Ask YC: Europeans, how do you protect against falling dollar in Adsense?

Question is, are there any European ad systems that would provide enough relevant ads for your site? I'm not saying there aren't, and I would like to see some better competition against google in this area, but I know one of the benefits of Adsense is that they have such a large base of advertisers, they have relevant ads for nearly every topic:

http://basketweavingtips.blogspot.com/2007/09/underwater-bas...

Not to mention more advertisers creates competition.

I wonder if and how much Europeans are bidding up prices in some categories.

I think that is a general economics problem one cannot solve easily until consequences of sub-prime crisis pass by and US dollar gets stable. Here in russia we are suffering from low dollar too, since all the contracts we have with north american companies are executed in US dollars, and they don't want to switch to Euro or any other currency. The losses we had for last six months hit $80k which is I think too high for a small startup like ours :-(.

Diversify. There are about 10 great UK/europe based ad networks. Sure you have to do a bit of work yourself picking good adverts, and you might get paid per lead/sale more often than per click, but the average revenue is comparable or even more than adsense.

Depends what you want to do with the money. Personally, I set up a Dollars currency account just to host my AdSense cheques. Kindly, Google does not do electronic funds transfer to a currency account so I have to stick with long waits and delays.

With the Dollars not being exchanged, I'm building up a travel fund and not losing value (apart from US inflation). I go to the USA once in a while, and the earnings pay for pretty much everything I do there. World-wide, there are a few currencies pegged to the US$, so the money can be used for traveling to those countries too.

In short, you'll only have a problem if you want to use the earnings in Europe. Otherwise, you can be very creative with it.

A related note: I sometimes wish Paypal would let me link my US$ account to my Paypal account. That would make life so much easier.

Pierre

Get a forex account and buy USD put options. This is what the option markets are for.

Loan the equivilent amount in dollars and convert it into the currency of your choice. When the money is withdrawn, you can pay the debt with inflated dollars. This is the standard strategy, but it only works with collapsing currency.

Currency hedging is what you're looking for - it is a way to minimize risk when doing business with fluctuating currencies.

Say you have a contract for $10000 USD due 6 months from now and the EUR/USD rate is $1.40 when you signed the contract. If the USD falls to 1.5 in those 6 months, you've lost ~7% on that contract, but if it stregthens to 1.3, then you've made a free ~7.5%.

Since you just want to make the contract and not play on the forex market, what you do is you open up a currency trading account and take the exact opposite position to the one in your contract. In your contract you lose money if the USD falls, so in your hedge, you open up a short position on the USD, such that you make the exact same money that you lost on the contract.

So once you've signed the contract, take a $10000 short position on the EUR/USD pair. If the USD weakens, you lose from the hedge, but gain from the contract, if the USD strengthens, you lose from the contract but profit from the hedge, so there is no risk to you no matter where the currencies go.

The downside is that you need the same amount of money to hedge as the amount you're expecting. One way to get around this is to use a leveraged trading account, however this restricts the amount of fluctuation your hedge can handle before getting a margin call - for example if you use a 5:1 leveraged account (that is, use $2000 to trade a $10000 position), your hedge will protect you against swings of close to 20 cents. So depending on how much money you have available to hedge and the amount of fluctuation you want to be protected against, you can choose how much leverage you want. (here's a tool to estimate it: http://www.fxtrade.com/tools/fxcalculators/margin_call_calcu...)

The good news is that with today's forex platforms, this is perfectly accessible/doable for any sized business/personal transactions.

Note: I do work for OANDA, but I'm just a developer there. I posted since I really do think currency hedging is neat. :)

put as many of your costs into $ as possible (hosting, etc) so you're hedged there.