Google AdSense Program Review

Google AdSense, Google's advertising program that lets webmasters display ads from Google's extensive list of advertisers, has taken the Internet by storm. Through this successful program, unobtrusive text-based ads are served in member sites, who then earn a commission every time someone clicks on the advertisers' links.

At this point in time, the jury is still out on whether this program will continue to enjoy its initial success. That is why, through this article, we want to give you some highlights and insights on how the Google Adsense program has worked for us, one month after we signed up for it, so that we can use it as a checkpoint for future analysis.

Why is Google AdSense so Popular?

Google AdSense uses Google's proprietary PageRank™ search technology to deliver ads that are highly relevant to the content of a page. Since Google assigns a PageRank™ only to pages listed in its index, the page must first be listed in Google before relevant ads can be displayed (if the page is not in the Google index, Google will display public service ads, for which no commissions will be accrued).

Running Google AdSense is simple and straightforward: Google gives you a snippet of HTML code that you can paste in the desired location on your page, and the ads start appearing immediately after you upload the changes to your server.

However, Google AdSense's main claim to fame is that, by displaying text-based ads, it is able to deliver much higher click-through rates than traditional graphic banner ads.   As usability studies have widely shown, users are already conditioned to ignore banner ads (or anything else that looks like them). As a result, banner ad click-through rates have dropped below a dismal 0.5% (in other words, it takes 200 page views, on average, to get someone to click on a banner ad).

By using text based ads instead of graphic banners, Google has been able to overcome banner ad blindness, delivering click-through rates that are much higher than the industry's average (some put the figure around the 1.5% mark). Our own experience after one month of running the program, shows a click-through rate of 1.2%, which certainly beats the 0.5% of banner ads.

How much can you expect to earn by running Google Ads on your site?

The pay-off per click varies widely depending on what each advertiser decides to offer, based on the profitability of their products and their expected conversion rate (percentage of clicks that deliver a sale). Google is not saying what the average pay-off is, but our own experience after one month of running the program shows an average pay-off of $0.63 per click. We have seen clicks paying as little as $0.02 and as much as $3.00.

So, just for the sake of giving an example, lets say that your site receives 1,000 page views per day. If the 1.2% click-through rate and $0.63 pay-off per click that we have observed on our site hold true for your site as well, in a 30-day month you can expect to make:

1,000 x 30 x 1.2% x $0.63 = $226.80

Not enough to get rich, but a nice extra income nevertheless, that you can use to pay for your domain name and hosting costs, and then some.

Will Google's AdSense continue to be successful?

This is the big question, and nobody has a definite answer yet.

On the downside:

• The program will most likely face strong competition from other search engines in the near future.
• The proliferation of text based ads could make users "text-ad blind" the same way as they have already become "banner-ad blind", causing click-through rates to drop.
• There is always the potential for abuse, since some unscrupulous program members may violate the program's rules and click on their own ads, inflating the advertisers' click-through rate and forcing them to decrease their pay-off per click.

On the positive side, I believe that Google AdSense's success is not only due to the fact that they deliver text based ads instead of banners, but because those ads are served by Google. The credibility and brand equity that Google enjoys is huge, and I expect them to continue to beat other search engines and advertising networks that may eventually jump on the bandwagon.

However, it is reasonable to expect at least a slight decrease in click-through rates and pay-off as a result of the increased competition.

We will continue to monitor Google AdSense's results on our site very closely, and will bring you fresh new insights in a few weeks or months so that you can better understand the evolution of this successful text-based online advertising program.