AdSense Arbitrage - The Theory
Make Money with AdSense Arbitrage - The Theory...
Arbitrage is the technique of buying low and selling high. AdSense arbitrage is buying traffic
with low cost PPC ads and then selling PPC to others at a higher price. Be sure to read
AdWords vs AdSense first, then read on.
There is more than one way to go about working AdSense Arbitrage – the difference is in the
source of your traffic. We will first look at using sources other than Google. Again - this is the
theory part. Actual application and case studies come later.
AdSense Arbitrage Method
Buying traffic from PPC providers other than Google.
Google has very high prices for their clicks. This is because Google has one of the largest
networks of sites for PPC ads and 40% of all searches online are done through Google. How
much can a 900 pound gorilla charge? Whatever he wants. So if you have an article on
mortgage rates with high paying AdSense ads for the keyword “mortgage rates”, it would not
make sense to be buying high cost traffic from Google’s AdWords for the same keyword. The
most you could hope for is a wash. But in reality, even if your site and AdSense ad placement
are very successful, you will only get about a 40% click through rate if you are skilled and a
bit lucky. So at best, it’s a wash and at worst it’s a bust.
The solution? Buy PPC ads from a different provider with a cost per click rate for the keyword
“mortgage rates” that is much lower than Google’s rate. Shoot for 75% lower at a minimum. If
you pay $0.95 per click to get traffic, you should be targeting keywords that get you about
$3.80 per click. $3.80 per click may seem like a lot, but in reality, a keyword phrase like
mortgage banking can get $15 per click – and that’s a low estimate.
So - in theory - your profit model would look something like this:
Cost per click inbound traffic: $0.95
Number of clicks: 1000
Total cost: $950
Click through rate (CTR): 40%
Number of clicks through: 400
Revenue per click: $3.80
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AdSense Arbitrage - The Theory
Total revenue: $1520
Revenue - cost (Profit): $570
(of course, a 40% CTR is crazy - which is why this article is uses the word "theory") The key is
to find keywords where the difference between the cost at one provider and the cost at the other
is large enough to make a profit. To get information about keywords and the cost differences
quickly requires a program like Keywords Analyzer or Keyword Elite. I use Keywords Analyzer
and will be putting up a review of both applications soon. With either of these programs, not only
can you find keywords, brainstorm niche site ideas, and generate thousands of variations, you
can use Keyword Analyzer to find good AdSense arbitrage keywords. With it, you can see the
difference between the highest price on other ad campaigns with the average price on Google
AdSense for the same keywords. Then you can create content around those keywords and
build a niche website to house your high paying AdSense ads.
The other part of the equation is to increase the click through rate on your site. AdSense
positioning, and color scheme as they relate to the site’s content are critical. Also - the only way
out of the site should be by clicking an ad - don't give the user any other choices.
AdSense Positioning
Google allows three ad groups per page. Since the proliferation of advertising online, people
have become numb to ads. They have what is known as “banner blindness”. So you don’t want
ads to look like ads. How? Try these three things:
1. Make the background color of the ad the same as the website
2. Do not use a border around the ads (make the border color the same as above)
3. Make the link color and text color the same as the links and text on your site
You can use text ads and link ads. The text ads go in or near your content such that they look
like a part of your content. Link ads can be placed near navigation to look like menu selections.
For positioning, try one of these three options.
Of course you can try other configurations and color combinations – just be sure to track the
performance and CTR of your AdSense ads.
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AdSense Arbitrage - The Theory
Keep Track
In Google’s AdSense control panel, you can create channels to place ads in. Google lets you
look at each channels (each ad’s) performance separately. Thus, you can track the
performance of each ad and tweak as you go to maximize your CTR.
I suggest limiting your monthly PPC budget to an amount tha you can afford to lose. For
example, on my very first AdSense experiment, I set a budget of only $10.00 per day and
watched it closely. The PPC ads cost me $22.00 – and I made about $19.00 on AdSense. So I
stopped the campaign – not because I was worried about losing $3.00 – but because I was
doing something wrong. I am working on an AdSense Arbitrage case study to flesh out the
issues and try some different things.
With AdSense Arbitrage, a good goal is to make about $1.50 for every $1.00 you spend. If a
niche site does not profit, can it right away. If a niche site does very well, consider expanding it.
But be sure to focus only on the profitable sites and drop the rest as soon as possible – that
way, you can stay in the green. Such is the theory. Time for the application.
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