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|Anatomy of an EPC Collapse|
Building a List of Causes
This discussion is NOT about Smart Pricing
There are many reasons for an earnings collapse, and it's important to list them. If you cannot diagnose a problem then you cannot cure it. Smart Pricing is not the only cause, so let's make a list of what causes earnings to dive.
- Too much inventory
As more people enter a space, the EPC is going to drop. MFAs in some cases may be a symptom of a niche with inventory that's under strain. MFAs may not be the problem, just the symptom of the underlying problem.
If there are so many publishers that they're cannibalizing inventory by advertising on each others site, then that niche may likely be suffering from too much inventory.
Speaking from experience, this can affect an older site, too. The bottom falls out, it's not smart pricing.
- Wrong idea of what constitutes a normal range.
Too many newbs complain about having been smart priced because their earnings collapsed after their first couple of months. The base amount they're comparing is not large enough if it's only one or three months. If five months out of six you're earning six cents per click, six cents is normal. Twelve cents per click for a month is a newb advertiser that didn't know his content network was turned on.
And this can affect older sites too. As inventory expands we're going to see lower and lower benchmarks for what represents an average EPC. Let's face it, the content network plays second best to the search network, and it may always earn significantly less than what advertisers are paying per click for search.
- Newb advertisers
Newbs can cause prices to go up and stay up until they run out of money. If no one is stepping in to keep up the pace then your EPC is going to collapse.
- Savvy advertisers
Everybody suspects that a contextual click is generally not as good as a search click. Whether that is true or not is besides the point, that's the general perception. As advertisers become smarter they're going to adjust their prices accordingly.
I suspect that all it takes is one or two bidders dropping their bids to cause a collapse and let the air out of a high EPC gravy train. This is not fact, and I admit it. However, this conclusion comes from anecdotal evidence from watching how the same advertisers dominate certain channels makes me aware of how much my EPC is dependent on these advertisers propping up the cost of bidding on my site.
Okay smarty pants... put on those propeller hats. :)
Let's hear what some of you think may be non-smart pricing reasons why EPC can collapse. I'm certain I haven't listed all the non-smartpricing reasons. What else, apart from Smart Pricing, do you think will cause EPC to collapse?
I think it is entirely plausible that Google, like any other business, will seek to maximise it's profits going into the year end.
I have worked for a few different retail companies over the last few years, and every single one that was a plc quietly adjusted prices on bread & butter lines in the last quarter (or pulled established offers) to beef up the bottom line.
Seek new cheese.
"I don't think anyone in this forum has ever suggested that all publishers are treated equally"
I did and still think so. There are enough 'reasonable' explanations for the EPC decrease for some of us - including me.
Here are 4:
1) tremendous increase in ad space in my niche
2) huge increase in data driven crap pages in my niche
3) I'm no longer able to shove visitors to high paying pages via adwords.
4) Adwords folks increasingly think content page advertising largely sux, and it does (largely).
|Justageek, I was responding to Visi's statement that "this discussion is totally hypothetical from both sides." |
|If you disagree with Visi's statement, why not take it up with Visi? |
I don't disagree but was wondering why you do? The nice thing about thinking that Google turns knobs one way is that they could turn it back the other way. The suggestions of 'less_advertisers+more_sites=less_revenue' means it can never get better and will continue to trend down if the current path of this product is followed.
So which is a better side of the house to be on? The one that thinks it can be fixed by turning knobs and have some hope or the one that predicts doom due to implosion?
|Why isn't Google also robbing Matthew, Bob, or Barbi? Why, for that matter, is Google rewarding Matthew, Bob, or Barbi while reducing its payout to Peter? |
Maybe that would make an easier pattern to see?
|If Peter honestly believes that he's being targeted for punishment or pickpocketing, maybe he should search for a "list of causes" (to use Martinibuster's phrase) and come up with a fix. |
My guess is since we don't know the causes for sure and every time a thread like this gets started the "list of causes" get bashed by folks who say "it can't happen" even though it cannot be proven to not be a cause. Perhaps if folks like you would just leave the thread alone the "list of causes" could be made (no matter how outlandish) and then left to the folks who want to try a fix for each possible cause to figure out for themselves if they are true or not.
|My guess is since we don't know the causes for sure and every time a thread like this gets started the "list of causes" get bashed by folks who say "it can't happen" even though it cannot be proven to not be a cause. |
Yes, just like the Pope can't be proven to not be gay.
The problem is that rational discussion tends to become lost in threads where angry publishers vent with claims (often presented as fact, despite a lack of suporting evidence) such as:
- Google is cutting AdSense earnings across the board;
- Google is favoring Wikipedia in its search ranking to sell more AdWords;
- Google introduced Quality Scores on the AdWords side simply to make more money (never mind that higher minimums have driven some advertisers away);
- Google is purposely corrupting its search results because bad SERPs encourage users to click on ads;
...and so on, ad infinitum, with Webmaster World looking more like #*$! [site name censored by WW forum software] all the time.
Getting back on topic, I'll refer you back to Sailorjwd's list of possible--or even likely--reasons why some (but only some) Webmaster World members are seeing "an EPC collapse."
I am curious how many seeing an EPC decline have opted out of CPM?
Even though we have had many more CPM's recently this month and last, this month we have seen very, very (+/- 3 times) wide values for our CPM ads while the regular PPC ads EPC seem to be roughly the same.
[edited by: Visit_Thailand at 12:23 am (utc) on Mar. 12, 2007]
|The problem is that rational discussion tends to become lost in threads where angry publishers vent with claims (often presented as fact, despite a lack of suporting evidence) |
No. That is not the problem at all. The thread is "Building a List of Causes" not "Building a List of Causes that can be Proven".
I don't care if someone thinks earnings are tied to the phases of the moon.
I'd just like to see a list without getting lost in all the rebuttals when those rebuttals were not asked for.
"Opted out of CPM". Me, repeatedly. My average CPM stats are 500% higher than what CPM ads provide (every time I check).
Also, the ads are usually off target. Like as ads for tractor trailers on a site about cars.
|My average CPM stats are 500% higher than what CPM ads provide (every time I check). |
Sorry sailorjwd. Could you explain that? I did not fully get the meaning. Thanks.
If I see cpm ads and get $1 per thousand imps. My average site CPM is above that ($5 per 1000 ad views). Not real numbers but real ratio.
Site targeted cpm ads suc for me and usually take over the entire site and are usually not on target. They annoy my visitors even more than I annoy my visitors.
On CPM, here is what I wrote in this very thread:
|Looking back at historic data, I am observing something very strange, out of tens of thousands of daily ad impressions, when there are like 200 to 700 CPM impressions (a tiny percentage), overall CTR and earnings drop noticeably, although those CPM advertisers get only very few clicks and impressions to affect anything, not sure which is the cause and which is the effect: When I'm heading down, google fills in via CPM, or when I get even a tiny number of CPM my earnings go down (This still has nothing to do with the dark Friday EPC nose dive) |
[edited by: martinibuster at 8:22 am (utc) on Mar. 12, 2007]
[edit reason] TOS 4 & 19. [/edit]
The spigot turns on, the spigot turns off. It's the way things are done. We can bitch or we can adjust/adapt..
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