I use Adsense quite a bit. Now, some people hate on Adsense, and attach this stigma to it about it being for noobs. I tend to take issue with any blanket judgements like that, because there are some niches where it pays *way* more to run Adsense than it does to run affiliate offers.
For example, take the Pet Insurance niche.
Typical payouts for a new customer in the industry is $20-$25. Not for a lead – for a full purchase. Based on a… large amount of data, normal purchase conversion rate hovers around 1.75%. Let’s over-estimate both of these ad call it a 2% conversion rate and a $25 payout.
Now, time for some math…
100 ad clicks, times our 2% conversion rate gives us 2 sales per 100 clicks.
2 sales times our $25 payout means we make $50 per 100 clicks.
$50 divided by 100 clicks means our average earning per click is $0.50.
Now, compare this to Adsense where, at the moment, my average earning per click on pet insurance ads is $1.45.
In short, I’m earning just shy of three times more with every click because I’m using Adsense instead of Affiliate ads.
Why This Happens
I’ll try to keep the explanation around this as short and sweet as possible.
- Advertisers typically view Affiliate as a low cost channel.
- For that reason, they typically pay out less per sale/lead than they would deem acceptable in PPC.
- So, to an advertiser, a $30 CPA (cost per action/order) might be totally fine in PPC, but in Affiliate they might set their payout to $20.
- PPC accounts are typically managed/reported on as a whole, focusing on the account total CPA.
- Given that PPC is likely managed on a portfolio basis, non-branded terms can have a $50+ CPA, as long as there are enough cheap brand/trademark sales to pull the account average down to the $30 CPA area (or whatever the acceptable limit is).
- Agencies do this all the time in the name of “maximizing coverage”. Which is true, to an extent.
- Coincidently, it also lets them up the spend… which means more fee revenue.
So, the basic takeaway here is that there can be *many* niches and situations where the advertiser (or the agency) is paying out more per click through the Google content network than you could earn with average conversion rates in the affiliate channel.
Other Reasons for Adsense
I’m running ~55 websites. Testing/tweaking offers on all of them would almost be a full time job. This doesn’t mean I’m lazy – it means I’m trying to manage my time wisely.
Typically, all of my new sites will start off with Adsense. Once I see a decent amount of traffic start coming in, I’ll start split-testing affiliate offers. Until I know a site can send 50-100 clicks a day to an affiliate offer, I stick with Adsense ads. Simply put – I don’t want to wait a month to get a fair amount of data to look at.
Sending 10 affiliate clicks a day could result in zero sales for a week even if the offer is good.
Sending those 70 clicks to Adsense can mean a fully reliable $70 (niche pending).
So, anything small volume or just starting out is a automatic Adsense starting point for me. Once rankings/volume are established, I’ll make a pass at testing affiliate offers to see which is going to earn more. Until that point, Adsense is just way, way easier.