It is important for you to know what to expect from AdSense with respect to CTR and CPM. CTR is the click ratio of page views to click. The higher the number, the better your bottom line will be. I expect to see from 8 to 12%. Some sites will do better than others of course. If visitors are in a “buying mode”, CTR will be higher. Try to put your efforts into sites which attract “buying mode” visitors.
For example, visitors to a site about poetry probably won’t be in that mode. However, visitors to a site about “learning about wood carving” may very well be in the market to buy tools or books on the subject. Even if your site attracts buyers, the placement of your ads may be hurting your potential CTR. All sites are different; there is not one single placement strategy that works across the board. You must test! (B sure you are not haphazard in your testing and you let the tests run long enough to count…usually at least 500 page views.)
Normally, text links which are nested within the written content on the page work best. Incorporate them into your content as well as you can. For some reason, text links seem to have a higher CTR than image links for most people. Maybe people are simply burned out with respect to banner looking ads. Oh, and always select either text or images for your ads. Do NOT accept the default Google wants to give when creating an ad group. They would like for you to choose text OR images…don’t do it.
As for CPM, I expect to see $10 to $20 at least. That may seem like a very high number to you. Perhaps you are only getting in the range of $5. I hear about those low numbers a lot with young sites. There are several possible things going on to cause such low numbers. Some of them you have more control over more than others.
First of all, CPM is how much the ad channel is earning per 1000 views. To put this in perspective, most banner advertising only pays $2 to $5 CPM. AdSense, for me anyway, is much more profitable than advertising for a CPM network with banners.
The one factor you have most control over are the types of ads which show on your site. Since the ads target the content, the content is the important factor. If your site is about music, poetry, or news for example, the CPM will be low. A simple way to gauge if the CPM will be low is by looking at the ad offerings. If someone clicks on an AdSense ad which may result in a sale for a $200 item, chance are the click will have made you quite a bit more money than a click for an add which was simply advertising a poetry site.
Therefore, spend your time creating sites which will attract ads for higher priced items or services. This is why sites about insurance (if you could break into that market) pay so well. A click on an insurance ad could result in a new account for the insurance company! Note: I am NOT suggesting you create a site about insurance. That area has far too much competition! Therefore, you can control some aspect of your CPM. However, there is another important factor which you have less control over. Most advertisers have conversion tracking setup on their ads. In other words, if a click results in a sale, the advertiser knows it…and so does Google. Google wants (needs) their advertisers to succeed. Google does not care about giving you a high CPM. They only care about their advertisers. If clicked ads on your site result in plenty of conversions for the advertisers, Google will place the higher level ads on your page for that niche. Those advertisers are making the most money for Google (by having higher bids usually). In turn, those clicks will earn you more money also!
On the other hand, if the clicked ads on your site do not result in many conversions, Google will only place the lower tier ads on your page. These of course will pay less per click…sometimes MUCH less per click.
The only way you can help attract higher paying clicks within a given niche is by attracting “better” visitors. If your content and marketing attracts visitors ready to take action after a click, your CPM will skyrocket as Google will place the best paying ads there. If your visitors are not targeted well and simply make casual clicks here and there, your CPM will be as low as the lower advertisers are willing to pay. For example, it is quite possible for one site about auto parts to have $0.50 to $1.50 clicks on a regular basis while another site about auto parts only receives $0.05 (or less) clicks most of the time.
All in all, quality counts! Fluff content will normally result in low CTR and CPM. Additionally, choose your niches well; some will pay much better than others! Be smart and put a little more emphasis on quality over quantity. The result will be more income with less work.