On the other hand, while there are many success stories, there are also many others who are frustrated with contextual advertising. They can’t see what the fuss is all about – while others are said to be earning thousands, they earn mere pennies per day? Where are the thousands expected from these programs? They have tried various strategies, changed ad placement, bought ebooks from those who claim to have found huge financial windfall from Adsense, and spent chunks of cash on pay-per-click advertising just to get traffic to their website. But, nothing seems to work.

The truth is, not all websites are fit for contextual advertising. Some sites are perfect vehicle for this type of advertising and do extremely well with Adsense, while many others can only expect very limited revenues from it. A new web site with very little traffic can expect to earn less than their more established counterparts enjoying higher traffic volume.

So when is contextual advertising not for you?

1. Visitors are interested only in your content, and nothing else.

It is commendable that you were able to attract the passion of your audience with your content. However, having visitors interested only in what you offer – and not the ads on your site – will not give your Adsense or YPN revenues any favor.

An example would be a gaming websites that attract mostly kids from 14 to 18. These kids primary purpose in coming to your website is to play the games that you have, and not really to buy anything or go someplace else. They like your games so they visit your website. They may even view your ads as a distraction to their gaming experience.

A forum website is in a similar situation, especially when you have developed a strong community group who have learned to interact with each other. Your visitors are just interested in participating, learning and enjoying the ongoing discussions and the ads on your site are of no interest to them. Hence, it is not surprising that forums generate very low click through rates as far as ads are concerned.

2. Your audience is not researching ways to spend their money.

A franchising website providing information on how to choose the right franchise will do much better in contextual advertising compared to a website about Abraham Lincoln. Why? Because the visitors of the franchising website are researching for ways to buy a franchise, so they are more likely to click on ads offering franchise consulting services, or ads from companies looking for franchisees. Compare that to a visitor researching on the biography of Abraham Lincoln who may not be interested in clicking on ads that say, “Look up your old friends from Abraham Lincoln School.”

3. Topic does not pay well.

The topic of your website will dictate the kind of keywords that will be seen on the ads shown in your site. There are money keywords where advertisers pay top dollars for their ads. If the topics of your website does not attract the high paying bids, chances are you will not make as much with Adsense compared to those who operate websites with top paying keywords.

What are these money keywords? There are lists of top paying keywords available on the Web. One clue, however, is whether the topic attracts audiences looking to spend money. After all, the advertiser knows that these audiences are likely to purchase or use their products. Franchise ads cost more per click compared to Abraham Lincoln ads. Insurance, mortgage, domain search, and computer virus are some of the high paying keywords.

Of course, there are a few caveats particularly for keywords advertisers know are likely to be abused. The best example is the famous “M” keyword or mesathelioma (form of cancer caused by asbestos). When publishers learned that advertisers (mostly lawyer firms hoping to solicit mesathelioma clients) were paying more than $100 per click for the keyword, it seems that every Dick and Harry on the planet rushed to create a website on the “M” word hoping to get that $100 click. Unlucky for them, advertisers got wise to the idea and hardly anyone reported getting $100 per click from their “M” website!

4. Content type not likely to get “actionable business result.”

Welcome to the wonderful world of “smartpricing” – a concept introduced by Google in April 2004 designed to reward or penalize publishers with higher payouts or lower commissions based on the calculated quality of their conversions.

Google explains smartpricing as “…if our data shows that a click from a content page is less likely to turn into actionable business results - such as online sales, registrations, phone calls, or newsletter signups - we reduce the price you pay for that click … For example, a click on an ad for digital cameras on a web page about photography tips may be worth less than a click on the same ad appearing next to a review of digital cameras.” If you think the advertisers’ bids for your topic are low enough, understand that the click you can get can even be lower!

5. There are little advertisers in your topic.

A website whose topic attracts few advertisers is more affected by upswings and downswings of advertising supply-and-demand. Your revenues are highly impacted by advertisers’ actions such as lowering their budgets or pausing their campaigns. Also, with too many publishers chasing after the same small pool of advertisers, publishers use up their allotments of ads for each leaving them with lower paying ads.

There are two situations where you will find the situation of too-few advertisers: either you are operating a niche website with a very narrow scope; or if your topic only attracts a few Adwords advertisers.

Websites covering various topics are less affected with the advertisers’ supply and demand. If in one topic the advertisers have used up their advertising budgets and only lower-paying ad shows up, another topic may be enjoying increasing bid prices as a result of advertisers’ competition. Fluctuations are evened out, and revenues become more stable.

6. Poor placement of ads on a page.

One of the factors affecting contextual advertising revenues is click through rate, which is influenced by the location of ads on a page, colors and number of ads. Even if your traffic and earnings per click are constant, you can increase your income simply by improving your click through rate. Increasing your CTR from 0.1% to 2% can spell a huge difference in your revenues.

Improve your click through rate by following Google’s suggestions of the best placement of ads. The heatmap can be viewed at the Google Adsense page. The key is to experiment how your users react to the placement of ads, and which positions attract the most click throughs.

It is important to remember that in Adsense and other contextual advertising programs, what will work for one website may not necessarily work for others. The key is to experiment with various factors and see what works for you..

About the Author:

Nach Maravilla is the Publisher and CEO of PowerHomeBiz.com LLC.

February 2006