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No AdSense Earnings Cap
ASA Shines Light on Popular AdSense Theory
martinibuster

WebmasterWorld Administrator martinibuster us a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month



 
Msg#: 3788196 posted 8:19 pm on Nov 17, 2008 (gmt 0)

In case you're not following the recent new ASA thread [webmasterworld.com]. here is what the new AdSense Advisor had to say about the rumoured AdSense Earnings Cap:

I 100% guarantee that there are no earnings caps on AdSense accounts. I will swear it on a big stack of Google search results. No earnings caps.

The earnings ceiling is a bit of speculation that has divided publishers for awhile. It's about a phenomenom where it seemed an earnings cap blocked publishers from earning more, regardless of increases in traffic, clicks, or EPC. The results always seemed to balance themselves out. It appears the phenomenom, which I believe some members truly have experienced, has another explanation.

So what do you think accounts for the balancing out?

 

ken_b

WebmasterWorld Senior Member ken_b us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3788196 posted 8:47 pm on Nov 17, 2008 (gmt 0)

I'm not sure that such occurrences aren't just coincidence.

Looking at stable earnings from the other side, what about when traffic and or page (ad) views drop dramatically but income remains fairly consistent, does it mean there is an income floor for the site?

Probably not.

I'd guess the type and source of a sites traffic is the main factor either way.

It's entirely possible to increase page views and probably even visitor counts without increasing the likelihood of a visitor clicking on an ad. Decreasing the likelihood almost seems like more of a possibility

But, I could wrong.

explorador

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3788196 posted 9:10 pm on Nov 17, 2008 (gmt 0)

I've been wondering about this a lot. I have several well established websites. I added Adsense to the first one reaching X, then adsense on the second one, X again. Now I have Adsense on 3 well established websites and all of them sum X again.

Each time I add a website with good traffic my earnings increase for a little while but come back to the same X income.

maximillianos

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3788196 posted 9:13 pm on Nov 17, 2008 (gmt 0)

Every time we think we have reached the maximum for our niche/market share... we always find a way to make more.

We have not experienced a cap... the only limit is how much traffic you get... From what I see.

ArtistMike



 
Msg#: 3788196 posted 9:35 pm on Nov 17, 2008 (gmt 0)

Sure seems odd that when you add more sites to your account you earn the same total amount each month. Sure seems like a "non-existent earnings cap". Wonder what would cause Google to push your earnings back down, if it is not a "non-existent earnings cap"? Wonder why a publisher that adds to his over all clicks each month would earn the same amount each month? Unless of course you depend on Google to tally your clicks and to tally what each click is worth... oh, that's right... we do.

Sorry. My mistake.

Edge

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3788196 posted 9:39 pm on Nov 17, 2008 (gmt 0)

So what do you think accounts for the balancing out?

Good question, I'll assume ASA has all the facts about the algo and search for an alternative speculative and untestable-theory to argue. :}

elsewhen

5+ Year Member



 
Msg#: 3788196 posted 10:00 pm on Nov 17, 2008 (gmt 0)

just brainstorming... i wonder of the people who experience this phenomenon get the lion's share of their revenue from a single or small set of advertisers. if the advertisers have fixed monthly budgets, there is only so much you are going to make.

of course there are other ads appearing in your adblocks, but if your visitors arent clicking on those (presumably because they are not relavent), then the budgets of your primary advertisers will appear like a "cap"

Hobbs

WebmasterWorld Senior Member hobbs us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3788196 posted 10:03 pm on Nov 17, 2008 (gmt 0)

Simple:

Limited advertiser inventory and budgets
+ Almost unlimited publisher inventory
---------------------------------------
= X factor + Rationing

X factor = SmartPricing, advertiser comes first ..

Rationing = Always on inventory re-distribution and adjustment to optimally exhaust ad budgets.

Add the above to an existing anti-spike/monopoly system you end up with what an observer can call a ceiling or a floor.

johnnie

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3788196 posted 10:08 pm on Nov 17, 2008 (gmt 0)

Thank you Hobbs, I couldn't have made my vision more clear than that :)

OnlyToday

5+ Year Member



 
Msg#: 3788196 posted 10:39 pm on Nov 17, 2008 (gmt 0)

...you end up with what an observer can call a ceiling or a floor.

There is no cap, just a system that appears and acts as though there were. The duck-looking, duck-walking creature is NOT actually a duck. How could we all have been fooled?

hutcheson

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3788196 posted 11:18 pm on Nov 17, 2008 (gmt 0)

Google isn't imposing a cap. But all businesses have budgets, and you can't collect more than the advertising budgets of the available real businesses.

ArtistMike



 
Msg#: 3788196 posted 11:31 pm on Nov 17, 2008 (gmt 0)

By the way, I run a real business online, I sell real stuff from my real online business, I pay real taxes on what I earn from my real online business. How much more REAL can you get?

dibbern2

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3788196 posted 11:44 pm on Nov 17, 2008 (gmt 0)

Our experience shows plateaus. We stay in one earnings range for several months; inspite of content changes and serp flucuations. The non-AdSense factors sometimes push trafic up, and sometimes down, but we stay on the plateau.

And after several months, we move on, always upwards. Looking back now, I can see the old plateaus that are only a fraction of current performance.

I believe there is no ceiling.

Scurramunga

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3788196 posted 12:10 am on Nov 18, 2008 (gmt 0)

Well, lets just call it Smart pricing instead.

Chico_Loco

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3788196 posted 12:53 am on Nov 18, 2008 (gmt 0)

I haven't been an AdSenser in a while, so I'm skim on the details, but just a thought that may or may not make "ad"-sense: diminishing rate of commissions?

Perhaps the first $x or y clicks earn a higher percentage than the clicks that come afterwards (and maybe there are different tiers)... Do the indications point to anything like this? That could give the impression of a cap if you get to such a high number of clicks or dollars where each incremental click is only worth a small amount.

[edited by: Chico_Loco at 12:54 am (utc) on Nov. 18, 2008]

signor_john



 
Msg#: 3788196 posted 1:10 am on Nov 18, 2008 (gmt 0)

Chico_Loco, that's always a possibility. It might seem counterintuitive, since commissions usually go UP with sales volume, but for a network like AdSense, that approach could have advantages. If nothing else, it would give a boost to the small publishers who loyalty is needed to maintain the network's ubiquity and market share.

Jane_Doe

WebmasterWorld Senior Member jane_doe us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3788196 posted 1:26 am on Nov 18, 2008 (gmt 0)

How could we all have been fooled?

There's a book called Fooled by Randomness that explains why a lot of occurences that appear to have patterns may really be attributed to random selection. It is an interesting read.

coachm

5+ Year Member



 
Msg#: 3788196 posted 2:09 am on Nov 18, 2008 (gmt 0)

There is no cap, just a system that appears and acts as though there were.

It's called "unintended consequences". I have no doubt that there is a phenomenon where, as traffic/impressions increases there is a damping down of revenue increase. This is something that's been happening since the start of adsense, noticed by many, and explained successfully by nobody.

I don't believe there is a cap, but that there are elements in the algorithm that create these observed results, which, in essence, amounts to almost the same thing.

Don't know if it's some kind of smooting algo, part of anti-fraud, a way of distributing prime ads, or what.

What I do know is that the present drops in CTR have to do with ?

What does surprise me (kinda) is that if it's a side effect, why not acknowledge it and offer at least a general explanation for us.

Chico_Loco

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3788196 posted 2:18 am on Nov 18, 2008 (gmt 0)

[quote]What does surprise me (kinda) is that if it's a side effect, why not acknowledge it and offer at least a general explanation for us. [quote]

That shouldn't be too much of a surprise. If they admitted to such a thing, some of their highest-earning Webmasters would jump ship immediately, since those are the ones being targeted. And rightly so... it just wouldn't be a fair business practice. It would be counterintuitive, almost. Most companies pay a premium for high yielding accounts, Google (if they are doing something like this) would be taking a premium FROM them.

btw... at what earnings point have people observed this effect taking place? ($10k/month? more, less?)

ArtistMike



 
Msg#: 3788196 posted 2:41 am on Nov 18, 2008 (gmt 0)

I have no doubt that there is a phenomenon where, as traffic/impressions increases there is a damping down of revenue increase.
============================

At what level it starts is irrelevant, the fact that it is there is what sucks.

signor_john



 
Msg#: 3788196 posted 2:45 am on Nov 18, 2008 (gmt 0)

if it's a side effect, why not acknowledge it and offer at least a general explanation for us.

How would that benefit Google? Publishers who are affected, or who even think they're victims of a side effect, would just complain that much louder.

Ultimately, eCPM and/or total revenues are what matter. If the numbers are adequate and the publisher can't do better with other forms of advertising, the publisher will stick with AdSense. If the numbers are disappointing and the publisher can do better with other forms of advertising, the publisher will walk or cut back on AdSense ads. Either way, an explanation of why there may or may not appear to be an earnings cap is just a sideshow.

ArtistMike



 
Msg#: 3788196 posted 3:09 am on Nov 18, 2008 (gmt 0)

Thus Google is happy to keep YOU in the dark and YOU are happy to stay in the dark.

dibbern2

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3788196 posted 5:08 am on Nov 18, 2008 (gmt 0)

I don't believe there is a cap, but that there are elements in the algorithm that create these observed results, which, in essence, amounts to...

Coachm lays out a very interesting possibility. But at the end of guessing, what does it matter? It is what it is, and we all accepted (probably gladly) that when we signed on, and through the years, stayed with the program.

I've yet to see an alternative that comes even close.

ArtistMike



 
Msg#: 3788196 posted 6:40 am on Nov 18, 2008 (gmt 0)

How about trying to improve the "program" so that it is better? Or would you rather just quietly accept it as it is and have blind hope that someday through magic it will be better?

zett

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3788196 posted 7:31 am on Nov 18, 2008 (gmt 0)

This thread is not about the improvement of the program.

Martinibuster asked a specific question:

So what do you think accounts for the balancing out?

based upon the statement of the new ASA that there is no earnings cap:

I 100% guarantee that there are no earnings caps on AdSense accounts. I will swear it on a big stack of Google search results. No earnings caps.

What actually is an "earnings cap"? This needs further definition prior to investigating ASA's statement. Is it a limit on the daily revenue that a publisher can achieve? Is it a limit on the monthly revenue? Is it something else? What exactly is an "earnings cap"?

I still do not believe there is an "earnings cap" that simply limits the daily/monthly revenue. That would probably be too simple and could be spotted (cue to people with forks outside MV).

I think there are other limits within Adsense that may provoke the impression that there is an earnings cap. For example, there could be an average earnings cap. On individual days, you can earn as much as Adsense needs to meet a long-term revenue goal. Say, your average revenue goal is $100. If you earn $200 on one day, there will be two other days at $50 to get to $100. I found some very very interesting data in my long-term analysis of revenue (on 200-day averages). I see graphs that suddenly start to constantly decline over a long period (six months). Then suddenly the decline is stopped and sharply goes into a platform (about another six to seven months). Then it goes into decline mode again for 7 months, and platform again. Weird. No explanation for that.

Again, in theory I could earn as much as Google lets me. So strictly speaking, there is no earnings cap. This is confirmed by my observation that individual days earn up to 2.5 X the long-term average. But there are always a couple of surprisingly "bad" days after that. Advertisers budget? I doubt that.

"Earning cap" could also be an algo that sets certain eCPM targets. These targets may be reached after, say, six months. Then the site and its eCPM targets are being re-evaluated by the algo. This would mean that:

- a publisher can grow his site and still see increasing revenue (as long as the site growth is bigger than the eCPM reduction applied over time)
- a publisher has an incentive to grow his site and bring more traffic to Google
- a publisher actually HAS to grow traffic if he wants to see revenue improvements!
- Google could improve their revenue share easily over time (as long as they sell the ads at the same rate)
- Google can dynamically adapt to changing market environment (e.g. by reducing the eCPM targets for selected or all publishers)
- Google can also have selected publishers on FIXED eCPM sweetheart deals

I am seeing harshly declining eCPM values on some sites right now, which could be attributed to the market reaction to the financial crisis, but it could also be Google just pretending it to be the market reaction to the financial crisis (and lining their pockets with it). Strangely, I do see the same advertisers I have seen over the past couple of years. Also, I do not hear happy jowling from the Adwords forum (that CPC has gone down significantly).

Adsense is as intransparent as it has always been. Without insights into which clicks earn what money, we do not have any chance of knowing.

Oh, and what is a swear "on a big stack of Google search results" actually worth these days? Not much, I guess.

Josun

5+ Year Member



 
Msg#: 3788196 posted 8:02 am on Nov 18, 2008 (gmt 0)

We have three websites with Adsense and had the same experience as explorador and others stated. Adding second and third sites didn't improve our revenues too much in spite of high traffic of the two additional sites. We left one site with Adsense and experienced very little drop in revenues.

I think this picture on Adsense side is corrolated with adjustments at Adwords. If Google cares more about smooth operation of Adwords and tries to prevent erratic fluctuations there (and create more predictable advertisement budget for Adwords customers), then this will create some dampening effect on Adsense revenues with further dampening by smart pricing and rationing. Since Adwords customers are serious source of income for Google, putting more emphasis on that side shouldn't be surprising. I agree with Hobbs: advertiser comes first!

We are in the dark and at the mercy of something that we don't know much about and don't bother questioning.

chetan

5+ Year Member



 
Msg#: 3788196 posted 8:05 am on Nov 18, 2008 (gmt 0)

I have experienced the Decline and Platform Trend observed by Zett.

Probably due to Global Crisis, eCPM has suddenly dropped in Nov.

night707

5+ Year Member



 
Msg#: 3788196 posted 8:09 am on Nov 18, 2008 (gmt 0)

I've been wondering about this a lot. I have several well established websites. I added Adsense to the first one reaching X, then adsense on the second one, X again. Now I have Adsense on 3 well established websites and all of them sum X again.

I have been observing exactly the same with our sites. All of them showing fully unique rich media content with regular updates.

Around every 6 months or so the general revenue figure of all sites goes down or up and remains at the new level steadily with only a few $ difference between 1 and 5 %.

my observation that individual days earn up to 2.5 X the long-term average. But there are always a couple of surprisingly "bad" days after that. Advertisers budget? I doubt that.

Same observation, same doubts!

btw. we are publishing adsense since the early days.

Lagonda

5+ Year Member



 
Msg#: 3788196 posted 1:16 pm on Nov 18, 2008 (gmt 0)

You're talking about earning the same with 1 or 5 sites, right?

In your cases, are these 5 sites showing the same ads, are they displaying the same kind of content?

I have two sites, one about cars the other about houses. They couldn't be more different - one being a forum the other an information site.

At a given moment their earnings were down, just like the pattern described by zett (February/March ~ September, +/- seven months).
Suddendly, in October, without warning or any changes in its structure, they've doubled the income but, one got a steady flux while the other kept falling... This could explain the advertisers' budget/inventory fluctuations.

Oddly enough I've registered with Adsense in October...

Was I "smartpriced" for 6/7 months? For how long does a "smartprice" lasts before it's "recalculated"? Can we say that we are evaluated (our ROI for the advertiser) as a whole for 6 months, lasting the results for another 6 months, and then evaluated again in a 2 evaluation per year cicle? Could it be that the period when my income doubled, the industry was in a natural uprising, demonstrated both by the advertisers' budget and the users' interest? That would explain the doubled income in only one half of the year...
Could the talked cap have anything to do with this pattern?

Example. Let's say you signup with Adsense in January. Adsense will analyze your account's (sites'?) ROI for 6 months, until June/July, give it a score and adjust your earnings accordingly? Then, in January next year it would repeat this cicle? Could this be the cap?

[edited by: Lagonda at 1:18 pm (utc) on Nov. 18, 2008]

petra

10+ Year Member



 
Msg#: 3788196 posted 1:54 pm on Nov 18, 2008 (gmt 0)

I've been with Adsense since its inception and my income has continually increased with the increase in my targeted traffic. In no way has it been capped.

This 65 message thread spans 3 pages: 65 ( [1] 2 3 > >
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