buckworks - 2:22 pm on Sep 2, 2012 (gmt 0)

but only because i've managed to increase my traffic

That's a big issue. For publishers, there's more competition for eyeballs than there used to be.

I see this from the advertiser's side, too. We already spend more on the content network than on search ads, but in both cases we have to balance the cost of our clicks against how many sales we get from them.

If we miss the balance point we'll lose money. Conversion rates create a natural constraint on how much we can pay per click.

A smart advertiser will monitor the conversion rates from different traffic sources, and will organize their campaigns so they can bid more aggressively if they discover a "conversion hot spot".

If your traffic converts better than average for me as an advertiser, I WILL try to bid more for it.

The reverse is also true ... sites that send lower converting traffic get lower bids, or even blocked from showing our ads.

My biggest exclusion list has over a thousand sites.