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The Google AdSense Business Model Explained

By Jamie Toyne

Every year Google pays out over $10 billion to businesses using the AdSense model. And most of these businesses watch this income tick in passively, through advertising placed on their websites by the AdSense program. A program that is completely free to join. If you already own one or multiple websites, have a blog or a YouTube channel, or are considering starting or buying your own site, then you might be wondering about how AdSense works. And how you too can get your piece of this billion-dollar pie.

Well, you’re in the right place. In this article, we will explain the ins and outs of AdSense and teach you how you can get started monetizing your site using this business model. Let’s dive in.

So what actually is AdSense?

AdSense is a program run by Google, to which publisher websites (that’s you) can sign up with a website, blog, YouTube channel etc. Once approved for the program, Google then displays advertisements on your website, and when people click on these ads, you make a profit for every click. Well, with Google taking a cut of course.

Sounds simple, right?

Well yes and no. The simple part is signing up. Google does most of the work, matching the most well-suited adverts to your site based on the key words you target. This is so that the audience that visits your site is more likely to be interested in the ads displayed. This means more clicks for the advertisers (who sign up with another Google program, AdWords), and more profit for the publisher. Therefore, even if you are quite new to the game, it is reasonably straightforward to get started with AdSense and it doesn’t take much work to maintain AdSense ads.

The trickier part comes in maintaining your own website or websites. The amount that you can earn depends on various factors. How many people actually visit your website and thus will click on the ads? Does your site target specific keywords, and how competitive are they? Is your site SEO optimised so that it ranks well for your keywords?

And why is all this important?

How do you make money with the AdSense model?

So, in terms of making money, your website size and niche is important. For an Adsense model, it is best to target specific keywords with your site. Most ads are valued on cost per click (CPC), which vary depending on niche and keywords. For example, if the CPC for one of your keywords was a dollar, every time someone clicked on an ad, the advertiser would be charged a $1, and AdSense publisher site would make that dollar as profit, but giving a percentage to Google. You can also get CPM ads, which are valued based on Cost per 1000 impressions (CPM). You can choose whichever one will make more revenue for your business. The CPC or CPM cost is set by the advertiser and can vary depending on how much they are willing to pay. When using CPC ads, generally the higher the CPC the better, but at the same time the more competitive it will be to rank for that keyword. Therefore, there are different approaches you can take to making money through the Adsense model. See the 3 main ones here:

  1. Niche site – If you choose to target very niche keywords there will be less competition to rank highly for them.
  2. Authority site – This means having a big, established site that corners the market and ranks highest for popular keywords. It means having a site with hundreds, or thousands, of pages and updating it with content regularly.
  3. Multiple lower-earning sites – Monetizing multiple smaller sites with AdSense can be an easier way to reach your earning goals.

As the AdSense business model is very passive, the main way to increase your revenue from a site is to drive more traffic to your sites to gain more clicks. This is measured by the Click Through Rate (CTR), which is the percentage of impressions that lead to a click. It can be calculated with the number of clicks divided by the number of impressions. The aim is to increase your CTR as much as possible. But remember you can’t click on your own ads.

How much money can you make with AdSense?

So, we’ve established how the model works, but how much money can you actually stand to make?

Well, publishers generally earn 68% of the profit generated for each click, Google taking a 32% cut. The average Cost Per Click in the Google Display Network (the network of sites displaying advertisements through AdSense), is $0.63 which means on average one click on an ad could earn you $0.43 per click. This figure can vary. A lower end CPC could be as low as $0.02 per click, and a higher end one may be $2.

However, in some cases, the highest earning keywords could make tens or even hundreds of dollars per click. In the US, the Insurance niche is the highest earner by far with an average CPC of $17.55. This is followed by Online education at $12.08, Marketing and Advertising at $6.45 and legal with an average of $6.11 per click. Check out the highest earning niches for publisher websites in the US.

adsense statistics

Source: cdn.semrush.com

A typical amount you could expect to make per month as a publisher website could be between $1000 and $2000 although some huge authority sites could make over $500,000 per month. Becoming an authority site in a niche is difficult, however, and can involve a lot of time and effort. Therefore a more sensible tactic can be using AdSense on multiple sites, each making smaller amounts. It may be easier to make $3000 per month, from 10 different sites making $300 each, than building up one sole site to make $3000.

One company shared how to make $100 per day through AdSense, they spread their traffic across 20 sites, with a shared total of 150,000 visitors per month. 90% of these profits being generated by 3 of the sites.

Examples of AdSense Sites

So, what do AdSense ads actually look like and how are different businesses using them? They usually appear at the top and sides or middle of a publisher site. Check out the very niche site Catforum.com that dominates a cat lovers niche.

adsense example 1

And here’s another example of an AdSense publisher site. This time Mashable.com is an authority website in the digital media sphere. They are said to put out more than 30 posts per day, and have millions of social media followers. They integrate the ads onto their page so that they look like it is their own content and are said to be making at least $180,000 per month.

adsense example 2

Pros and Cons

So, still considering using AdSense? Let’s recap some of the pros and cons of this online Business model:

Pros:

  • Passive
  • Easy to get started
  • Low startup costs
  • Flexible – it can work with various types of website
  • Scalable – you can monetize any number of sites using AdSense
  • See an income stream within a few weeks
  • There is no upper limit to what you can earn
  • Low maintenance
  • You can sell AdSense sites for up to 20x what it generates monthly

Cons:

  • Depending on your niche, AdSense payouts can be quite low
  • Large sites are best to generate decent revenue and this can take time and effort to build
  • You need to stay on top of SEO to keep your site ranking highly for your keywords as the AdSense model relies highly on this

Conclusion

So there you have it. Whether you already have a site with many visitors per month or you want to start one from scratch or buy one, AdSense can be a quick, straightforward way to start making money from a website. Make sure to research your niche and keywords strategically first, to find the perfect balance between CPC and niche competition. And hey, you can be generating revenue in no time.

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