Friday, December 27, 2013

Thursday, December 19, 2013

Pondering Making Money with Google Adsense

The Goal

So here is a scenario.  You want to make 60,000 USD per year using Google Adsense.  Note this is the pre-tax amount.  Let's break down the numbers.
  • A good conversion rate would be gaining a $1 of ad revenue per 1000 hits.  The click through rate from what I've read is about 20%, and the rate you receive per click is dependent on your specific niche, but for our purposes let's shoot low and say that 200 click throughs results in one dollar of revenue.
  • So using simple match, we are going to need 60 million hits a year to generate the income we are targeting. That is 5 million hits a month, and taking an average month being 30 days that means we need about 167,000 thousand hits A DAY.

Getting Real - Part Time Blogging Revenue 

For most of us generating that many hits probably isn't going to happen.  Let's look at a more realistic scenario.
  • You generate a 1000 hits a day, 365 days a year.
  • This gives you a yearly income of $365 USD  a year.
Now the question is how much time does it take to generate a 1000 hits on a blog a day?
  • You are going to have write content fairly often , say at least 5 times a week, spending at least 5 hours a week doing so.
  • You are going to have to spend sometime engaging in promotion using social media.  Say you spend another hour doing this per week.
  • So, saying you do this 50 weeks a year, you are making a total of $365 dollars year by spending 350 hours of labor.  You will be making just slightly over a dollar an hour...
  • But remember this is pre-tax income.  So obviously you aren't going to live of $365 dollars a year, so you will have to work another job.  Both Google and Paypal report your earnings to the federal government, so they are going to take a bite out of that $365 bucks, depending on how much money you make at your other job.  Also Paypal (if you get pain by Google through them) are going to take a 3% cut (roughly) in transaction fees.  So you most likely will be netting under 300 dollars for 350 hours of labor.  NOT WORTH IT.

Additional Scenarios 

OK, let's say you invest instead of 7 hours a week, 49 hours a week in generating content.  That, using the current formula above, would generate you a little over $2500 bucks a year.  That, combined with government assistance or a third world life style in some of the lesser developed nations might be sustainable. But for most of you who might read this it absolutely isn't.  

Now let's say you get a better niche, where you actually make something along the lines of $5 per 1000 clicks.  Well that would help, you would only need about 34,000 hits a day to reach that 60,000 dollar net income mark.  With our 7 hours a week / 1000 hits a day scenario that would generate a little over $1800 bucks a year, that would increase your net pay to about $5.14 an hour before taxes.

So, for the vast majority of us it isn't even worth our time to embrace Google Adsense.  How could we still make this work?  What are we missing?

Changing the Equation

  • Some content has a long tail, and even after the content is published, it will continue to generate hits.  From my experience blogging anyway only a few articles will be long tail ones.  But if you can find a niche where the subject you write about is fairly static, you might be able to boost your weekly revenue with existing articles.
  • Things like posting quick links to other people's content, acting like a meta directory of info in some circumstances might boost the number of post that you get.
  • Some how getting people to write post for free, maybe because they have a passion for the subject, will create additional post.
  • Ways to automate detecting and posting links to other articles might help.
Let's say you do fairly well, and get 3000 hits a day at a 7 dollar per 1000 hits range. You would have to work part time at this, say 20 hours a week for 50 weeks or about 1000 hours of labor.  This would bring you about 7700 bucks of revenue.  Or would bring your pre-tax pay rate to about $7.7 an hour.  In most cities in America this is roughly about minimum wage.


Most of us are better off getting a part time job in the service sector than trying to use Google Adsense as a primary or even secondary revenue source.