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|Your Theory Why AdSense Earnings Were Higher Years Ago|
Fun with Tin Hats - What's Your Theory?
A civil discussion, not a debate. It's fairly clear there was an AdSense boom time and then a periodof change that affected revenue, or at least it wasn't so easy to turn a buck. Not everyone has experienced a decrease because not everybody is standing still. Nevertheless, I think even those who are making more now than then understand what I'm alluding to as far as how much easier it was to make a buck when the service was new as opposed to now. I am not saying AdSense is dead or not lucrative. I'm just pointing out that there has been a change/growth/whatever and am throwing out the question asking for some reasons why you think this might be so.
Please list your theory, speculation, or wild idea why you think AdSense earnings were higher before than now?
Here is one theory. As I recall, there were thousands of dollars worth of AdWords coupons flooding Internet conferences. Those AdSensers who have not attended conferences several years ago won't know what I'm talking about so before you comment on this theory, hear me out. (Here is a recent example [google.com] of an AdWords promotion that would inject Google money into the system, though probably not on the same scale as in the beginning).
Every conference I went to there were thousands of dollars worth of coupons available from denominations of $250 on down (as I recall). I think there may have been $500 coupons available, too. There were so many coupons floating around that some people were selling them, exchanging them between themselves, and opening multiple AdWords accounts to take advantage of them.
Could part of the higher payouts have to do with there being less publishers in the system? Is it possible that another contributing factor in those early days of higher ECPM was the flood of AdWords coupons?
[edited by: martinibuster at 8:27 am (utc) on May 2, 2009]
Yes, I am of the opinion that the number of publishers, with AS, now is far higher than in 2006 when I started, therefore the cake, even it is bigger now, has to share it with lots of additional new colleagues . If you add as well the two past years of economical downturn, you can understand why this dramatic drop in revenues for lots of people, me included.
I see it as managed returns (for Google). Making sure participants get something while paying to play. This is what I take away from all the conversations that occur here on WW and other places. Might be wrong, but that's what I hear from the rank and file. That's the way a casino works. :)
The Google money machine still works. I just don't think it works as efficiently as it once did, and that many of the players are finding that out. It also seems that Google is searching for the lowest common denominator to keep income generating (for them) while keeping the masses of potential revenue seekers satisfied with...lowest income possible. When dealing with several millions of players that makes sense. Those that can pay more to play get a shot at high stakes returns against investment. All the rest get something to make them think they have a chance.
Then again, I don't use Google for my on line sales. The niche focused is too small, too high priced, and word of mouth works better. There's also no middleman so ROI is spot on!
My simple theory of decline in revenues is pretty simple........ apart from the increase in publishers thus decrease the pie a bit, google is now a publicly listed company and they need to please their share holders more than us :(
In addition to the standard recession (shrinking pie) and competition (dwindling share of shrinking pie), here are some additional wild(er) theories:
- Slow down in new fresh to the net ad clicking users.
- Ad blindness for veteran net surfers.
- Less MFA has to affect a segment of publishers.
- Landing page rules turning off some advertisers.
- AdWords complexity ,, ,, ,,
- Doubleclick acquisition injecting more publishers than advertiser leads.
- Doubleclick injection into the system leading to AdSense flirting with ad blocking.
- SmartPricing algo becoming more aggressive to balance supply with demand and not just conversion.
- Google dropping the ball on code quality due to lack of competition for too many years leading to data loss that is later artificially unfairly balanced out.
- More advertiser control positively affecting few and devastating the rest.
I didn't want to say it before, but the game is rigged... er... the game keeps changing with new rules (which is about the same thing).
Some of you folks have been running with G since inception. Did pretty well for a time. Now not so good and you have changed nothing. So what changed? From my perspective the game changed and the players aren't quite sure of the new rules.
Started with adsense a few years ago and saw a steady increase in earnings each month up until October 08 when it suddenly started to decline rapidly even though traffic etc was increasing. I think that the recession is partly to blame but I also think that google has changed something in the way that clicks/earnings/ecpm are calculated. I think that a change was implemented in October and they've been tweaking it ever since, maybe it's a conspiracy theory :0) but who knows.
My humble opinion is that the cause is:
* Google silently taking a bigger portion of publisher's earnings to meet the market expectations.
There is no reason to believe the cause is ad blindness (although it certainly plays some minor role), because there have been at least two occasions where far too many advertisers saw an "inexplicable" and abrupt drop by ~50% during a very short period (a few days).
Economy changes over time.
Advertisers change their budgets over time.
I'm the perfect example. We use to spend $1000/month just for branding on Adwords. Now we spend $50/month due to cutbacks.
I don't ascribe what I see to Google.
I serve mostly local markets; if anything, those have *more* advertisers, as Google refines its geo targeted search and advertising. I have the same and new advertisers, and my EPCs are through the roof.
No, what's fallen off so precipitously for me is CTR. And I'm *trying* to think of a way to blame Google for that, but I can't, because there's no reasonable scenario in which a disastrous CTR does Google any good. Also I've seen the same thing in other ad networks, affiliate ads, etc. What drops off is CTR.
So I'm attributing it mainly to ad blindness and the economy, till a better idea turns up.
I am going to chalk the problem up to ad blindness and the declining economy.
maximillianos is right example.
I think that we can not speak generally. It is depend on many things but my site;s perform excellent and earnings was never such a good as it is now (I use Adsense for last 5 years).
I guess that it probably have to do with quality of your site's and number of advertisers that would like to advertiser right on your site and pay extra for space.
My philosophy was always to make quality site where people will come back and then with good SEO campaign you can not be wrong.
A number of people have mentioned growth up until about 2007, a levelling or small drop to the end of 2008, then a large drop.
a lot of weird things came in to play since the good days (such as smart pricing). The drop in 2009 will surely be largely down to the recession, and my CTR has halved over the last few months, and more recently EPC has taken a battering.
I'd like to put it down to smart reporting. Moved a massive rectangle from the heat spot at the top down to the footer. Absolutely no difference in any stats - CTR, eCPM, CPC. Could be a co-incidence, but experimenting with size and position doesn't seem to give any sensible results these days.
I also think it's a growth mismatch. A case of over-saturation of content. Most veteran sites had unique -- for lack of a better term -- content or first-mover-advantage in their relevant Adsense publisher marketplace, so they did well in the beginning. The exponential growth of me-too publishers whose only purpose is to infiltrate niches (without much qualification/experience to be in that niche) in order to get a piece of the content pie is one of the causes of more takers and fewer givers (not that it's necessarily a bad thing, it's a free market, right?) and hence, The Incredible Shrinking AdSense Pie. So, I think the growth of content servers (regardless of quality) hasn't matched the growth of advertisers.
I think Adsense earnings were higher years ago because:
1. Fewer publishers were in the system.
2. Changes to the SmartPricing algo have decrease some publisher earnings.
3. Ad quality restrictions and landing page restrictions have disrupted some advertisers.
4. The world economy was stronger than it is now.
5. Ad blindness had not begun, but it has now.
The economy obviously isn't helping matters, but it's also important to remember that a number of major changes have occurred over the years. These changes have been good for advertisers and for the long-term growth and health of the network, but they've introduced a note of reality into publisher earnings. Consider:
1) When AdSense launched, advertisers were forced to buy clicks from the content network by default. What's more, all clicks were sold at full retail--there was no "smart pricing" to adjust the nominal CPC based on anticipated conversion for the advertiser.
2) Over time, Google introduced smart pricing, separate bidding for the search and content networks, placement (site) targeting, domain filters, and other tools that let advertisers spend their money more selectively than they did in the early days. Google also tightened up its definition of a "valid click," which undoubtedly had at least some effect on CTR in many cases. The net effect of these changes was to bring the cost of AdSense ads more into line with its actual value to advertisers.
3) The number of publishers using AdSense ads has probably grown hugely over the years, and in this era of automated keyword- and SEO-driven sites that spit out pages faster than a machine gun, it's a safe bet that the number of Web pages with AdSense ads has grown faster than advertisers' expenditures have grown, thereby cutting the revenue pie into smaller and smaller slices (on average, if not for every individual publisher).
4) Another factor may be the growth of Web display advertising, vertical ad networks, and media-buying tools. On my own site, display advertising has become much more important than AdSense is, and nearly all of the ads that I see on my site from big corporate advertisers are display ads from my vertical ad network, not AdSense ads. If you doubt the impact of vertical ad networks, read this ClickZ article [clickz.com] from April 30 (taking note of the fact that, in the last year, the U.S. audience for vertical ad networks has grown from 40.3 million to 109.8 million unique visitors).
Side note: Over the past 12 to 18 months, I've seen earnings per click return to the levels of 2003 and early 2004. CTR, on the other hand, has declined, bringing down eCPM. I attribute this to a combination of factors, including ad location (AdSense no longer gets "pride of place" on my pages), Google's stricter definition of a "valid click," and--over the past year or so--a worldwide recession that has discouraged casual clicking.
[edited by: signor_john at 3:04 pm (utc) on May 2, 2009]
I had a record September with earnings nearly double any other month (been with Adsense since 2004). This massive spike in September renewed my hope for continued prosperity with AdSense. Unfortunately, ever since then it's been back to 'normal' and now in May, to sub normal levels. Since I haven't changed my AdSense code or layout, I'm inclined to think the drop is on Google's end. Hopefully, I'll see a return of earnings to a level I can live with. If not, oh well, it was a fun ride while it lasted.
[edited by: Play_Bach at 3:09 pm (utc) on May 2, 2009]
It is my humble opinion that it is due to the huge increase in the number of publishers.
Back in 2003 when I started, in my niche there were only about 6-7 of us. Now, I couldn't even tell you, there appear to be hundreds.
To combat that a LITTLE, I have four online shops, plus numerous informational websites. I am an expert in my niche.
However, advertisers only have so much money to spend and with all the competition that we have, it will only stretch so far. So, those of us who used to make more money than we do with less impressions, less work, and less sites, it has to be mostly due to more publishers.
My two cents worth and my personal experience.
Some advertisers becoming better at managing their AdWords costs.
Other advertisers dropping out as AdWords has become more complicated. (As an aside, I'm getting many more contacts from businesses about buying ad space on my site.)
Some advertisers becoming better at managing their AdWords costs.
Add to this an element of ad blindness which is reflected in slightly lower CTR.
All these 3 factors combined make a BIG drop in revenue.
Unless the record earnings I had in September was some kind of AdSense 'correction' for all the previous months that had reporting errors, I don't see the other factors (ad blindness, more publishers, advertiser savvy) as enough of an explanation for the eCPM drop.
It's interesting to read the thinking here. I was breakfast this morning with some local commercial real estate developers. A few of them I talked to privately were telling me they we're going to move forward with some major (tens of millions of dollars, in some cases) projects thinking that, as one said, "the economy is going to turnaround."
This is worrisome to me, but I understand. It is very, very hard for many people to get their head around the rapid change we have seen in available cash for spending. I suggest that the economy in the last 12 months is driving a lot of what you might be seeing in terms of money from ads.
Here's a suggestion. Where has most of your traffic been coming from in the US? What states? Pick five or seven.
Now go here,
and look at the menu on the left and pick those states. Now you have some data. If it's not the economy in your prime area, then you can look at other things.
|My humble opinion is that the cause is: |
* Google silently taking a bigger portion of publisher's earnings to meet the market expectations.
I agree that this is the cause. Since Google keeps their revenue share secret, when times get tough for them, they can simply take more money off the top and pretend that business isn't as bad as it is.
But will they stop when the economy gets better?
If the comparison is two years ago, we do know that Adsense is pulling in more revenue than back in 2007. So we know we have more money coming into the system.
I don't think the publisher's share has changed much in the last two years, so we know that the money flowing to publishers is higher than it was two years ago.
If everyone agrees this is true, and they also believe payouts (per click) are lower, then we can reasonalbly conclude that...
The opportunity for clicks (impressions within the system) grew at a faster pace then revenues. Therefore less revenue per click (assuming the CTR remained steady).
|Since Google keeps their revenue share secret, when times get tough for them, they can simply take more money off the top and pretend that business isn't as bad as it is. |
Google's quarterly earnings reports tell you what percentage of AdSense network revenues were paid out by Google. If Google were "taking a bigger portion of publisher's [sic] earnings to meet the market expectations," we'd be able to see that in the quarterly earnings reports. (And yes, I know that Google doesn't reveal the percentage paid to any individual publisher, but that's beside the point in a discussion of Google's overall revenue share.)
I don't think it has anything to do with ad blindness as I've been using adsense for 3-4 years now and each month there's been a steady increase. Ad formats, colours and positions have remained the same, so I think it would be highly unlikely that everyone went ad blind on the same day back in October 08.
I've tried many experiments with colours and layouts since October but it's pretty pointless as it's virtually impossible to test anything these days as ctr and ecpm are all over the place from one day to the next.
More players searching for a static amount of revenue first, the recession second.
Adsense provided exceptional returns, many people saw this so they entred the market to get their share. That's why revenue has fallen. Now it's falling, some will withdraw and the earnings will go backup again but not to previous levels.
That explains why Adsense / Google is till pulling in increasing retrurns.
One question puzzles though. Some analysts refer to Google's lion share of income coming from paid ads in their SERPS. Has any one analysed if that income is decreasing or increasing. If its increasing significantly then the Adsense pot may be getting smaller but no effect on Google's bottom profit line.
The reasons are way too numerous to easily fathom.
In the early days of AdSense there were fewer publishers, I now compete with many more than I used to for those AdSense clicks. Fewer publishers meant more money.
Also back in the day Google didn't have their local search they way it is now so your site showed up by default worldwide and you got more clicks, then the local defaults kicked in, gone.
Advertisers realizing they had been garbitraged pulled out of the content network.
Google killed garbitrage, profits dipped further.
AdSense targeting changes over time may or may not have altered which ads your site displayed compared to earlier years.
Thanks to Google Cache, Google Maps and other services the customer stays on Google longer, possibly sees the same ads on Google first, and perhpaps doesn't visit your site in the first place, can you say NOARCHIVE?
Blah blah etc.
[edited by: incrediBILL at 9:04 pm (utc) on May 2, 2009]
|Back in 2003 when I started, in my niche there were only about 6-7 of us [publishers]. Now, I couldn't even tell you, there appear to be hundreds. |
Do you think the number of advertisers has not increased since 2003?
|And yes, I know that Google doesn't reveal the percentage paid to any individual publisher |
Yes, and why do you think they keep it secret? Because of the competition? What competition? I don't see any. AdSense has no real competition. It's a near-monopoly. The only real reason I see is to be able to change the percentage without the publisher or anyone else knowing. If you see other (good) reasons, list them.
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