Building more sites to maximize AdSense revenues-- makes sense?

I've read with some interest recent posts from eager & anxious marketers/web site publishers seeking to ascertain the legitimacy of setting up multiple websites to participate in the Google AdSense program and earn revenues.

The questions have generally been focused on whether it was a correct thing to do so. Did Google allow it? Is there a cap on the number of websites from one publisher that can participate in the program? Inevitably, there was a question betraying the fear of a ban by Google.

Prima facie, there is absolutely nothing wrong with the idea of setting up multiple sites and generating revenue through advertisements from each one of them, notwithstanding where the ads come from. To be honest, it reflects the ingenuinty of the website publishers to eke out the maximum from a particular revenue stream that's worked well for many of them in the short period since Google introduced it. As long as publishers do not resort to anything unethical-- yes, I'm talking about click fraud, the bane of PPC--- I'd say the strategy is worth a second look to make additional/complementary revenue. If you can make money out of the program legitimately, why not, because there's no point in counting the dollars that one didn't make when the program allowed you to after restrictions have been introduced at some stage in the future.

Now, that's a view from the "rightness/legitimacy" angle. But let's look at it from a business perspective. As mentioned earlier, most discussions related to this topic focus on whether it is a correct/legitimate thing to do. I believe that is missing the point. The (unasked) question should have been: does it make business sense to adopt this strategy?

What one mustn't forget is that there is a cost involved in building and maintaining lots of websites, and there's probably an even bigger cost in driving traffic to these websites. Unless one is able to generate a very high amount of traffic to each of these properties, and thereby increase the probability of click throughs to the AdSense ads, it's definitely not worth it.

Anyone who's done a bit of PPC marketing with Google Adwords and watched the typical clickthrough rates could quickly run some back-of-the-envelope numbers to determine the volume of traffic that would be required to generate a sufficient number of clickthroughs (for simplicity sake, assume a clickthrough rate of 2% of the total number of page views that you are getting) from the AdSense ads to be able to give you a decent cheque every month. Now compare it against the cost of generating that volume of traffic (including regular updates with good content to attract traffic)-- irrespective of the marketing channel you use.

Is the benefit to cost ratio favorable? If yes, then the choice is a no-brainer---go ahead, build and maintain those sites.

If not, then obviously one needs to re-consider the strategy and weigh in some of the additional advantages: the opportunity to cross-promote your own products/services/content across the multiple sites and the potential to get more in-bound links to the flagship website.

So, my point is--- generating revenues from AdSense cannot and should not be the raison d'etre for adopting a "lots of websites" strategy, simply because it wouldn't be cost-effective and sustainable. It can't be the foundation of the business model. By all means, go ahead and build multiple websites because of all the other opportunities (both directly revenue-generating such as other advertising opportunities that could yield a better CPM for you and the intangibles such as link-building for your core properties) that are available. Along the way, if Google AdSense presents you with a complementary revenue stream, take it and make the most of it while it lasts !

Until next time,

Ben Flux

posted by Ben Flux - Traffic Junction @ 10/01/2005 04:57:00 PM