Ads by Google

PirateNinjaPirateNinja Icrontian
edited October 2004 in Internet & Media
I know alot of you have Ads by Google on your site. I want to put them on my site which passes reidiculous amounts of traffic now of days.

Just wondering, how does that work with taxes? Do you report profit under a self proprietor if your website is not part of a licensed business?

Comments

  • primesuspectprimesuspect Beepin n' Boopin Detroit, MI Icrontian
    edited October 2004
    If your site is owned by you, individually, you simply take in the income as a sole entity (otherwise known as a person ;) ).. You use your social security number instead of a tax ID #, and when you do your taxes next year, MAKE SURE you claim the income. When a corporate body pays an individual that is not an employee (AKA a subcontractor, AKA you), that income is reported to the federal government, and so if you don't report it, they'll eventually find it anyway when Google does their taxes, and welcome to audit time.

    So put your social security number in there, get your checks every month, and then report it on next year's 1040. You'll get a form 1099 from google at the end of the year, summarizing the monies paid out to you.

    Good luck :)
  • edited October 2004
    So how much does google make for this site?
  • Straight_ManStraight_Man Geeky, in my own way Naples, FL Icrontian
    edited October 2004
    What you get for an ad click is a floating percentage commission. One ad can be worth more than another. Ad Sense tries to tag ads to site content, based on Bot looks at the site.

    The actual benefits to a site are in fact TWO-FOLD. Because Google is actively indexing the site to feed more relevant ads, and doing this more often, your site index entries will get updated on Google more often. Plus you get some ad revenue based on how many clicks folks do on ads. An ad that gets ZERO clicks? You showed it for free. To advertise (buy an ad) that Ad Sense feeds, ad buyers bid (by statign a commision rate, not by asking a prticular site to host ads and paying that site directly). Ad Sense DISPLAYERS can set up a range of options that include what minimum commission ads they will show (not ads from whom, rather ads that pay a minimum percentage of revenue from that ad per click). The buyers of ads offer a commission they guarantee to pay.

    Ad Sense ends up with Google not paying out more than it takes in in revenue, they make enough to act as brokers, and Google pays you from what advertisers pay them. It for a nomral site will float a lot based on how much each ad on average pays per click. If you get a site and set up for Ad Sense, you are nto guaranteed a minimum revenue, BUT if people click a lot then those clicks add up for you as site owner with being able to flex your settings to maximize overall revenue. What all sites get is likely to flex from month to month based on what people are drawn to, and probably an everything site will have the most stable income.

    The way this works I cannot even predict what the Ad Sense might do for me. I'll probably set ti up in about 5-6 months, because I WILL be having a forum site up starting about then and Ad Sense will help offset site costs. BUT, I will not expect to make an overall site profit just from Ad Sense and other minor ads for a minimum of 3-4 years, and I AM a business owner and an IT tech.

    Google Ad Sense, they have a whole explanation area for Ad Sense ads, and many options as to how you can show them and how many and how big a space on a web feed page you want taken up by ads. lets take EOC, it has Folding@Home stats which need a server for them EOC itself, and EOC's forums. BUT, Jason is still asking for donations to help offset the costs of processing the top 2000 folding team's amount of data flow and expand the stats functions. He has a site with an established forum and website and folding stats site. My guess is that Anandtach might be breaking close to even, probably to profit side if Anand Shimpi counts in teh offers he gets from folks wanting him to write for them (he has a column in Computer Power User now). Ad Sense in and of itself will not turn your site into a profit maker, but it can be used to help offset some costs. Most of the folks that make money from IT sell IT services directly as well as have a web presence, and the web presence is there not to draw an instant profit in and of itself, instead it helps gets hands-on jobs and that pays more for the site than do any click-on ads. BUT, if the same site gets high enough in the rankings on Google it can draw many more folks of which maybe 1 out of 25 to 1 out of 50 will click on ads now and then.

    AND, if it gets THAT busy and survives, then the owner of that site can raise the minimum ad commission he or she will accept and some folks who know the site's rep will pay for ads there by offering that commission rate. Google went with a self-controlling market for ads while acting as broker, essentially, and if Google were not a search engine also, Google would not be making a decent profit brokering. It's not Ad Sense alone, its Ad Sense PLUS the Botting frequency you get with Ad Sense and thus the more frequently updated indexing Bots plus the automatic server CLUSTERS in Google make the two things interdynamic by the very nature of thier interoperation.
  • PirateNinjaPirateNinja Icrontian
    edited October 2004
    Thanks for all the information. Absolutely superb posts. :)
  • MediaManMediaMan Powered by loose parts.
    edited October 2004
    ^Ben wrote:
    So how much does google make for this site?

    For nearly the first 8 months Prime, Shorty and I were supporting this site out of our own pockets. A website takes time, energy and dedication to begin to become successful. The rise is nothing but dedication but the fall can be even quicker.

    We survive now but our income statements are the secret scribblings in crayon of our accountant.
  • primesuspectprimesuspect Beepin n' Boopin Detroit, MI Icrontian
    edited October 2004
    It's against our contract with google for us to disclose the revenue of the adsense campaign. I can tell you that it pays for the bandwidth, so that we no longer have to pay out of pocket. That's a good thing, because that means that the site will keep running. There's only so much money one person (three people, actually) can spend out of pocket before someone has to tap out.

    I can also tell you that there is no way that any of us could possibly quit our day jobs and just run this site. The revenue is not much more than is required to pay the hosting bill.

    If you have a site as big and as busy as this site you may do alright for a single person. It'll pay your bandwidth, but it's not going to be enough to be your only income. It will be a nice supplementary income though :)

    You will notice that no major site has ONLY google adsense as their revenue source. Major sites like Anand use many different advertisers.

    Let me put it this way: You can expect a few pennies per click. And as you can imagine, you can have hundreds of thousands of visitors to your site in a month, like we do, and VERY few of them will actually click an ad.... So if you have slow traffic, like under 100,000 uniques a day, adsense probably won't do much of anything for you.
  • mmonninmmonnin Centreville, VA
    edited October 2004
    OK dont tell us how much Google writes you every month, but you can tell us the bandwidth costs.;);)
  • MediaManMediaMan Powered by loose parts.
    edited October 2004
    mmonnin wrote:
    OK dont tell us how much Google writes you every month, but you can tell us the bandwidth costs.;);)


    I pay Prime 3 chickens and Shorty and I help plow the fields.


    Tricky Marc...reverse deduction. Let's just say that after 1.5 years we are just starting to reach the break even point. I'm still 2 years out from my break even point if you add it all up from the days of IC forward.

    Prime and Shorty are owed about 345,854.35 hours of sleep.
  • primesuspectprimesuspect Beepin n' Boopin Detroit, MI Icrontian
    edited October 2004
    The bandwidth costs as much as the traffic generated by the number of people who connect to our site in a given billing cycle, say, a month for this example, multiplied by the amount of traffic that each individual downloads or uploads to our server. Then, that number is multiplied by the amount required by the upstream tier 1 provider to maintain their infrastructure and provide equipment to connect to the internet. So, just plug that number in, and do the math :wtf::scratch::thumbsup:
  • ShortyShorty Manchester, UK Icrontian
    edited October 2004
    The bandwidth costs as much as the traffic generated by the number of people who connect to our site in a given billing cycle, say, a month for this example, multiplied by the amount of traffic that each individual downloads or uploads to our server. Then, that number is multiplied by the amount required by the upstream tier 1 provider to maintain their infrastructure and provide equipment to connect to the internet. So, just plug that number in, and do the math :wtf::scratch::thumbsup:
    Basically it costs more this month than it did last month... and will cost more again next month :eek:
  • CyrixInsteadCyrixInstead Stoke-on-Trent, England Icrontian
    edited October 2004
    So if I start clicking on your Google ads...?

    ~Cyrix
  • primesuspectprimesuspect Beepin n' Boopin Detroit, MI Icrontian
    edited October 2004
    You support our endeavour to buy a new server so that the site doesn't slow to a crawl when mediaman releases another popular article :D
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