When SERPs change....

I monitor my Adsense earnings

[bnhall]

Whenever there's a change to the Google SERPs, I pay ultra close attention to any impact this may have on my Adsense earnings.

Surely Google does the same? In other words, when they implement an updated algorithm, do their Finance guys monitor the impact to Google's Search & Content based revenue? Aren't earnings attributed to their "network of content partners" (i.e. us!) some 50% of their net revenue? If so, would they knowingly implement a change which would, for example, decrease their quarterly earnings 25%?

Perhaps as a private company, they could have. But not as custodians of the company for their shareholders. I imagine their shareholders want to maximize their earnings. I know I do!

[cleanup]

Good point.
They may even stick with a bad update (poor SERPS) if the revenue was found to be higher?

[Macro]

I was thinking of posting this exact same thing. I agree, it's a good point. It's unlikely Google doesn't track earnings relative to algo changes they make. There is no evidence for that, of course, or that they change the algo to benefit earnings. But, I'm sure they keep a very close eye on the relationship.

[Hinso]

I wonder if it is now Google policy to tread a fine line between, on the one hand, delivering accurate and relevant SERPs (to maintain their reputation with curtomers) and, on the other hand, producing a proportion of irrelevant results that will result in the most lucrative returns from Adwords.

[IanTurner]

There are too many other factors involved, to make it an exact science.

[Jalinder]

So to be successful on the net, you MUST:
1. Have a good themed site
2. Lots of good content, no duplications
3. Have Adsense ads on all your pages.

Remove any point above and you are at risk?

[ownerrim]

I'll add my own two cents to that:

4. never stop adding quality content
5. never stop seeking inbound links
6. never link out to a site that's questionable

[europeforvisitors]

Surely Google does the same? In other words, when they implement an updated algorithm, do their Finance guys monitor the impact to Google's Search & Content based revenue? Aren't earnings attributed to their "network of content partners" (i.e. us!) some 50% of their net revenue? If so, would they knowingly implement a change which would, for example, decrease their quarterly earnings 25%?

1) If the financial types tried to tell the Google search engineers how to run search, we'd hear about it.

2) When algorithm changes occur, some AdSense sites go down in the rankings, but others go up. So why would anyone assume that an algorithm change would result in a substantial decline in Google's quarterly earnings? If any change occurred, it would likely be to Google's advantage, because higher-quality search results = higher-quality ad traffic = better click conversions for advertisers = lower "smart pricing" discounts = more revenue for Google.

[bnhall]

efv, let's see if GOOG's 1Q05 trounces their 4Q04. If it doesn't, you may be right. If it does, I may be.

[Macro]

So why would anyone assume that an algorithm change would result in a substantial decline in Google's quarterly earnings?

It could result in a decline or increase. And, it probably does :). Higher quality search results may actually result in more people clicking organic results than sponsored links. Results of a certain type - preferring a certain type of publisher who's less likely to have Adsense - may result in massively less impressions (and clicks) for the Adsense network. It's all linked, my friend, and a sneeze in the basement can give the financial boys upstairs a nasty cold. I don't believe they have Chinese walls. They don't have need to.

[TNJed]

Doesn't really matter if you think of it this way.

This is the same scenario as in the sports betting world. One half wins and one half loses, but the party that never loses is the bookie because of the "juice." The juice is the 10% loser fee the loser pays in addition to how ever much they lost on their bet. If you bet $100 and lose then you usually pay $110. The winner gets his $100 but where did the $10 juice go? The bookie gets it. That's where they make their money. They adjust the point spread as bets come in to keep both sides as even as possible, but they always keep the juice. For the bookie, the more that lose the better.

With Google SERP updates, some adsense publishers lose and some win, but if there is a greater overall loss in CTR for the entire Adsense network due to a SERP update, Google still wins because of their own "juice." The Google juice is the Adwords network. If CTR goes down across the board because of a SERP update then the CPC must be turned up by the advertisers. This increases bids where they once weren't as high.

This would explain why some wonder why their CPC went south and others say its increased like never before. On the big balance sheet in Mountain View though I'm sure they have a continuous upward trend and in the end, he with the juice wins.

This could be wrong but I couldn't help make the connection. And I'm not saying G does this on purpose, but it's just the nature of supply and demand and one of the natural benefits for being in control of both sides.

[europeforvisitors]

efv, let's see if GOOG's 1Q05 trounces their 4Q04. If it doesn't, you may be right. If it does, I may be.

"May" being the operative word. :-)

Google reveals both total revenues and payments to partners, so it should be fairly easy to see if the payout has been cut. (Although even then, it may mean only that guaranteed CPM deals or other "signup bonus" arrangements with premium partners have expired. A change in the payout to one publisher or group of publishers wouldn't necessarily mean the same change ws affecting publishers across the board.)