The Importance of Establishing a Baseline

May 29th

A number of my friends have stated that they have been growing less and less impressed with AdSense as a monetization model, but I think it provides a huge opportunity. The reasons I like using AdSense on a new site are:

  • Google has huge reach, so it shouldn't take their advertisers long to pick up on new advertising trends and opportunities

  • it requires virtually no effort, thus it allows you to scale without needing to hire ad sales reps
  • it makes it easy to establish a baseline earnings potential so you know how much to value your other media sales at
  • that also allows you to determine how much effort and investment each channel should get before committing you to spend thousands of dollars on a money losing channel.
  • if you track your ad clickthroughs you can also see which advertisers you are sending your leads at. If they keep buying them over an extended period of time and your site grows to be powerful with broad reach you can either partner with the same sources they are using, or perhaps create direct and premium partnerships with similar or better offers and companies in the same field

Of course there are downsides to placing AdSense ads on your site (like having your largest income generator and one of your largest sources of traffic being the same company), but as I have been building a few sites I have found AdSense helpful in determining where to pour resources.

John Scott recently had an AdSense integrated design competition , where he is offering a couple hundred dollars for a site design. Where else could you get a profitable and amazing site design for only a couple hundred dollars? Running a forum or being socially active helps you establish other baselines outside of your company and outside of AdSense, which allow you to be more efficient at finding and using resources. Friendships allow you to scale up and down without having to worry about hiring and firing employees.

Social interaction and the distribution it brings leads to further distribution, which gives you a wide reach of great people who will offer to give you feedback on your errors. So long as you are not defensive and do not try to control language when your ideas spread then nearly unlimited fast and honest feedback are great bonuses for anyone trying to spread ideas.

Which resources do you overvalue? Which resources do you undervalue? What do you use as helpful baselines in looking at the productivity of your business?

Published: May 29, 2006

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Comments

May 31, 2006 - 5:20pm

I respectfully disagree with using Google Adsense as a "baseline" for monetization.

I have read many horror stories about how Google is not paying their Adsense clients what they are due, instead acusing them of 'click fraud' and not proving it.

June 1, 2006 - 12:47am

You may have heard many stories about that, and I am sure that some people may wrongfully get ripped off that way, but it is not something that happens to a very large percentage of the overall userbase.

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