Why your Adsense Sites could be leaving money on the table

In this post I ran calculations on over 2,000 recent website sales to find out which type of monetisation strategy yields the highest revenue per unique user.

The idea behind this is simple; For every site we own we do similar things to get traffic – link building, partnerships, blogging, ppc etc, but doing the same actions on two different sites can yield very different results.

In short, how much money you make isn’t really down to how much SEO you do. It’s how well the site is set up to convert and monetise the people who visit. For example, I can build 100′s of links to a site that has ads and make little money regardless of how much traffic is generated. On the flip side, I can do half the work and get half the traffic but still make many times more if that site is set up to sell a product for example and does so with a great conversion rate.

This is hypothetical and can depend heavily on things like page design, suitability for the audience and the offer itself, but in sampling several hundred sites I should hopefully be able to see a trend.

To test the various theories I’m going to be looking at differences in revenue per unique user – the average amount a site generates for every unique visitor it gets. This is different to looking at just ‘revenue’ because:

• With so many sellers providing “estimates” rather than real figures (this is more common in smaller sites hence the bias towards excluding them explained below), we cant rely on the quoted revenue figure itself. It is fair to assume that over-inflation of figures is going to be constant – i.e. Someone making $20 per month is unlikely to claim $5,000 per month (although I’m sure someone will have tried it :)) and the amount of truthful listings in the dataset should also help even the numbers out by averages. Also we’re looking at a relationship rather than the actual numbers – i.e. Method 1 is several times more profitable than method 2. The x times may not be accurate due to estimates, but overall it will still be safe to draw a conclusion if the first method outranks the second by several times
• Using revenue or average revenue alone for a monetisation test is a bad indicator as this can largely depend on factors like on and off page seo, traffic, age and page rank. By using RPU we eliminate (to an extent) the owners ability to attract traffic and just focus on what that traffic does once it has arrived.
• RPU averaged across a wide distribution of sites, allows us to remove anomalies and bias so we can see the effect on large and small sites alike (excluding the very small ones as discussed above).

I guess I’m one of the few people who can openly admit to getting a little excited by numbers … it’s sad, but this literally had me on the edge of my seat, as what the information below tells us can change your strategy in both the types of sites you create and what you do with websites that you buy. I had to do all my own number crunching this week (a Typhoon hit the Philippines and wiped out electricity in many places, leaving me with an online staff count of zero) so I’ve double checked everything for accuracy.

Firstly, here’s the criteria I used to create the dataset. If you’re easily bored or just want me to get to the point, you can skip this section (look for the next orange heading). I have the full data for all the sites analysed stored in excel – send me a message if you would like a copy to run your own calculations or check the validity of what I’ve done.

• All sites with a gross revenue less than $30 were excluded to try to prevent skew. (I exclude these sites in all statistics run here as they tend to contain the highest percentage of fictional data)
• All sites with a visitor count of less than 250 were excluded (e.g. someone will list a new site with 1 ‘sale’ (usually the seller’s mom) to be able to list it as established or revenue producing)
• The data is based on people’s supplied numbers, not all of which will be accurate, but taking a larger sample size of at least a couple hundred should help even this out. I had a discussion with someone on the Warrior Forum who raised a valid point that the data could be skewed by the fact all these sites are sites listed on Flippa and created by people with a flipping mindset, not a long term one. I dont believe this is accurate; firstly the sample has many aged sites that produce substantial revenue. ‘Startup sites’ were excluded from the dataset. Secondly, all the sites are from the same source and what I look at is the difference between methods. (So if figures are likely to be lower than average, then ALL figures will be lower than average regardless of their monetisation method)
• The data for “All (including not specified)” is taken from all markets and should be used as a control. All the other data is taken from just Flippa sales as only they provide data on the criteria needed.

Adsense alone = a quick route to slow growth

Unsurprisingly, one of the lowest RPUs and hence one of the poorest methods of monetisation for a site was Adsense / Advertising only which barely makes $0.11 for each unique user that visits. Adsense is probably the easiest way to start in IM and I personally think it’s a great way to make a dent in generating a passive income, but this proves that

Adsense is not the most efficient way to make a living online. Excluding the work put in to set the site up, for the same amount of SEO effort you could quite easily double or even quadruple your income from that same site with a few changes.

Many of us, myself included, are guilty of staying in the adsense comfort zone – it’s easy to do , outsource and understand, but the same amount of link building could easily earn you more with a different strategy.

Affiliate Sales performed slightly better

If starting with Adsense is like earning a white belt then selling affiliate products would be a yellow one or the next logical step up (…yes, I intend to work the life out of this karate metaphor).

Affiliate sales do tend to make more money but only a little bit more at $0.26 gross per unique user. You’ll notice there’s not a huge difference between the gross and net figures which, as most affiliate products offer about 40% (information products), initially look wrong, but makes sense if you remember that gross revenue is not always turnover. For an affiliate, gross revenue is technically what they receive in commission, and net will be that figure minus promotion and hosting costs.

Ryan Malone raised the point in a comment recently that the difference between having your own product and promoting someone else’s is huge, not just whilst you own the site but also if you come to sell it. The numbers justify this, showing that with a little time and possibly a small amount of expenditure up front, you can do the same amount of work each month and make a considerable amount more money. (For a quick and dirty method of creating your own product based on one you currently sell, see this post on adding value to your website portfolio)

What was interesting is that

a combination of both affiliate sales and advertising yields the worse results overall, worse than advertising / adsense alone.

Not convinced? Use Google optimiser and run a split test on your site if you currently use both methods. Try one landing page with both methods, one Adsense only and one Affiliate ‘money page’ only and see which yields the most revenue. The results seem logical in that an unfocused site has no ‘ultimate goal’ for a visitor, although I believe this wouldn’t be the case if only the inner pages had adverts as opposed to the whole site.

Become a Black Belt and own your product

The type of site which made the most revenue per unique user, gross and net, were sites that sold a product or service.

Flippa has no strict guidelines on what this is, but from the data I analysed it consists of

• Service offerings (mostly SEO related) such as proofreading, traffic selling, link building and Facebook / Craiglist services
• Ecommerce offerings including dropship sites
• Web Applications
• Info products and Digital Downloads (with ownership rights)

It seems logical that this type of business would have the highest RPU, as almost all of the revenue is gross profit (with the exception of dropshipping). Not only will these sites generate more cash when you own them, if you decide to sell, the average revenue multiple far exceeds any other type of site, especially when you have an asset (content rights or software) included in the sale.

If you think about it, most of the biggest names in internet marketing started with affiliate marketing, but very rarely stayed there. I’m not a big fan of guru-ism, but I understand why people like Ryan Deiss, Frank Kern and Eben Pagan continue to pump out product after product, simply because they know it’s the most effective way to make money.

To stress the point, picture this; you have three sites that you choose to work on in the same niche. All are brand new sites and you spend the same amount of time doing exactly the same amount of work. Assuming you manage to attract 1,000 visitors per month on average for those six months

- An Adsense site is statistically likely to make you $660 in profit.

- A site selling a Clickbank product ($27 ave per sale after refunds, 0.6% ave conversion) statistically likely to make you $972 in profit.

- A Product based site (e.g. ecommerce or your own DVD / Ebook product) is statistically likely to make you $6,360 in profit.

These figures are based on averages, but generally will stack up unless all of the 400+ transactions looked at were anomalies.

There are logical reasons to own an adsense site, some of which I’ve taken from discussions with peope on forums, but not all these are ‘good’ reasons. My excuse was ‘comfort zone’ and fear of failure. Doing something different always lost to doing something that I knew would work (i.e. adsense), so the choice of potentially failing or guaranteed success was an easy one to make. Not thinking big enough has potentially cost me 000,000s in lost revenue for all the time I’ve spent promoting sites that could be making more money with the same level of promotion.

Here’s a list of things to consider:

• There are practical reasons where an Adsense site is still the best option which include, lack of time initially to do something else, lack of suitable products in a marketplace e.g. government / community / social, ease of ownership (although I dont think selling an affiliate product is much more difficult) and portfolio diversification (not having all your eggs in one basket!)
• If you’re actively promoting adsense sites, ask yourself if they could support a product based offering such as a dropship store or an information product and give serious consideration to switching. It may not be broke, but that doesn’t mean you shouldn’t fix it!
• If you’ve been doing your own linkbuilding for over a year and you’re doing it for an adsense or affiliate site, stop now! You’ve served your time – outsource everything you understand and devote your hours to creating a product
• There’s an opportunity in searching for websites for sale that are adsense only but have good traffic. Simply changing the monetisation would more than likely increase its revenue based on the existing traffic figures.

Just to clarify, I’m not condemning Adsense sites completely, but suggesting that if Adsense is your entire portfolio, you could be selling yourself short. They’re quick to set up and easy to manage, but sooner or later, it’s time to graduate onto something bigger or we’ll always be chasing that “1,000,000 sites making $1 per day” dream that new internet marketers seem to aspire to, after the posts on forums from the MINORITY of people who have achieved it. It’s not impossible to do (maybe a 1,000 sites rather than 1 million!) , but I believe there’s a quicker way to make the same amount of money.

READ MORE: flipfilter.com