Its a mistake many Adsense rookies make: the sites keyword-optimised and attracting exactly the ads they want, but the clicks are low. So they up their Adwords budget and drive lots of traffic to the site, but the revenue per click is always less than the cost per click Adwords is charging.

Its caused by using the same keywords for your Adword ads that you use in the site to attract ads. It sounds obvious, but youd be surprised how many people get their fingers burnt in their first month of Adsense. Essentially, if your keyword lists are the same, youre competing with the people you rely on for revenue. In that situation, you can never win.

The big boys have all the best keywords sewn up thats exactly why you used those keywords in your site content!

The secret to using Adwords successfully for the small profiteer is that magic word again niche. Not just for your site content, but for your target audience. You have to find that small percentage of search engine users who dont type in the obvious words. Target your ads at them and use your site to channel them towards the big payers the advertisers on your site.

We had a scenario recently where a group of students had set up an advice site (http://www.thedebtfreestudent.co.uk/) and were hoping to attract ads to at least pay the hosting costs, maybe make a little profit on the side.

There content was keyword-rich and the site full of relevant ads. Problem was, their Adwords were costing as much as 2.30 a click! After a few weeks, their losses were growing.

As we pointed out, the > 90% of people who wanted the information their site offered (and would therefore be interested in the ads on their site) were not likely to find their ads unless they were outbidding the main players to get a higher Adwords placement. Once that happened, they were bound to be in a negative cash flow.

Once wed deleted the costly keywords, we were left with very few. But a bit of lateral thinking thinking like that 2 - 5% of people who dont type in the obvious keywords produced a list of 40 keywords and phrase variations that were precisely targeted towards their niche audience.

We introduced these keywords in batches, watching their performance and deleting those that were not attracting visitors.

In most cases, their ad was the only one shown. The ad was not relevant to 95% of the searchers, but, therefore, anyone who was attracted to the ad had been sufficiently intrigued by it to temporarily divert away from their initial search. In other words, every visitor to their site was genuinely interested in what they had to offer. The other 95% dont matter youre not being charged to display your ad to them.

Of course, they were no longer getting the same volume of traffic to their site, but the CPC of their ads was as little as 5p and no greater than 10p and their site ads CTR was five times higher than before.

Its surprising which keyword searches generate visits to your site. But thats the point about this approach if they were obvious, everyone (big boys included) would be using them.

Theres a down side to this approach, in that Google pride themselves on relevancy, downgrading ads that dont get a large percentage of hits, but if your ad is the only one shown, you cant get demoted anyway.

Small users have to find and target their own small percentage of the market; to take a small slice of a big pie, without going head to head with their own revenue providers.

In the financial and gambling worlds its known as arbitrage ie a transaction that involves no negative cash flow in any case and a positive cash flow in at least one.

The maths is simple: If each click to your site costs you C and X% of those visitors click on your ads, each producing a revenue of R, then your arbitrage is C/X. As time goes on, your average values for C and R will settle down and X (your CTR will hopefully improve).

But the golden rule is: set your max bid as your arbitrage ie C/X. This way youre not making a loss. If youre not making a profit either, then this niche is probably one that you want to discard.

Youll probably never see an ad for http://www.thedebtfreestudent.co.uk, not if youre searching on the main keywords. But enough people do, and those people generate enough revenue to keep their site going.

Follow the rules above, keep it small and simple in the beginning and your site WILL start to turn a profit.

Andy Follin runs AFIN SEO, an advice service for budding internet entrepeneurs.Bernie Mac
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