Forum Moderators: martinibuster
I think we got final confirmation today that the topics for our web pages must have been "overbid" by the AdWord advertisers originally, and now has righted itself to an unfortunately low level of payout for us (good for the AdWord advertisers though. As fellow PPC advertisers ourselves at least that's a plus for someone).
We'll be switching to other pay per text programs soon, and I will post to the rest of you as to how it goes. Hopefully it will be OK to post this info to the AdSense forum. If not then perhaps it's time to open up an "alternative pay-per-text" forum soon.
Much envy, and congrats to those of you in the well-paying areas of AdSense.
thx
SN
To suggest CPC will decline is to suggest that the ROI on all keywords is below acceptable levels for current advertisers and that there aren't new advertisers who can achieve an acceptable ROI (and "acceptable" is different for each decision maker anyway) . I can cite anecdotal evidence that CPC for some keywords is likely to increase.
And just because Advertisers A, B and C discover that paying X cents per click isn't generating an adequate ROI doesn't mean that Advertisers D, E and F can't. For example, A, B and C might be bidding 25 cents per click, selling a $25 service with a $12 profit margin, with a conversion rate of 2%. That gives an ROI of 20% since it took $10 (20 cents / 0.02) to generate $12 in profit (a net gain of $2).
Maybe Advertiser D sells a service for the same price, but has a $15 profit margin and still has a 2% conversion rate and (an ROI of 50%), Advertiser E has a $12 profit margin, but because of a combination of better ad copy and a better sales site and better service has a 5% conversion rate (an ROI of 200%) and Advertiser F has a $100 high-end service with $50 profit margin and a conversion rate of just 1% (ROI of 150%). Isn't it reasonable to assume such advertisers would be willing to pay more than the going rate of 25 cents per click, due to their higher ROIs?
Of course, I could come up with examples which would show a negative ROI too or ROIs below an acceptable level. Such advertisers shouldn't bid on those keywords then or perhaps shouldn't advertise on AdSense period. This is no different than the types of decisions that *any* advertiser has to make about *any* type of advertising, whether it's print, radio, tv, yellow pages, Internet, a guy in a gorilla suit wearing a sandwhich board or anything else. The major differences are that advertisers using AdSense (and similar services) can change their bids at any time, can see the results in near real time and can track results and ROI in near real time in order to react more quickly.
On a per keyword basis, CPC might go up, CPC might go down and what a keyword is worth is in the eye of the beholder (advertiser).
I'm not so quick to call AdSense a success or a failure for advertisers or publishers and I don't have enough information to bother speculating on the future of AdSense or content-based advertising in general, but I am cautiously optimistic that it may succeed for a significant subset of advertisers and publishers and that since it's in its early stages we can expect to see a lot of changes, improvement and growth.
Switching directions, but staying on-topic for this thread, when I decide whether to implement AdSense on part of a site of mine, I consider the CPM relative to other alternatives, the time required to implement and manage alternatives and whether the ads are the types of ads I wan to display. The time component is a big factor. If a section of a site with a dozen pages has 500 daily impressions I don't necessarily want to spend the time to research affiliate and direct advertising options, enter business relationships and add code even if it means a higher CPM if my effective AdSense CPM is acceptable.
Sure, everything else being equal I prefer higher CPC ads, but I just try to focus on what I can control. And that's increasing the number of visitors to my sites, the number and frequency of return visits, the number of pages viewed per visit, the number of good content pages and ad placement and presentation that improves CTR.
If total earnings are my goal I'd be happier with 5,000 impressions, a CTR of 6%, a CPC of $0.10 and $30 in revenue per day than 500 impressions, a CTR of 1%, a CPC of $1.00 and $5 in revenue per day. Just something to think about.
For example, A, B and C might be bidding 25 cents per click, selling a $25 service with a $12 profit margin, with a conversion rate of 2%. That gives an ROI of 20% since it took $10 (20 cents / 0.02) to generate $12 in profit (a net gain of $2).
$0.25 per visitor and it takes 50 visitors to convert {2%} then 50 x 0.25 = $12.5
You are loosing money with the above scenario.
Maybe Advertiser D sells a service for the same price, but has a $15 profit margin and still has a 2% conversion rate and (an ROI of 50%), Advertiser E has a $12 profit margin, but because of a combination of better ad copy and a better sales site and better service has a 5% conversion rate (an ROI of 200%) and Advertiser F has a $100 high-end service with $50 profit margin and a conversion rate of just 1% (ROI of 150%). Isn't it reasonable to assume such advertisers would be willing to pay more than the going rate of 25 cents per click, due to their higher ROIs?
I don’t know Steve.. the math is a bit out of kilter.
loanuniverse, thanks for discovering there was a problem with the calculations. The problem was my calculations used 20 cents per click, but I typed 25 cents in my post.
Your calculations based on 25 cents illustrate an interesting point though (and I verified that they're correct) since one of the advertisers (Advertiser A) is actually losing money by advertising at 25 cents per click (-4% ROI), but is profitable at 20 cents per click (20% ROI). And a shift in per click pricing by a nickel has a pretty big impact on ROI for the other 3 advertisers too.
1) CTR's will drop, because of "blindness", and the fact that people will start recognizing ads they already clicked. (unless they are specifically in "buy-mode"), this may apply more to certain sites than others...
If you want some "banner-blindness" examples, i can show you my current day stats from fastclick, it's kind of funny reading:
Media - Total Impr - Total Clicks - CTR
Banners - 17,151 - 1 - 0.01%
This is from a banner located right on the top of my page, a reader doesn't miss it.. and my site is really clean looking.. a couple of years back CTR's for banner ads were higher.. (5 times at least)
2) Fraud, it's a shame, but it happenes and click-bots and fraud-networks will certainly play a part in reducing ROI for the bidder, just what kind of impact this will have i have no idea, i hope it will be minimal.
3) More publishers, where the money is at, publishers will follow, i expect a lot more travel sites and sites that deal with how to get help for debts and that kind of stuff will be popping up..
With regards to the 3rd point, why would company A continue to pay over 5 dollars pr click even if their ROI allowed it if they could get away with 1 dollar/click due to all the new publishers..
With the example you made before with the two different websites, i understand your point.. but would you rather have a website with a CTR of 5%, avg CPC of 1.50 and daily earnings of 40 dollars, or a website with a CTR of 0.6%, avg CPC of 0.15 and daily earnings of 30-35 dollars?
1) CTR's will drop, because of "blindness", and the fact that people will start recognizing ads they already clicked.
Depends on the site, the page, and the topic. If you're a consumer who's thinking about a luxury cruise in Hudson's Bay, you probably haven't visited Luxury-Cruises-in-Canada.com or seen ads for Hudson's Bay cruises. You're much less likely to have "ad blindness" than someone who reads news stories in THE WASHINGTON POST every day.
Fraud, it's a shame, but it happenes and click-bots and fraud-networks will certainly play a part in reducing ROI for the bidder, just what kind of impact this will have i have no idea, i hope it will be minimal.
That's certainly a risk, and Google (and its competitors) will need to give advertisers more options if they want contextual content ads to succeed over the long term.
More publishers, where the money is at, publishers will follow, i expect a lot more travel sites and sites that deal with how to get help for debts and that kind of stuff will be popping up..
True, and Google's SERPs will be cluttered with as many ersatz "content pages" as they currently are with boilerplate affiliate pages. The one difference is that Google will more control over AdSense publishers than it does over affiliate sites: It can cancel the accounts of publishers who bend or ignore the rules.
With regards to the 3rd point, why would company A continue to pay over 5 dollars pr click even if their ROI allowed it if they could get away with 1 dollar/click due to all the new publishers..
You're assuming that "all the new publishers" will be able to deliver traffic. I don't think that's likely to be true.
Relevant contextual ads are less intrusive (load quickly, publishers tend to blend them with the site better than banner ads), more relevant to what the user is interested in and today's technology allows publishers to rotate ads easier to keep them fresher, publishers to do the same and 3rd party ad serving companies like Google to optimize the ads based on what is best for the advertiser, publisher and arguably for the user.
The CPC model is debatable, but the relevant contextual advertising model is more like other forms of advertising that are successful today - print ads, product placement in tv/cinema, etc. Ad blindness is an issue with all forms of advertising, but we haven't seen yellow page ads, magazine ads or television ads disappear. They adapt. They become more targeted. They use new techniques. TV advertising has become less effective, thus the shift to more product placement in TV shows and movies, even to the point where the same baseball game in one market may show an ad for Coke behind home plate, but show an ad for Dr. Pepper in another market thanks to CGI and marketing based on demographics. So, sure, I expect there to be some contextual ad blindness, but not to the same extent as for banner ads for reasons above and I think innovations will counteract it and we'll see companies try CPM and CPS models for contextual ad serving.
Media - Total Impr - Total Clicks - CTR
Banners - 17,151 - 1 - 0.01%
Yikes - less than 0.01%. If your CTRs were 5x as high a few years back that's still terrible. I hear you though. I typically see 0.2% to 0.5% for banner ad campaigns I've implemented as a publisher, but when targeted well (such as for a specific book title on a page about the book's topic) I've seen decent CTRs in the single digit percentages.
Fraud, it's a shame, but it happenes and click-bots and fraud-networks will certainly play a part in reducing ROI for the bidder, just what kind of impact this will have i have no idea, i hope it will be minimal.
Fraud has been an issue with online advertising since day 1. Cheaters will keep innovating and ad servers will keep improving their methods for detecting fraud and dealing with it. It might be a constant battle, but that doesn't mean it's not managable. But like spam and online scams it'll probably continue on a large scale until governments worldwide get serious about criminalizing and prosecuting those committing the fraud. I don't want to get off too far on a tangent, but spammers would be less inclined to hack into someone's server and use their bandwidth to spam large numbers of people if they were concerned that they might get caught and prosecuted for theft, forced to reimburse costs, pay fines and spend some time in prison. Same with Internet ad fraud.
3) More publishers, where the money is at, publishers will follow, i expect a lot more travel sites and sites that deal with how to get help for debts and that kind of stuff will be popping up..
I do too. Except for the fact that SERPs will be clogged with many nearly identical sites and publishers in those markets will be getting less and less of the pie I don't see this as a failure of contextual based advertising or a problem for advertisers. This just goes to show that CPC or EPC is not the metric that those chosing to build an ad-revenue supported site should focus on.
With regards to the 3rd point, why would company A continue to pay over 5 dollars pr click even if their ROI allowed it if they could get away with 1 dollar/click due to all the new publishers..With the example you made before with the two different websites, i understand your point.. but would you rather have a website with a CTR of 5%, avg CPC of 1.50 and daily earnings of 40 dollars, or a website with a CTR of 0.6%, avg CPC of 0.15 and daily earnings of 30-35 dollars?
This may not be what you expected me to say, but I'd chose example 2, assuming the markets for both were equal and neither were new markets where I could have the opportunity to be first to market and create a very popular site quickly. If you really meant which do I think most people would chose I'd say example 1. The reason I'd chose the latter is because I believe there would be less competition and so I think it would be less likely that CPC and number of available ad impressions and site visits and page views would decrease as other similar sites were built. Plus, everything else being equal I prefer to publish a site that has a larger number of visitors and page views since I believe that opens up more options.
So while everyone is out trying to build the 100,000th bookstore affiliate site, debt consolidation site, dating site or some other type of site that everyone and there brother has built or is building or has ads which are high CPC/EPC I'll take the contrarian view.
Yikes - less than 0.01%. If your CTRs were 5x as high a few years back that's still terrible. I hear you though. I typically see 0.2% to 0.5% for banner ad campaigns I've implemented as a publisher, but when targeted well (such as for a specific book title on a page about the book's topic) I've seen decent CTRs in the single digit percentages.
With a CPM of .28 this converts to about 5 dollars CPC so depending on how you look at it, it's not that bad.. :)
I do too -- Except for the fact that SERPs will be clogged with many nearly identical sites and publishers in those markets will be getting less and less of the pie I don't see this as a failure of contextual based advertising or a problem for advertisers. This just goes to show that CPC or EPC is not the metric that those chosing to build an ad-revenue supported site should focus on.
No, it won't be a failure at all, but with more of these publishers the price pr click goes down, impressions will go down and the topic will be less "worth".
I don't think this is bad at all, i think it's only fair.. but i can't say i'm looking forward to the Google SERPS in the years to come for competitive keywords..
This may not be what you expected me to say, but I'd chose example 2, assuming the markets for both were equal and neither were new markets where I could have the opportunity to be first to market and create a very popular site quickly. If you really meant which do I think most people would chose I'd say example 1. The reason I'd chose the latter is because I believe there would be less competition and so I think it would be less likely that CPC and number of available ad impressions and site visits and page views would decrease as other similar sites were built. Plus, everything else being equal I prefer to publish a site that has a larger number of visitors and page views since I believe that opens up more options.
I didnt really expect you to say anything, but even if we didn't include other ad inventory options (only AdSense) i'd still pick number 2, same as you because the fall-height is lower, and you can be pretty sure you won't see your income decline much even over a long period of time..
The other site however will be faced with potentially much lower CPC as time passes, maybe a 0-95% drop, and even if he manages to keep a CPM 3 times higher than the other example i bet he'd be making less money, if not in 6 months, then in a year, or in a year and a half. The "bottom" has to be somewhere in the PPC world, just like in the CPM world, i just think you should create sites with estimated numbers close to it -- at least that way you are not building a cardhouse that will have zero worth when some bubble bursts, because they usually do..
Site A
Impressions= ($40/$1.50) X (1/0.05) = 533
Effective CPM = (40/0.533) = $75.04
Site B
Impressions= ($35/$0.15) X (1/0.006) = 38,886
Effective CPM = (35/38.886) = $0.90
I can get another $0.13 CPM from another source and make as much as site A, without having to worry about loosing my position on the one or two SERPS that are feeding my Site A. I am assuming here that the bigger site is getting its traffic from more than one search-term, or maybe is getting it from “Britney Spears” :D
BTW, I am glad to read that the fastclick ad was CPM.
