Thoughts on Contextual Advertising: Site Building, Monetization and Ethics

Jeremy Schoemaker aka Shoemoney and the owner of this famous Adsense check has put up a nice little video about his presentation at the recent 2007 New York Search Engine Strategies Conference.
Part of a panel on contextual advertising which included Jennifer Slegg, Jeremy’s presentation was mainly centered around his personal experiences on making money with contextual ad programs like Adsense and Yahoo Publisher Network.
The video in question was 27 mins long video and was a brief introduction to contextual advertising, primarily from a publisher’s perspective. I took some notes on Shoemoney’s suggestions and made a short list of the key points:

• Build a site and develop strong user functionality for your site before thinking about monetization.
• You should at have at least 1,000 daily visitors before throwing up Adsense ads on your website. Before you reach that traffic level, the key emphasis should be on building critical mass.
• Good points about contextual advertising: It allows one to avoid the headache of looking for direct advertisers and chasing after payments.
• Negative points about contextual advertising: Lack of editorial control over the type of ads that are displayed. Adsense ads might contrast greatly with the content on your website. Users might associate Adsense ads as recommendations from your website. (E.G. Ads for puppy mills on a quality dog breeding website.)
• Another negative about contextual advertising is that to earn money, your visitors have to click away from your site. You might lose users who might not come back again to your site.

And there’s some more stuff on Adsense Arbitrage and publisher compliance. A full text copy of the panel on making money with contextual ads can be found at SEO RoundTable. There’s some great Adsense tips from Jennifer Slegg as well, so be sure to check that out.
Contextual Advertising on Blogs: Balancing Profit Motives and Long-Term Goals
One of the points that Jeremy mentioned was similar to my confession that monetizing too early was one of the biggest blogging mistakes I’ve made.
Contextual advertising is profitable only if you have a consistent and large traffic flow to your website. Even if your ads are perfectly optimized and blended, you won’t make much money if only a few hundred people visit your site daily.
Why aggravate visitors and push the profit issue when it’s evident that traffic and audience building should be of primary importance? Alternatively, ask yourself this question:
Would you rather earn $4 a day everyday for the next 3 months or would you want to forgo the minuscule monetary incentive and focus 100% on building defensive and search traffic, which has the potential of exploding your ad earnings?
If you’re seriously interested in gaining a large reader base or making money from blogging, understand that monetization is a gradual process that comes after site and traffic building.
Contextual advertising is also not the only solution. Monetize with different methods according to traffic levels and site growth. Most of all, focus on long-term development and overall site growth instead of short-term benefits.
This is doubly important when you don’t own several websites and only have one flagship site that is your main money-maker.
Contextual Ads Relevancy and Niche Branding/Site Objective
To the web savvy surfer, adsense ads are seen as different from actual editorial content on a blog or website. These users won’t think that the Adsense units are personal recommendations from the site owners.
However, some other visitors might mentally associate the contextual ads they see with the general content on this blog. Herein lies a dilemma that was on the mind in the last few weeks.
One of my goals was to always to make money through Adsense but I soon realized that giving up prime ad space on Dosh Dosh to contextual ads on eBook, affiliate or MLM scams is not really my cup of tea.
The hypocrisy bothered me. While I righteously blog about monetization strategies and traffic building, a get-rich quick ad unit silently refutes what I say by offering empty promises of instant monetary gratification and long term financial success.
Can I still bitch about evil eBook scams, while my site has its real estate overrun by ads that promote such products?
Dosh Dosh is a tiny dot on the world wide web which belongs to me and taking editorial responsibility for whatever shows up on it is an important criteria for gaining user/visitor trust.
The site’s purported motive is also of primary importance. If Dosh Dosh is all about ‘helping you to make money online‘, it’s raison d’entre is to perform that duty at all cost or risk losing its niche identity. Putting ads which claim to help you get rich quick while not actually doing so runs contrary to the motive or identity of this site.
On the opposite end, running Adsense on sites with little content (proxies, parked domains etc.) or weakly branded sites with a very general and wide range of topics means a lesser risk of going against your site’s mission statement or content focus.
Then again, a lot also depends on how you optimize your site to make sure that there is the highest relevancy possible. This includes making your articles keyword dense while choosing the right page titles/meta tags etc.
An important point to remember is that contextual ad relevancy can negatively impact your site’s identity in the eyes of new visitors. This is probably another reason why going ad-free during the site-building process can be very helpful for longterm growth prospects.