Google Adsense & PPC advertising

Think Adsense is an unsustainable business model? As Lee from the Forum Fix points out, Adsense raked in about $10 million dollars a day of revenue at Google last quarter. Perhaps a publisher making $10,000 a day off of Adsense actually is pretty reasonable.

Every so often I sit back and take a look at a situation in perspective. I don’t consider myself a Google worshiper, but the fact is their system of contextual advertising is having a dramatic impact on the internet. Adsense connects buyers with sellers in an incredibly efficient way, and allows web site owners to focus on building great sites rather than focus on finding individual advertisers.

Is the “system” perfect? No; but what is?

Last year I wrote an article for Chris over at WebsitePublisher.net titled “Google Adsense Optimization Secrets.” Admitedly, nothing was really a secret but it made a great title.

I am amazed how few people bother to test out new things with their Adsense units. Unlike CPM ads, you have the ability to dramatically influence your Adsense earnings by controlling placement and earnings. When I say dramatically, I don’t mean increase your earnings 2-3%; I mean doubling, tripling, or even quadrupling your earnings. It turns out even that may be conservative:

…one of my favourites was a science website that was earning about $10 per day…Things went crazy from there and earnings shot up to $700 per day. Finally, they moved one of the 300×250 Rectangles from the top of their page to a location more embedded in their content. After that, earnings went to over $1,700 per day!

Does that sound like an over-hyped sales copy for an equally over-priced e-book? Its not. Its straight from Google’s official Adsense blog.

As I reported a few days ago, Markus Frind, the owner of the free dating site PlentyOfFish.com has been pulling in $10,000 a day from Adsense. What is even more remarkable is that he is single handedly (with a little help from his wife) running one of the largest dating sites on the internet. I asked him if he would like to do an interview for the blog, and he agreed.

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In 2003 you made a post on WebmasterWorld where you said you were making $40 a day. At what point, either before or after this, did you recognize that you could generate a livable income, and beyond, through your own websites?

I knew the day adsense came out that i would be able to make a lot of money, suddenly here was this revenue stream i could actually build a business on. My site at that point only had a few hundred visitors a day and it was only a few months old. But my growth was steady and I could plot on a graph exactly how much traffic i’d have in 4 or 5 months in the future. This was the same time where i started doing mass anti competitive intelligence, i blocked anyone with the alexa toolbar from signing up and anyone using comscore. I figured if i was to have any chance i would need to stay completely under the radar, if no one knows you exist then no one is going to counter you or clone it.

What was the biggest obstacle you have faced since starting PlentyOfFish.com and how did you overcome it?

I wouldn’t say I had any real obstacles, growth is steady and you have a good 2 or 3 months lead time on when things will start to become an issue. I spent a good 3 months of the last 12 months on vacation. I suppose that the biggest issue has always been performance, In order handle 14-15 million pageviews a day on 4 servers you have to constantly tweak the database, as execution paths etc change as the database grows and load increases.

You started PlentyOfFish to learn and expand your skills. When did you begin treating the site as a business?

I was making around 4k a month off the site and i quit my job to do it full time. At the same time i learned how to do PPC, affiliate marketing , SEO etc. Basically i tried to learn as much as possible, adapt it to my needs and move on.

You appear to be an advocate of simple, quick loading designs. Do you think that there are any other elements of web site development that developers are looking at wrong and may be counter-productive to their success?

Function over form to build an emotional connection with the user. Blend ads into content, No flashing crap, make the site useful. Basically all those things that everyone knows you are supposed to do, but very few people actually do. There is no magic bullet, but you should always test new designs or new text etc to get the result that you want. You will never have the worst design and never the best, but through testing you can always improve.

I’ve noticed some resentment by promotors and owners of paid dating sites. They fear that once a customer gets a taste of free dating they will never pay a monthly fee, thus destroying the online dating industry as it exists today. Do you think they should be threatened by PlentyOfFish.com?

Many of the owners/promoters of these niche sites basically are people who had no clue about the internet and got in the market during the .com boom and lucked out onto a viable business model. Since then they have lived in a bubble with relatively little competition. The large sites are worried, but they have always faced stiff competition. For the most part the industry wants to ignore the fact i exist and they are just hoping that I will go away, so they don’t have to explain to investors why profits are vanishing.

I think in the future paid dating will account for 5 to 20% of the over all online dating market, currently 68% of my membership in the United states has paid for a dating site in the past, draw what conclusions you will.

Do you have a vision of what the internet will look like 5 years from now, and if so, can you describe it?

Adsense and YPN will be standard components of any business models. There will eventually be a massive market place where you just select a age range, city gender etc and your ads will be shown to people matching your demographics. More tools will be developed to track users intentions and monetize them. If you own a site about horses and someone was thinking about buying a car a week ago while searching the net, your horse site may display car ads. We will eventually see online ads approach the ROI of offline ads or even exceed them as monetization of intentions\preferences takes hold.

Aaron Pratt has interviewed Shoemoney over at his SEO BUZZBOX blog. In the interview Shoemoney reveals that his past jobs have included selling appliances at Sears to getting paid six figures by Wells Fargo for 20 minutes of work a day. The most amazing part of the interview is the dramatic turn around Shoemoney had after he learned search engine optimization in 2005 and was able to rocket his websites to the top of Google.

My user driven sites now totaled about 3 million users and I was told by my premium adsense representative that my sites were the highest grossing Adsense sites for the “mobile niche”

When I hear a story of online success, I’m all over it. I want to understand the beliefs and outlook on the person behind it and what they did to make it successful. After plenty of these great success stories this year, here comes another one that perhaps tops all of them.

By now you probably have heard about Markus Frind of PlentyofFish.com. He has gone public both on forums and in interviews about making $1 million in 3 months from Adsense.

I first ran into this story a few days ago reading this blog post on “anti-marketing” design. Up against other popular dating sites, PlentyofFish’s design would lead you to believe that Markus would be lucky to be making about $30 a day; in fact, in 2003 he was making $40 a day from Adsense (although this may have been from other sites.)

So lets back up; is it the design that makes his site successful? Between saved bandwidth expenses, and a better Google clickthrough rate, I think it is very important. However, as I dug further into this story I discovered that behind this simple design was a very complex system and someone who worked smart & hard to be sucessful; here is a direct quote from WMW:

Keeping my site fast and running is one of my smallest issues.

1. Approving and editing 20,000 images/day
2. BLocking 1000 nigerian russian scams, escorts etc per day.
3. Blocking fake accounts, trouble makers etc.
4. 100k+ edits/modications/day

5 to 10% of yahoo’s and the industries total signups are scams escorts etc. I’d guess these guys steal on the order of $100-400 million per year from the industry.

How does he moderate all of this? Automation. This is brilliant. Considering other companies must hire hundreds of employees to do all of this, I suspect he is looking at a multi-million dollar buyout within a matter of months. Could he go the way of craigslist and resist it? I don’t know; he’s waving a big flag trying to get a lot of attention right now, and its certainly working.

This story reminds me about computer games. There has been such a huge focus on graphics the last 10 years that gameplay is rarely innovative and often hollow. The same can be said of websites. Post a link on Sitepoint and people are all over you about web standards, not “does your website work and does it help people?” The ugliness of Myspace was the first big single that may be pretty designs aren’t important; PlentyofFish is the nail in the coffen.

As humans one of our biggest weaknesses is becoming obsessed with what is not important. We spend 90% of our time on that little 5% — and that is why so many of us fail. PlentyofFish is an example of what happens when someone understands that its not the fancy design that brings in visitors, its something else. He understands that search engine traffic is important, but its even more important to have visitors that come back to your site again and again.

There is a lot more to say about this story, but for today I’ll leave you to dig deeper here. I suspect Markus is being bombarded with media inquiries but I’m going to try to get an interview with him anyways.

From Jensense - Google adds demographic targetting for Adwords for site targeted campaigns. This appears to echo an option available in MSN’s new Adcenter. Will this positively or negatively affect Adsense eCPMs? For those of you with high-traffic sites, I think this can only be a good thing.

From Reuters — The settlement stems from a lawsuit filed by Lane’s Gifts earlier this year in an Arkansas state court and is designed to settle all outstanding claims against Google for fraud committed using its pay-per-click ad system back to 2002, it said.

This is certainly big news. I expect some bloggers and pundits are going to jump to the conclusion that this proves click fraud is a threat to Google & pay-per-click advertising’s future. Don’t read any more details into this story than are already there. To date, Google Adwords remains one of the best pay-per-click advertising programs on the internet when it comes to addressing fraud.

Your in luck — eBay carries them!

The reality is that human body parts are prohibited on eBay — and also illegal to sell in the US. I think this is illustrative of a larger problem. In this month’s Business 2.0 there was an article about a company using algorithms to do PPC advertising buys on a massive scale (already lent it out, so I don’t have the details.) What could possibly go wrong? This may be one example.

From Paidcontent.org:

…an interesting experiment from Harper Collins: it is putting the entire contents of a book online for free — but with ads, along with an Amazon affiliate link for those who want to buy the hardcopy.

Its a business book, The New Entrepreneur and they are using a mixture of Yahoo and Google Adwords. As a publisher, how would you compete if it became common place for print publishers to put their books online? (in a very indexable and search-engine-friendly format, I might add.)

Straight from MarketingSherpa’s ContentBiz:

“By ContentBiz estimates, online publishers who placed Google’s AdSense contextual ads on their sites in return for a cut of the revenues, made about $1 billion last year.”

The cats out of the bag, web publishing is a legitimate business. And that $1 billion from Google is just one slice of a much larger pie; it doesn’t include the other ad networks or affiliate marketing. Together, those added billions more onto publishers revenues in 2005.