I started using Adsense on my sites, way back in September 2004. I never really had any sites as such, and until around June 2006, I was just experimenting around with the whole content publishing, and advertisement area. It got my first payout from Adsense in September 2007. That means, effectively, it took around 13 months for the revenue to go over $100.
Then, in just about 6 months, I got my second payout.
I know, this is mere peanuts when compared to what others are earning from Adsense. (And it is also a lot more than what many others are earning). That is not the point of this commentary, because I did not actively work on this. The ads were placed just for the sake that I can cover the domain name costs and the server hosting costs. And I do get some extra, with which I treat myself.
Here I am trying to analyze and find out why my websites payed out faster the second time, when there are several news stories going around in terms of reducing advertising budgets world wide.
Why did I get the second one faster?
Here is my understanding on what happened. This is result of the analysis of the logs and statistics. Take it with a grain of salt.
When I started out, I had just one website - WiseTome.com. It did not have many pages, and that resulted in lesser number of ad impressions. And that meant, the revenue accumulated at a rate that would be slower than if there were more pages. And on an average, when I started out, I would update the website with a new page, once every week.
Gradually, I moved on to blog regularly at Splat under WiseTome, and later at KalaaLog.com. In effect, I was averaging on publishing around three to four pages every week. This was a increase, but according to the logs, this alone was not directly affecting how much revenue came out of advertising. There was something else in the equation, that make the earnings in the second phase grow faster than the first one.
Advertising Revenue Equation
Before I get to what happened, here is a simplistic view of the Advertising Revenue Equation for CPC (Cost Per Click) advertising options.
R = P x i x c x e
R is the revenue in a month (in dollars).
P is the number of pages in your website that have advertisements.
i is the percentage of these pages, that gives the number of page impressions.
c is the CTR - Click Through Ratio. This gives how many number of clicks were made on the advertisement for one page/ad impression.
e is the effective revenue per click through in dollars.
So, for illustrations, let us say you have 100 pages in your website that have advertisements on them. If i is 1000%, then in a month, you had around 1000 page views, and thus, there were 1000 page impressions. The click through ratio varies depending on the audience. Let us say, it is 5%. Then, the number of clicks on ads would be 50. If you get an effective revenue per click of 20 cents ($0.2), then in that month, you make $10.
The P in the equation, sort of explains why you are likely to reach the second Adsense payout faster than the first one.
Remember that as you start publishing more number of pages, the ones that you had already published stays. It will still be available to all search engines, and they have a potential of getting page impressions.
Hence, for the last earning period, if you had 100 pages, and the next month you added 20 pages, you are effectively having 120 pages. Instead of a $10, you have a potential of earning $12 instead.
This compounding effect results in faster accumulation of revenue the second time than the first.
There are some factors that go against the compounding effect. The older the page gets, especially in a blog where it falls back into archives, it does get a bit less likely to get visitors. This affects even more, when the published content is time oriented - news and similar content are only useful when they are published.
One thing you could do, is link back to older pages from the newer pages, whenever it is relevant. That way, even the visitors to your new pages are driven back to the old ones. Another option is to create content that are more time-less or time critical. That way, they will be relevant even after the date or month of publish. When you have such content, you can create and keep updating a single page, that will gain traction and trust by the visitors. They will keep visiting these pages and be driven to other parts of your website. (Read about Reference Pages by Maki).
Note that the earnings mentioned above are for illustration alone. The rates i, c and e, are dependant on factors like type of content, and the demographics of the visitor.