Forum Moderators: martinibuster
It's entirely possible that this new structure will INCREASE our earnings, because, as someone pointed out in that thread, it will now be easier for advertisers to revise campaigns that aren't working out.
I believe Google has a good reason to make this change. Although there will always be people who will lose revenue, generally we should be better of with the new policy.
I do agree that $G would not make any change that would significantly hurt their revenue. If everyone is suddenly getting only 1 cent (or less) a click no one would run adsense on their sites anymore when there are so many higher paying options.
Freq---
It's a pretty simple formula. Ads that DO get or are predicted to get a higher CTR will have a lower bid threshold. That's not really new, in that the ranking of ads, as we've been told for a while, takes CTR into account. An ad will display at #1 position if it has a 10 cent bid and a 20% CTR over an ad with a 90 cent bid and a 2% CTR because total income will be higher.
By slowly weaning publishers off the high incomes of the past Google is also preemptively preparing publishers "now" rather than shocking them later with rate cuts when the competition gets furious. Again trying to cajole them into remaining in the "fold".
Google may cut rates enough that no one will want to compete. A one cent rate could bring in a lot of small fry advertisers that have held off. Once Google gets an advertiser hooked there is a substantial cost of time and effort to move elsewhere.
Having cut rates to publishers if competition for publishers revs up Google would then be able to raise income to some extent to hold onto publishers, squeezing all those advertisers they now have hooked.
Eventually rates to advertisers and income to publishers does have to go up. Could be a long wait though.
An ad will display at #1 position if it has a 10 cent bid and a 20% CTR over an ad with a 90 cent bid and a 2% CTR because total income will be higher.
I agree that this makes perfect sense for Google from revenue maximisation point of view. As an advertisers who tried AdWords but stopped using them due to way too low ROI I welcome the news about 1 cent clicks and going to try it again.
However I think 1 cent clicks are a wishful thinking, lets think logically here: suppose we have 100 views and there is an advertiser with a perfect 100% CTR, lets assume this advertiser gains 1 cent per click rate. This means $1 revenue to Google, great. Now suppose someone bids 10 cents, they only need just above 10% CTR to beat that ideal advertiser to the top spot, make it 20 cents and only 5% CTR is required.
If you consider that 100% CTR is impossible, and realistic good CTR is probably 20%, it means that someone who bids 10 times more cash will only need 2%+ to beat the guy with 1 cent bit but much higher CTR.
Advertisers now are used to paying way more than 10 cents per click, which tells me that those 1 cent clicks ain't going to materialise much, certainly not on top spots.
However I think 1 cent clicks are a wishful thinking, lets think logically here: suppose
Supposing something is not thinking logically.
Suppose there's only one advertiser on a keyword? It happens. The minimum for those keywords is going down from 0.05 to 0.01.
The good news is the Adwords > Adsense conversion model may actually work on those keywords. The bad news is there will no longer be only one advertiser on most of them, therefore.
This is like solving "Achilles and the Tortoise" by debate. We need maths!
Supposing something is not thinking logically.
It is: word "suppose" in this context means "assume".
Most of words that are worth bidding for have advertisers, often more advertisers than spots on the first results page.
Case in point - words I was bidding for had reasonable number of clicks estimated at 5 cents, however I was not getting any at that price, in fact I was not getting anywhere near the place the estimator suggested. Raising bid to 25-30 cents helped to be featured, but this is many times ever 5 cent minimim bid.
The point I am making that different between 1 cent and 5 cents, or even 20 cents are 500% and 2000% respectively. These are huge numbers, which means that extremely high CTR attained by at with 1 cent won't be a match to bids with currently reasonable 10 cents per click.
Will see how it turns out.
It is: word "suppose" in this context means "assume".
I think the assumption is questionable.
Most of words that are worth bidding for have advertisers,
Well, that depends. There are lots of niches with little or no keyword competition.
Some Adsense publishers may get a significant part of their earnings from 5 cent clicks. Their earnings may plummit and I think they're right to be worried.
I think the assumption is questionable.
Gee, look at the assumption - 100% CTR, this is not really an assumption, this is akin to taking best possible scenario and then analysing it and coming to conclusion that 1 cent * 100% CTR will product less revenue than 11 cents * 10% CTR, and since 100% CTR is ridiculously high which leads me to conclusion that unless nobody is bidding for the words its unlikely (sadly) that 1 cent clicks will be seen. Time will tell -- hope I am wrong (as an advertiser).
I think the assumption is questionable.Gee, look at the assumption - 100% CTR,
The part I find questionable is:
Now suppose someone bids 10 cents
This is not true for all topics. Sometimes there are just very few advertisers and there's no reason to bid above the minimum.
Sites that are operating on the minimum bid may see their earnings decline.
