Burts AIS, osCommerce & More Blog
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Monday, January 02, 2006

Adsense/Adwords Arbitrage. Huh ??

What is Adsense? We pretty much all know what Adsense is, if you don't then you aren't going to be all that interested in this Blog. What is Adwords? Paying per click for visitors to your own website. What is Arbitrage?

The purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy. Source: www.dictionary.com
So just what is Adsense/Adwords Arbitrage? Well, it's when a person holds both an Adsense Account (advertising other peoples sites on his website[s] and receiving commission per click) and an Adwords Account (gaining visitors to his own website[s] by paying per click)... Now imagine the scenario of creating a website that is highly monetized using Adsense. Imagine getting 30 to 40% CTR (not overly difficult if the site is laid out correctly)... Getting Traffic How to get traffic to the site? Well, use the usual method of SEO, links, article submissionand what-not. But there is another way. Use Adwords...which is known as Adsense/Adwords Arbitrage. Or in other words, pay a very low amount per highly targetted keyword, in the hope that the visitor will click a higher paying ad once on your site... Many Adwords users don;t know exactly how to play it to best effect. You'll see that most Adwords Ads are very untargetted. By using highly targetted keywords you'll be able to pay much less (sometimes just a penny or two) to gain a visitor. And hopefully get a 50 or 60 cent click when they click an Adsense Ad on your website. Obviously this approach can be very risky, but when played correctly it can produce very good results. I have played around with Adsense/Adwords Arbitrage, but decided it wasn't right for my needs. I pretty much came out even. Since I now know much more about how Adwords works (ideas from the Rich Jerk eBook), I may give this another go sometime soon. A real life result! When it works, it can work well. Here's a comment I found in one of the private Forums that I regularly use...
$48,475 for December from Adsense - cost $26,454 in Adwords.
You can see that this person (and I have no doubt they are telling the truth) paid out $26k in Adwords Fees to recoup $48k in Adsense Income. Overall, a $22k profit in one month. Warning As with anything of this nature, it is very easy to lose your shirt. You could end up spending $5k to recoup just $2k for example - that would be a nightmare. If you are going to try Arbitrage, then make sure to do a lot of reading beforehand! Links Rich Jerk eBook An interesting chapter on how to maximise Adsense & Adwords potential Explanation of Arbitrage from Wikipedia.

New URL: www.osworld.biz - thanks!

2 Comments:

At 1/03/2006 11:12:00 PM, Blogger Chris H said...

Yup, good article G.

I've often thought about using adwords to generate traffic, just didn't seem to click.

 
At 2/18/2006 04:11:00 AM, Blogger John said...

You'll want to make sure you have enough cash to cover your AdWords cost since you won't get your AdSense check for the current month till the end of the next month. Cash flow is the name of the game.

 

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