AdSense Arbitrage

15.4 AdSense Arbitrage

Once you get to grips with the numbers that you see on the stats pages and your logs, you might notice something interesting. You might see for example, that you’re getting 5,000 ad clicks on a page each month and that page is generating $1500.

Divide $1500 into 5,000 clicks and you’ll realize that each click for that type of content is bringing you 30 cents.

That means that when you come to buy content, as long as you spend less than 30 cents for a click to that page, you’re going to make a profit. And one way to do that is to open an AdWords account and buy advertising space on Google’s search pages. You could pay as little as 5 cents per click, giving you a profit of 25 cents each time your 5-cent users click on your 30-cent ads.

That’s AdSense arbitrage and it sounds like a foolproof way to increase your revenues.

If it were that easy, everyone would be doing it.

The first problem with arbitrage is that you can never get a 100% CTR. Not every 5 cent click you buy is going to give you 30 cents back — and every impression that doesn’t result in an ad click is going to eat into your profits.

With these kinds of figures (and obviously, yours are going to be different), you’d need a 16% CTR to break even. (If every ad click costs 5 cents and gives you 30 cents, you can afford to lose five out of every six clicks or 16%).

So if you can see that you’re getting a 16% CTR, buying advertising on AdWords to send traffic to your AdSense ads could be a good deal.

Or not.

The second problem with arbitrage is that your CTR rate is based on users coming from your current traffic sources. The users you buy through AdWords might behave differently. They’ve already clicked on an ad once so they might not want to click on an ad again.

Or alternatively, because you know they’re the type who do click on ads, it’s possible that they’re exactly the type who’ll click on the ads on your page.

Results from using arbitrage vary. Some people report that the clicks they buy on AdWords give them less revenue, others report that they’ve increased their CTR.

The real key to arbitrage success is buying traffic based on the right keywords. And to do that you need...