Monday, March 5, 2007

Interview with the AdSense million dollar man

When Jason Calacanis wrote in his blog that he was on schedule to make a million dollars with Google AdSense over the next twelve months, he created a phenomenal buzz about the financial possibilities of running AdSense on blogs, as he does on his Weblogs Inc. network.

If back in September when we started playing with Google Adsense someone told me it would turn into a $1M a year business I would have laughed. A million bucks without a sales person? Give me a break!

However, yesterday we broke our $2,100 record with a $2,335 day. That’s an impressive number I know, because if we can take that number to $2,739.72 we’re at—wait for it—$1M a year.

I asked Jason if he'd care to answer some questions on how he does it, he graciously did just that, sharing his thoughts, ideas and advice on AdSense.

Why did you decide to try out AdSense back in September?

We were launching blogs quicker then we could sell advertising, so we figured we could either give the ad space away (like magazines do) or we could try to make a little money from it with 3rd party ad networks like AdSense, Tribal Fusion, Fast Click, and Burst.

Did you initially place AdSense on all pages, or did you gradually add it over time? Do all pages on Weblogs Inc now run AdSense?

We started with a couple of blogs and then quickly put it all over the network.

What single change do you think made the biggest leap in your AdSense income?

1. Taking off the borders around the advertisement
2. Making the links the same color as the links on the blog

Why did you select the ad unit location that you did? (Curious because it is not generally a high CTR position).

We were sold out of leaderboards on our big blogs, so we figured we could slip the thin horizontal banner without it feeling like too much advertising. People tend to like--or not care about--Google Adsense ads. Which is great compared to graphical banners which people sometimes hate.

How successful have you found rotating the ad unit colors to combat banner blindness?

Never tried that... thanks for the tip!

You use channels on your sites, do you also check your channel reports on a regular basis? Have they helped you with making decisions regarding AdSense?

We do channels for each blog, and now we are doing channels for each position on each blog. This is a lot of work because we have seven positions across 80 blogs. I wish Google Adsense would automatically do reports by format (anyone listening over there?!).

How do you balance the user experience versus advertising revenue? Do you deliberately chose the less intrusive AdSense ad formats on Weblogs Inc?

We don't like to abuse our users. We like to give a lot of content on one page (15 stories), and keep the heavy advertising up top. So, after the first page down your past most of the advertising.

You mention that your AdSense revenue would be higher if it wasn't for advertising commitments already made on blogs such as Engadget. Is AdSense successful enough that you plan to place AdSense in those more prominent ad spaces when they become available, or is the current secondary placement on those blogs working well enough?

AdSense doesn't reach the level of display advertising ($3-12 CPM) and it never will--unless Google started selling display advertising! Wait a second... that's a really good idea!

Do you ever worry about someone attempting to target you for click fraud?

Not at all. Google has the issue totally under control. Besides, the advertisers correct click fraud by lowering the price of each click by what they think the cost of fraud is. So, if people were paying $1 per click, and they thought 5% were fake they would move their bid to .95. This is why the whole issue of click fraud is overblown: the advertisers look at the results and bid accordingly! People who bring up this issue--like the press--don't understand that Google Adword buyers are very, very smart and take into account a certain level of fraud.

Every system has fraud, look at credit cards! Should we stop using credit cards just because there is massive fraud? No, because on a percentage basis it is manageable. There is an acceptable fraud level in any economic system and we balance the freedom of having a credit card with the fact that someone could scam the system.

Do you plan to test Yahoo Publisher Network when it becomes available? What will be your deciding factor when choosing between the two - strictly revenue or something beyond that? What about some of the other contextual ad networks on the market?

This is all about performance. If Yahoo Publisher Network makes us more money we will give them the inventory. However, we don't have all the time in the world to swap out these networks all day long, so we can't try every ad network out there.

In fact, I've been telling the smaller ad networks that come to us now that they have to give us a "floor CPM." They would pay that floor rate in advance in order for us to even test their network. Out of the 10 ad networks I've told this to 8 think I'm crazy and two are considering doing it. So, I'm making some progress. :-)

In another year large publishers with quality products are going to be able to demand a minimum "floor CPM." Some folks might be getting this already. I would love to see Google or Yahoo say "we're gonna pay you at least a .25 CPM for your traffic, or 65% of the value of the clicks--whichever is greater." They could give you a report each month with both results.

If someone is going to beat Google at this game that is how they will do it, with a guaranteed minimum CPM. If I were trying to beat Google I would do three things: 1. disclose the % of the split, 2. give a floor CPM, and 3. direct sell CPM based advertising on top websites. In other words, add the direct selling that BlogAds or Tribal Fusion does to what Google already does. Then an advertisers could say "I'll pay a $5 CPM for the top leaderboard on your site, and .50 for ever other click you can get on your site."

That is the future: blended buys through one ad network.

I'm sure Google and Yahoo will offer this in the next year.

What is the best piece of advice you have for a publisher brand new to AdSense? What would you have done differently when you started with AdSense, knowing what you do now.

I would have run four ads per page, taken off the borders, and made the links the same color as the links on the blog. I would have also made channels for each position and blog so I could track things better.

How many times do you login to AdSense a day? Are you a stats junkie who checks every ten minutes? Or do you check only once or twice a day?

I have about 50 saved Adsense reports in a folder on my Opera browser. Every day I click on it and autoload the 50 pages. I then scan and look for trends. Sometimes I find a CTR spike or an eCPM of note. However, it's pretty steady at this point.

The best thing you can do to make more money is produce world-class content. That's what I spend my time on: finding people who can make world-class content... and pay them!

How successful have the AdSense for Feeds ads in your RSS been? Have you had a problem with readers not wanting ads in their feeds from you?

Like three folks were upset about RSS ads. Now, we have millions of people coming to our sites every month so we're not going to stop the revenue for three freaks who want free content without advertising (don't we all want that?!?!).

If you did a survey and asked people watching Desperate Housewives if they would consider paying to have it without commercials people would say yes. You could ask the same group if they would like to save money by watching the Sopranos for free with ads in it and they would say they would consider it!

Ads in RSS are no big deal. They are just like banners or text links on a web page. If you produce great content people will deal with the ads, and if you produce really great content a certain percentage of those folks will pay for the content (if you want to go that route). So, it's important that when you're running a business you ignore the freaks and listen to the real fans. Real fans of the site understand you need to make money in order to produce free content, and those real fans even visit the advertisers and buy their products knowing that it will support the product they love.

Jason will be at Search Engine Strategies next week in San Jose, and will be joining myself on the Earning from Search & Contextual ads session. You can read a bit more about the session here.

Thank you Jason for the interview!

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