AdSense Monetization Vs. Affiliate Revenue

This could possibly be one of the most devastating revelations for the people standing high on their soap boxes preaching to us that there is no better thing than an affiliate program. You may have seen around the Internet that some people have tried giving AdSense a bad rap, they say that it’s a “noobie crutch” and if you want to make any real money you should run am affiliate site. Well I’m here to tell you that its just not true, in fact AdSense could be the better choice when it comes to some niches in particular. In fact I would like to prove it to you right here in this post today.

AdSense better than an Affiliate Program

Yes, this could very well be true and in fact it is true in many cases. However, the truth of the matter is that you have to choose the right tool to do the job at hand. For this post I would like to use the example of building a site in the insurance niche, and of course it’s important to make sure that everything is fair so I’ll be covering the potential earnings that could be expected from a site that is “trying” to monetize with an affiliate program and then take a look at a site that is monetizing using AdSense.

Affiliate program payouts

If somebody was to setup a website for the insurance industry niche and choose to monetize it using an affiliate program they could expect a payout of $20 to $25 per new customer sent to the insurance company. At first glance this sounds pretty good, right? Well, let’s take a closer look at this shall we? Take a look at the fine print, that payout is for a NEW CUSTOMER which means that the affiliate won’t get payed unless they send the insurance company somebody that has their money out and ready to hand over. This payout isn’t for sending them a new lead or a potential customer.

What does this mean?

Well basically what this means is that an affiliate program in this niche will not make anybody any money, that is expect for the insurance companies. Let’s take a look at the math to illustrate may point. Taking a look at a qualifying amount of data, it’s possible to see that the normal purchase rate of somebody that clicked through on the affiliate link is around 1.75% (for simplicity I’ll round this up and call it 2%). But, let’s go a step farther with this to see just how much somebody can expect to make in this niche using an affiliate program.

Visualization of Clicks Vs. Conversions

I’m going to follow my above trend and keep the numbers in this math simple, while still being accurate. So let’s say that this site is getting enough qualified traffic to generate 100 ad clicks, and we already know from above that there is a 2% conversion rate which means that out of those 100 clicks this site ends up with 2 sales. For the benefit of doubt let’s assume that the payout is on the high-end ($25), so this site has just been able to make $50 dollars profit off of those 100 clicks. Now you might be thinking well that’s not to bad, I could live with those earnings and that’s fine but first let’s take a look at some other possible options.

Improving Earnings with AdSense

For this I would like to once again keep the math as simple as possible while keeping everything as accurate as possible. So taking a quick look at AdSense I can tell you that right now the payout on insurance ads is hovering around $1.45 per click. Right there you’re probably already doing some quick math in your head saying yup thatĀ AdSense is the better option. But let me finish out the math so we can look at it in black and white and enjoy the site of it shall we?

Comparison of AdSense earnings Vs. Affiliate earnings

So let’s keep with those same 100 click troughs but this time the site will be getting payed for each one of those clicks, that’s $1.45 per click as a matter of fact. Which adds up to $145 in earnings for those same 100 clicks that we saw earlier and that poor affiliate that was only making $50 for those same exact clicks.

Why does this happen?

Well, the answer for this can get pretty complicated but let me keep it simple, ok? When an advertiser chooses to run an affiliate campaign they typically look at it as a low cost advertising channel. They set the affiliate payout of sending a new customer high enough so that it looks appealing, but they know that the chance of getting paying customer from affiliates is going to be well 2% out of every 100. However, they know that they still get to keep the leads and all the added exposure that comes from it, well that’s the bonus for them “Free Advertising”.

However, when it comes to AdSense there are multiple insurance agencies all competing against each other for the same spot, and they know that the one paying out the most will be able to grab that top spot. So they are willing to pay a little extra in order to grab that top spot away from their competitor even though they will end up paying more for it in the long run. Why do they do this? Well that’s a topic all on it’s own and deserves its very own post, so I will just tell you that it has to do with them “maximizing coverage”.

In conclusion, I hope that I have been able to prove to you that choosing to go with an affiliate program because somebody else has beaten into that it’s the way to go, or the fact that the high payout prices look appealing is not a good reason to go down that path. And in fact AdSense could end up earning you much more money in some niches. My main point to all of this is to do your homework first, find out for yourself which monetization method would be best and most profitable for your websites niche.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *