lot of money on getting started.
Also, though 5% is a reasonable number, it's probably on the high end for someone getting started. Make it 3% to be on the safe side.
Good luck!
If I were you, I would just base your ad income on going cpm rates in your sector. You can always fall back on them if or when you need to. Anyone giving any projections for Adsense on an untested site is just blowing smoke. If you pitch your smoke to a VC and he believes you then fine. Most of them don't know any more about Adsense than the rosy reviews they read about headline making sites. If you have technical ability, I would stop wasting time on a business plan and just do it yourself or else hook up with someone who does have the tech skills and you cover the business side.
Running an online business is not like other businesses. You can work in the off hours after your regular job without having to surround yourself with all the expensive trappings of a nice office, etc.
The only reason for a business plan in the online world today is to milk VCs or else be academic. So if you are just looking at cashing in from a VC, then just blow some smooth smoke. The only thing that will support business plan funded site with a staff and all the trimmings is traffic. Heavy-heavy-heavy-heavy traffic.
In my niche, I compete with several VC backed Web 2.0 firms. They are currently burning up millions with all their trappings. They ignore SEO or else no nothing of it and would rather spend time talking at Web 2.0 conferences. Their only hope is to be acquired by a major player. If they are not acquired they'll be down the drain in a year. In the meantime their only revenue stream is Adsense. I'm beating these guys in traffic and my ads are well targetted, but I'm a one man show and definitely not getting rich. They have poorly optimised pages for both Adsense and SEO. Their ad positioning on the page is poor as well as targetting. Even if these companies had relevant ads they would still need tonnes more traffic to make a profit with all their overhead. These are smart tech savvy people with millions riding on the line. Thankfully they are all locked up in the Web 2.0 ivory tower playing around with science fair projects. Poor Bastards never had a chance. In the mean time I'm sure they'll continue tagging everything in sight and developing new methods for their APIs which no one in the real world will ever use.
The bottom line is any content site is cheap to build and doesn't need financing these days. All the technology is out there free (opensource). Even really exotic stuff can be found on SourceForge if you need it. The thing I like about it is it's better to start this kind of business the old fashioned way. On a shoestring. No you won't be in a fancy conference room giving powerpoint presentations, you'll be under the hood learning more about the net than you ever wanted to. But that's better than being a web 2.0 flameout.
hunderdown
Brian, those numbers aren't completely crazy--the 5% CTR and 20 cent EPC.
BUT, I think using them only makes sense if you're planning to re-evaluate quite soon after getting starting
I will be watching how things are going every step of the way. Thanks!
Optirex
Get this one in your head...you will be a PUBLISHER! I am not being degrogatory, just understand that what you are considering, I guesstimate, is being a brochure site for your products?
I actually have a website that has the products of the company I work for. It would not be appropriate for me to put adsense there. Mainly because we want people to buy our products not leave. In fact we use google adwords to bring in traffic.
What I plan to do is align all the various interests in the same direction. I will make a site that google wants to link to because... the people searching want to find it and after they find the info they were looking for, some of them will say wow I have been informed I now understand, hey that little ad there just happens to be selling what I have just come to understand I want I think I should go there... and the site that was advertising for them will be thrilled to find informed people that are coming to consider buying and will find that the number of links that buy is larger than average from my site...
I could be wrong but I think the hard part is making all this happen, the easy part will then be collecting the advertising money. Since everyone is happy and no one is on the "short end of the stick" the site will do nothing but prosper.
Sorry to be vague, but if I shared my idea here this is the place to find people that could take it and have it running before I got ready.
markus007
If you have high pageviews/user you will have a LOW ctr, but your earnings per visitor are higher then someone with a 1 pageview/user site.
Marcus, thanks for the comment. I think this is something that I knew deep down but hadn't really focused on. Just as a side note- your million in 3 months was the first thread I read here and was pointed to by somone else that has a website and is following your advice. Just thought you would like knowing that in a round about way I joined because of your presence.
BillyS
Monte Carlo simulations are perfect for this type of information - you've just got to decide on the probabilities of occurance and your half way there!
I love it! I guess I am not familiar with the term monte carlo simulations, but if it has anything to do with determining the likelihood of making x amount versus 1.1x, 1.2x, and so on to make what would be a bell shaped curve around an average, then that is exactly what I am trying to do. I figured people here could help me point out the average since if left to my own devices I would have myself a millionaire in just over 3 months ;)
guru5571
The only reason for a business plan in the online world today is to milk VCs or else be academic. So if you are just looking at cashing in from a VC, then just blow some smooth smoke.
Part of the reason I am trying to work out a business plan, is because there is no VC and I only have so much money I can put into it. I wan't to know how big the black hole is that will be sucking MY cash. It won't be around very long if I can't start making money coming in to offset the money going out.
Thank you everyone that answered for your help.
I will be reading many threads and asking more questions in the coming days on other topics. Please feel free to add more here too I will definitely read everything anyone has to say.
If you want real money then you will have to be in a 'monied' areas. These tend to be aggressive in terms of seo. If something looks easy you can bet there are plenty of other people trying to do the same thing
