incrediBILL - 5:43 pm on Oct 30, 2011 (gmt 0)

Just remember, your AdSense CPC isn't the actual amount being charged advertisers.

Google pays you $0.68 per $1 charged to advertisers for AdSense clicks, or $0.51 per dollar for search ads. To keep the math simple, that means for every $51-$68 you earn in AdSense, they charge about $100 to the advertiser thus Google earns from $32-$49 for the same clicks.

Look at Google as a big source of both traffic and ad revenue, and no matter how you slice it, there is only so much traffic going around to share that ad revenue.

I'll bet Google does everything possible to make sure the maximum money possible is paid out of that ad revenue bucket every day, and any odd behavior we see is just an artifact of the algos trying to max out that ad spend vs their ad budgets and traffic.

What's the alternative when your CTR doubles suddenly but the available ad budgets don't increase accordingly?

Well, I'm guessing AdSense could:

A) raise the ad prices, probably not happening if the advertisers have fixed budgets and it would run some advertisers away making the problem worse, not better. Fewer advertisers to bid up the ad prices and they go down, not up. bad idea.

B) they could burn through the ad cash pool just as fast as when there are fewer clicks to maintain the same CPC and then show lovely PSA ads after the ad budgets are exhausted like the old days. bad idea.

or...

C) AdSense could simply counter the higher CTR by smart pricing the ads to spread the money out over the same period and show actual ads all day, not PSA ads or off topic ads, better for your site, better for the advertiser, more relevant for the visitor.

Never mind. I'm completely wrong. Google wants to throttle your sites! they don't need more money, no need to impress Wall Street or make the investors any happier! :)

That's right, Google wants us to fail.