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Our website is getting 20 clicks per day, and yet you're only getting two or three dollars per day. What gives? Why aren't you seeing the big bucks that you've been expecting? What went wrong? What happened? Why has AdSense failed?

AdSense isn't broken, your expectations are.

Way back in February, I had the opportunity to experience (for a day) success with contextual advertising. Since the program I was using at the time is no longer in business, here are the numbers that generated some cash over the course of that day:

Page views: 6,875
Clicks: 667
Earnings: $128

If you divide 128 by 667 (money earned by number of clicks) you can determine that the average cost per click is just under 20 cents. Now, if you assume that I had only received 20 clicks, instead of nearly 700, my total earnings for that day would be just under $4.

Also of note is my click through rate: with almost 7,000 page views, and almost 700 clicks, my click through rate (CTR) was nearly 10%. If the implementation of my advertisements was poorly done then my CTR would plummet to possibly 1%, or lower. Many websites still treat contextual ads like advertisements and separate them from the content, which results in the same poor CTR that banner ads tend to get.

Finally, my website attracted low paying advertisements. The advertisements were limited to eBay and some other online auction websites. Had my website attracted different, higher paying, ads I could have doubled, tripled, or even quadrupled the amount of money I made on that day.

From all of this data we can conclude the following:

• Generating revenue from pay per click contextual advertisements is a statistics game. Like black jack, poker, and the stock market, PPC can be broken down into number.

   

   

• Pay per click advertising is a numbers game. At its core it becomes a ratio between number of clicks and number of visitors. With a proper implementation, contextual ads can bring in a click:visitors ratio of 1:10 (1 click per 10 visitors), while poor implementations can expect a ratio of 1:100 (or 1%).

   

   

• The amount earned per click is a variable multiplier that averages out over a period of time. While there are statistical anomalies on the high and low end of the earnings per click, you will find that your clicks will reach an average that you can come to depend on.

   

   

• Since this is a game of numbers, the number of page views (your traffic) has a direct impact on the number of clicks, therefore as page views increases, clicks do too.

So, has AdSense failed? No. AdSense (and indeed, contextual advertising) is nothing more than a mathematical formula, whose variable are filled in with numbers that you generate. Sure, there may be variances to the high or low end of the earnings spectrum (some days people just don't click, it happens), but that's the nature of mathematical statistics, and the nature of AdSense.