REVENUE SHARING explained

Nowadays, most websites use Pay Per Click programs like AdSense as a way to pay for the services they provide. Some others went further and got the great idea of letting the members that keep the website alive benefit from this revenue stream too. This is called Revenue Sharing.
How does Revenue Sharing work?
 

Revenue sharing is typically used in "community websites". A community website is a website that has a loyal readership regularly updating and renewing the website's content. Discussion boards or Forums are the best example to explain how revenue sharing works, as they are the most common form of community websites.

As a registered member of a forum, you get the right to access all the services it offers (ask for help, help others, send private messages, search the forum.). 

To motivate their members, forum owners used to thank them by different flattering techniques (become a moderator, have your name on the best members' list, become known as an authority in a given area.) but when AdSense became a popular monetisation system used by almost every Internet advanced user (typically the people participating in forums), some clever forum owners thought the motivation would be even greater if the best members could benefit financially from their participation in the forum. Revenue Sharing was born.

Even though the terms may vary from a revenue sharing forum to another, the principle is the same: Every forum member is asked to give his AdSense publisher ID then, after fulfilling some "active member conditions", a percentage of the ads displayed on the forum would be for him i.e. displayed with his AdSense Publisher ID. If the advertising gets clicked, the member earns money directly in his AdSense account. This is called Revenue Sharing because the forum owner shares his website's earnings by sharing his advertising space.

To have your ads shown, you may be asked to reach a certain number of posts, start popular threads, be a member for a defined period of time.

As you can see, this a "performance based" strategy that ultimately benefits both the forum owner and his community: the forum owner gets loyal and active members making his content richer and up to date which will end up increasing his website's earnings and the forum members get a share of the money they helped make in addition to the help and services they get from the forum. This is a great win-win situation.
Some revenue sharing websites: 

The fact that Revenue Sharing is a win-win strategy helped make it very popular among internet users and many websites are now using it. We have listed below - and commented on - some popular revenue sharing websites to help you make your choice if you want to get started making money from revenue sharing. We will keep updating the list as we discover new interesting websites. 

However, we would like you to know you shouldn't expect to make much money out of revenue sharing as it will hardly ever earn you more than a few dollars a month (we have tried it!). 
digitalPoint forums

DP Forums are among the most popular and usefull webmaster forums I know on the net. After registering and posting at least 50 times, you are allowed to enter you AdSense ID and get started sharing revenue.
For threads you start, your AdSense client ID will be used 50% of the time when the thread is viewed as a thread. 
Your AdSense client ID will be used 50% of the time when the thread is viewed by post and you made the post of course.

As you can see, the only way you can have your ads shown is by starting threads. In about two weeks, I participated normally (two or three post a day) and two or three threads started. Here are the results : 322 impressions and 2 clicks earning a huge 25 cents! I also got some CPM impressions which got me 2 additional cents.

ADSENSE ARBITRAGE

AdSense arbitrage is a simple technique that has been imagined by some internet "pirates" to automate the process of making money online. They use pay per click programs like adwords to generate traffic on a given website, then they convert the traffic into money using advertising programs like AdSense. This is of course against google TOS. 
 

As you can imagine, the cheaper the traffic is, the better. That is why those unusual advertisers try to target the least competitive keywords even with low traffic. 

The traffic is then directed towards an MFA (Made For AdSense) website. Of course, the website should be optimized to generate a high CTR and a high RPC making the eCPM really good and the whole business profitable. 
Let's see it in action!
Traffic: 

We have chosen to build a website on web hosting so we have to find keywords related to hosting (a competitive area) that are cheap to generate decent targetted traffic. We have chosen the following words (some typos and some other rare keywords):
Keyword  
Average CPC  
Traffic  
Monthly Budget 

cheep hosting  
0,41  
2810  
1152,1 

perl hosting  
0,19  
1100  
209 

webb hosting  
0,22  
3351  
737,22 

celeron server  
0,33  
590  
194,7 

AMD server  
0,24  
102  
24,48 

secure web hosting  
0,28  
3215  
900,2 

TOTALS  
   
11168  
3217,7 


However, some arbitragers don't mind using irrelevant cheap keywords or other PPC advertising networks like Yahoo Publisher Network, Miva... to get cheap traffic even if it is not targetted. 
The website: 

We have built a one page website with no outgoing links. We have placed a paragraph about web hosting stuffed with high value keywords related to hosting (affordable web hosting, cheap web hosting, free web hosting.) followed by two large rectangles of adsense ad units. 

An additional link unit is placed on the right hand side of the page instead of a menu.
Revenue: 

To be profitable the website should generate a 30% CTR (possible given how we build it) and an average Revenue Per Click (RPC) around $1. Our profit will be as follows:

Profit = Revenue - Expanses 

Profit = (11168 * 0.3 * 1) - 3218 

Profit = 3350 - 3218 = $132

So we have managed to make $132 dollars doing almost nothing!
A shaky business model
As you can infer, this business model is really shaky and not sustainable as the least change in the business model parameters (CPC, CTR and RPC) can lead to some serious losses. In addition, such practices are actively fought by Google and all AdSense publishers using them are banned.

Double your adsense earnings showing fewer ads

YES it is actually possible to dramatically increase your revenue from Adsense simply by reducing the number of ad units you show in every page. In fact, most AdSense publishers think (and the AdSense team also tells them) that showing more ads will increase their adsense monthly income. This is unfortunately hardly ever true! 
 

Before you read on, we strongly recommend that you carefully read our article about the adsense pricing model since the strategy we will be discussing is mainly based on taking advantage of the adsense pricing model.

As you probably know, there are three main ways to increase adsense income on a website: 

• more traffic 

• higher CTR 

• higher CPC 

The strategy we are to reveal aims at getting a consistently higher CPC. 
Double adsense earnings showing fewer ads: A case study 

Let's consider the following case: you run a website with some traffic and three ad units (Top banner, Right Hand Skyscraper and a half banner at the bottom) and you make $ 130 a month. 

Let's see how you could double your income by showing fewer ad units. Here are some details about your website: 

• Traffic: 9.000 visits and 25.000 pages viewed in average every month. 

• AdSense Stats: 
Ad unit  
CTR  
CPC ($)  
Revenue ($) 

Top banner  
1,00%  
0.23 
57,5 

Skyscraper  
1,20%  
0.11 
33 

Half banner  
4,00%  
0.04 
40 


Unless you have understood the adsense pricing model, you may be wondering why CPC is so different from one ad unit to another. Anyway, this is normal since the ad that gets the higher paying ads is the one that first appears on the HTML code (the Top banner) and is followed by the second one (Skyscraper) then comes the third (Half banner).

Let's now cut down the number of our ad units keeping only the Bottom Half banner. This means the half banner shows first on the HTML and so gets the two best paying ads. Since it is the first ad unit, it should have the same CPC the top banner used to have. Moreover, a banner shows 4 ads where a half banner shows only 2. This will result in a considerably higher average CPC for the half banner (due to more competition). CTR will at least stay at 4% since we kept the same placement, same colours. but could also increase to something like 5% because your advertising will be less intrusive. 

Let's now see how much money you will be making with no change in your traffic stats:
Scenario  
CTR  
CPC  
Revenue 

1  
4,00%  
0.23  
230 

2  
4,00%  
0.30  
300 

3  
4,50%  
0.23  
259 

4  
4,50%  
0.30  
338 


As you can read on the chart you could easily make $ 230 in the most pessimistic scenario while an optimistic scenario could yield more than $ 300!!! with no change to your traffic and a better reader experience.
Can I use it on my website? 

Yes most adsense publishers can use it. However, there are some preliminary conditions to getting the most out of it:

• If you are in a low paying market (like arcad and games related websites) where CPC is around 5 cents no matter how high your ad is in the HTML code, don't use this strategy as it won't do much for you. On the opposite, if you are in a high paying niche this strategy could work great for you. 

• You also need an ad unit with high CTR, compared to the other units on the same page, while having a lower CPC. The bigger the differences are, the more you could increase your revenue. 

If you can fulfil the two above conditions, then hurry up and remove those ads that keep you from making real money. 
Want more money?

OK! Now that you have reduced the advertising pressure on your visitors, you can choose to sit down and watch increased loyalty from your readers, more links... (long term results) or choose to get even more money now (short term) by adding ads to the space you have saved.

As you know, link units and referral products are perfect for that since they do not compete with ad units (so you can add them with no risk to the above strategy). 

Of course you can use other advertising programs instead of adsense but we won't discuss that as this is a "make money with adsense" website!!

adwords / adsense pricing explained

Understanding how Google determines the value of a click through AdWords / AdSense is a key issue because the pricing model is complex while being crucial for your business ROI. We'll first expose the general process and then get look at realistic case study. 
adsense / adwords pricing process 
 
Identifying keywords 

The first thing the AdSense bot does is to set a list of keywords that seem relevant to your page's content (contextual targetting). This is done through a complex algorithm nobody really knows except Google ! 
listing Competing Advertisers

For each keyword, a list of competing advertisers is established. Doing so for all the keywords results in an extended list of advertisers competing to show there ads on your page. 
Pricing every ad

Then based on the maximum amount of money (max bid) every advertiser is ready to pay, an ordered list is established from the highest bid to the lowest one. Then the Vickrey pricing model is applied as shown in the following example : 
a pricing case study

In our page, let's say that the AdSense bot has detected the 4 following keywords as relevant :
Advertising
Cost per Click
AdSense
Pay out 

Then for each keyword, AdSense lists interested advertisers as follow :KEYWORD ADVERTISER MAX BID ($)
Advertising Pordgast inc 2,25 
  John immo 0,25 
Cost per click Pay-it-less.com 6,50 
  Ultimate aBooks inc 1,02 
  more4less.com 2,52 
  Ariel Blown 0,75 
AdSense Google inc 4,00 
  James LeGrand 2,00 
  adsense4money.com 1,50 
  millionsinminutes.com 0,50 
Pay Out Google inc 2,00 
  neevie ltd 1,85 


The next step is to list those advertisers from the highest bidder to the lowest one. This gives the following list :ADVERTISER MAX BID ($) 
Pay-it-less.com 6,50 
Google inc 4,00 
more4less.com 2,52 
Pordgast inc 2,25 
James LeGrand 2,00 
Google inc 2,00 
neevie ltd 1,85 
adsense4money.com 1,50 
Ultimate aBooks inc 1,02 
Ariel Blown 0,75 
millionsinminutes.com 0,50 
John immo 0,25 


Unfortunately for some advertisers, all ads won't be shown as ad space on the page is limited to a single large rectangle ad unit which can hold no more than 4 ads. This means only the first four will be displayed. 

But how much will every advertiser be charged for a click ? The answer is : 1 cent more than the advertiser following him. The next chart gives the CPC for every advertiser :POSITION ADVERTISER MAX BID ($) CPC 
1 Pay-it-less.com 6,50 4,01 
2 Google inc 4,00 2,53 
3 more4less.com 2,52 2,26 
4 Pordgast inc 2,25 2,01 
Invisible James LeGrand 2,00  


As you can see, the most agressive advertiser "Pay-it-less.com" won't pay $ 6.50 but just 1 cent more than "Google inc" max bid to deserve his first position ! The process goes on until we reach the last advertiser (James LeGrand) who is only useful to determine what the fourth one (Pordgast inc) will pay.
AdSense Pay Out 

Now that we know how much every advertiser will be charged for a click, how much of the money will an AdSense publisher get ? This is called "pay out".

Pay out ratio can never be close to 100% because Google has costs to run its AdWords / AdSense programs and needs to make some profit! Today, nobody really knows for certain what the ratio is for AdSense, however we assume it is between 50 % and 60 % !

So if someone clicks on the second ad, you will earn something close to $ 1.30 

Lately, Google introduced CTR as a new criterion to define an advertiser's position in the list. Now the AdWords / AdSense algorithm uses CTR * Max Bid to order publishers using the same general logic as shown in this example.

improve click Through Rate

click Through Rate (CTR) is one of the three parameters that make up the AdSense basic revenue formula. Thus increasing it can have a dramatic impact on your AdSense income 
 

Over time, CTR diminishes naturally as Internet users get more and more used to the ads and less attracted by them. This is exactly what happened to Image banners that used to have something like 5% CTR and that are nowadays performing less than 0.5% ! 

AdSense sponsored links are successful today because they managed to come up with an innovative way of advertising through link like ads. This success is mainly measured, though not exclusively, by a high CTR ranging from 0.5% to 20% in some cases, the average being around 3 %. Now it is up to you to take advantage of this high optimisation potential. 

We have listed three main ways to improve a website's AdSense click Through Rate: 
Improve CTR using Ad Format 
Improve CTR using Ad Colours 
Improve CTR using Ad Placement

How do I create advanced reports ?

The first thing you are asked to set to your needs is the product data you want to analyse. Below the "choose product" heading, you will find a drop down menu covering all three AdSense products: 
adsense for content 
adsense for search 
refferals 

Once you have choosen the product, you will need to define a date range. You can either use the drop down menu to define a period of time like today, yesterday, las 7 days... or define your own customised date range like from Sept 5 2006 to Oct 31 2006 to see how the Septembre update affected your performances. 

Next you will need to tackle the "Show data by" section. I understand this is quite confusion so I advise you to choose the default criterion which is "Page". However, advanced adsense users must be able to use any additional data provided by google so let's take a look at how the adsense team explains it. I have modified the text to make it a bit clearer. 

Advanced reports provide the option to view your performance by page, ad unit, or individual ad. We've highlighted the differences between each report below. 
Page reports will show an impression every time a user views a page displaying Google ads. We'll only report one page impression no matter how many Google ads are displayed on a page. 
Ad unit reports will show an impression every time a user views a Google ad unit on your page. For example, if a page with one half banner and one vertical banner is viewed once, we'll display two ad unit impressions. 
Individual ad reports will show an impression for each individual ad that's shown in any ad unit (remembre that a single ad unit can contain more than one idividual ad). For example, if a page with one half banner and one vertical banner is viewed once, it will generate three ad impressions. 

The last decision you need to make is choosing between displaying "aggregate data" and "channel data". 
Unless you want a summary of your overall performance on a daily basis or that you have not defined any channels, I think you should opt for "channel data" option that will give you valuable data on the performance of every channel you set up earlier. 
Once you choose "channel data", more options are displayed. This is a little confusing at first but if you are familiar with SQL queries and databases you shouldn't have any difficulty using these options. For others I have tried to list some guidelines: 
select at least one channel you want to analyse 
set grouping to "date" or "channel", avoid using both 
try many combinations till you get what you want 
try to understand the data and you will see what other data you need

Prepare data for analysis

After a period of time using adsense products, you have enough data to start learning from experience. 
Adsense offers some good reporting tools to help you manage your ads and adapt your advertising strategy to the unique reality of your website. 
 

To summerise my approach I would say that it is all about "identifying what works and what doesn't to take appropriate actions" . 
Setting up a framework for analysis 

By default, your adsense account will only give basic data about how well your ads are performing. In fact, the data is only grouped by product type and no difference is made between ad units and link units. 
This is really not enough if you are serious about developping your adsense business. 
Using channels 

To figure out what channels to use, you need to ask yourself what data you would like to have. Would you like to know what ad format has the best performance? Would it be better to have an idea about the performance of each section of your site? Are you concerned about where to put your ads (top of the page, bottom, left...)? 
According to your answers you need to use different types of channels. 
- URL related data:
If you have more than one domain (or website) that displays your ads, I highly recommend that you add all of your domains as URL channels to track each one's global performance individually. 
For an indepth analysis of a particular domain, use URL channels to track directories or even pages if these are not too numerous. This will provide an idea about how well every section or page of the website is doing. 
- Ad format related data: 
Some ad formats are known to be more profitable than others. To make sure this is true for your website too, I recommand that you define a custom channel for each format that you use. For example, use "300-250" for small rectangles or simply name the channel "Small rectangle"... 

- Positionning related data: 
Where you place ads on a page is sometimes crutial to their performance level. To track this influence (if there is any) use words like "left", "top", "middle", "text embeded", "in menu"... to define custom channels. 
- Colours related data: 
Colors can also be intersting to track as they can impact the CTR of an ad unit for example. The best choice here is to define custom channels based on the palette you use ("open air", "ink"...). 


Of course, these are just suggestions and you are free to come up with other criteria you find relevant to track.

Optimize your advertising strategy - Part 1

In its AdSense program, google offers an array of products : 
Adsense for content 
Adsense for search 
Refferals 

The first critical task (after understanding each product), is to come up with the best possible combination of these products.

Of course, each website is unique and so requires a unique " Advertising strategy " combining AdSense and other advertising techniques. To help define the best AdSense strategy for your website we suggest you try and answer these simple questions : 
Do you have many returning visitors ? 

This is tipycally the case for a blog or a portal with constantly updated content (news, forums...). If this applies to you, we think you should not rely on refferals to yield much income as they only pay for "a first time install". Once the majority of your readers will have installed the reffered product (firefox, picasa, adwords, adsense subscription...) you won't be getting any more money from these ads. 
On the contrary, if you have mostly first time visitors, then refferals can be a good choice. 
Where do your visitors come from ? 

Again, if you are considering refferals, you should keep in mind that these can be restricted to some regions of the globe. For example, the google pack installation won't pay you any cent unless the person installing it is from the USA. Thus, if the majority of your visitors comes from England it is useless to put this product on your website. 
Is your design flexible 

In some cases, and particularly with some blogging services, you do not have total control over the lay out of your website. Then you may have only one place to put your ads which is less than 20 pixels high. In this case for example, you cannot put any ad unit since there is no suitable format offered. 
In some other situations, you may be using a CMS (Content Management System) to build your site and be confronted to the hard fact that the only region you can personalise is the menu (or sidebar). In that case we strongly recommend you use link units because they can be harmonously integrated into any menu.

What is a MFA?

“MFA” is a new term you may have come across lately on discussion boards or blog posts. MFA is the short version of “Made For AdSense”. It is always associated with the term “site” (or “website”) or “blog” as it is a new phenomenon touching all imaginable web contents.

An MFA Site is a site that has been designed, created, published… in the unique goal of generation income using the Google AdSense program.

Accordingly, content, design and general website quality are generally poor when it comes to MFA websites and cause a bad visitor experience. Moreover, MFA site creation has been made easier and easier over time as the process has been highly automated through some cheap software offering to create such sites in minutes.

Although some MFA websites use traditional traffic generation and marketing techniques, most of them are based on what is known as “AdSense arbitrage”.

DISPLAY YOUR FIRST ADSENSE AD

The adsense code is a javascript code you copy and paste into your pages. Javascript is easier to implement than PHP code or any server side code because any page, be it dynamic or static (in plain HTML), can execute it on the client's browser.

Once you have logged into your account and created your ads, the last step of the creation process automatically generates the javascript code for you. When you click the frame displaying the code, it is automatically selected and you can copy it.
Insertion the code

Now that you have the code, the next step is to open you webeditor or log into your blog / CMS... administration interface to insert the javascript code in the page's code. Please be very carefull not to paste it in your editor because it will be interpreted as plain text and won't execute on browsers.

This means you need to access the HTML code of your page. To do so using a popular webeditor like Dreamweaver, you just open the page you want and click the "Code" button to see the HTML code. Scroll to the desired line and paste your code there. To make sur your implementation is good, the code entred will be invisble when

HOW TO CREATE CHANNELS

Once you will have created and customized your ads, you will be offered the possibility to create channels. Channels are used to track the performance of a specific ad / link unit. 

Here is the screen you will see:

As you can see, you can either assign an existing channel to the unit you are about to create or create a new channel. 

To assign an existing channel, just click the "Add" link beside it. 

If none of the existing channels suits you, click on the link called "Add new channel" (just below the box). An input box will pop up and you will be able to type in the name you want to give to the channel. Click OK so the channel is automatically added to you channel list. It will also be assigned to the unit you are creating. 

If you want to remove a channel you have assigned to the ad, just click the link called "Remove" shown beside it.

Once you have added the channels you want, just click the "continue" button to get your code. 

For a comprehensive case study on how channel can be used to track performance and make decisions that will improve your earning, read this article. 


Next : Display your first AdSense ad unit >>

How do I create and customize my ads ?

o start creating an AdSense ad unit, you need to be logged into your AdSense account. If you do not already have an AdSense account, you can apply from this page. 

Once you are logged in, click on the "AdSense setup" tab and choose a product as shown below:

You will probably want to start by AdSense for content. On the next screen you will be asked to choose between ad units and link units. We will use the default options. (for more details on how to choose suitable AdSense products, please reffer to our advertising strategy guide).

On the next screen you will be able to customize your ads, by choosing the ad format and the colors as shown below:

When you are done, click the "continue" button and you will be able to get your Javascript code. This code has to be insered (copy and paste) in every page's HTML you want AdSense ads to be displayed on.

the adSense basic formula

Making little money with AdSense is easy : Set up the ads and leave them. Making real money with AdSense is much harder. This article will help you understand the adsense revenue generation mecanism (Business Model). 
the formula
 

AdSense revenue is based on a very simple formula you aught to know by heart : 

Revenue = Traffic x click Through Rate x Average Revenue per click 

This is also called The AdSense Business Model. 
Revenue 

This is the result of the formula, the amount of money you earn. 
Traffic 

In this context, traffic is the number of times a google ad is displayed on your website for the considered period of time. If your pages are seen 10.000 times during a month, your traffic is then 10.000 provided you place adsense ads on all your pages. To get 10.000 page impressions a month you can, for example, have 5.000 visitors viewing an average 2 pages per visitor or 8.000 visitors viewing 1,25 pages per visitor... 

Please note that google can also show "public service" ads that are not taken into account which will reduce you traffic. 
click through rate (CTR) 

CTR is how many clicks you get out of 1 (one) page impression. It is generally close to 1% or 2%. A CTR of 3% means that a traffic of 10.000 resulted in 300 clicks. 
CTR indicates how well the ads are doing, of course the higher the better but do not dream of a 30% CTR! 
Average Revenue per click 

As the phrase indicates, this is the amount of money Google pays you (in average) for every click. It can be 5 cents, 20 cents or many dollars. 
The process that determines the revenue per click is complexe and will be discussed in upcoming articles.

AdSense application guidelines

Access to the adsense program is subject to acceptance by the adsense team. Do not worry however, they are not the hardest to convince! Just follow these simple guidelines and you will soon be a membre of the adsense publishers community. 
 
If you have more than one website or blog, apply using the "best" one. Once you get accepted for one website you can use adsense on all your other sites and blogs! 
Do not apply with unfinished websites (containing pages "in construction", "coming soon"...), although you might be accepted in the program it is useless taking risks as an unfinished website will never get you any money so wait for it to be finished. 
Adsense is based on content (text), so keep in mind that a minimum text is required in all your pages (avoid excessive flash and images). 
For a website to be accepted it is commonly accepted that a minimum of 20 pages is often enough. For a blog, we think that a 2 months old blog has serious chances provided you post frequently. 
Certain contents are prohibited. If you are running a website with pornographic content, do not try to apply for an adsense account. Here is a complete list of what Google does not accept : 
Excessive profanity 
Violence, racial intolerance, or advocate against any individual, group, or organsation 
Hacking/cracking content 
Illicit drugs and drug paraphernalia 
Pornography, adult, or mature content 
Gambling or casino-related content 
Excessive advertising 
Any other content that promotes illegal activity or infringes on the legal rights of others 
Pop-ups, pop-unders or exit windows that interfere with site navigation 
Excessive, repetitive, or irrelevant keywords in the content or code of web pages 
Deceptive or manipulative content or construction to improve your site's search engine ranking, e.g., your site's PageRank 
Incentives (monetary or point-based) to users or third-party beneficiaries for online activity including, but not limited to, clicking on ads or links, performing searches, surfing websites, reading emails, or completing surveys 
Sales or promotion of certain weapons, such as firearms, ammunition, balisongs, butterfly knives, and brass knuckles 
Sales or promotion of beer or hard alcohol, tobacco or tobacco-related products, prescription drugs, products that are replicas or imitations of designer goods 
The program is only accessible to men and women older than 18 years. So if you are younger, you can either wait for some months and keep building your site's content and popularity or use someone else's identity keeping in mind that you could run into truble if your business does particularly well.
Is your website usable ? Does it have a functionning menu, well layed out pages, interesting content... you wouldn't expect advertisers to put their ads on websites you wouldn't trust yourself! 

Sign up for AdSense.