Forum Moderators: martinibuster
I'm wondering how widespread this trend is. Any other experiences with a large drop in Adsense revenue in the last few months? Whether your answer is yes or no, it would be helpful to have a ballpark estimate of site traffic.
Frankly, I'm sick of the "smart pricing" response to explain revenue fluctuations. No rational approach would decide overnight that advertisements are worth 25-50% of what they were yesterday. If the trend is true, then I suspect something other than smart pricing is afoot.
Thanks for the great posts! I (and i am sure that many others who frequent this board) totally agree with every word.
shareholders have almost zero effect on organizational culture, says I, management consultant, and management book author.
They have even less of an effect when most of those big investor owned shares are class A with 1 vote, while the geek owned shares are class B with 10 votes.
But I'm sure the real experts already knew that.
Nah, you're the one who doesn't understand, because we're talking about overall payout percentage.
A possible explanation is that they take 50% more money from selected high-earning established publishers to mask their losses caused by possible mass exodus of advertisers (and possibly publishers). They are a public company now and they simply can't afford to announce a significant drop in income. It could cost them more than money. The reputation and sustainability of AdWords is directly connected with the chance of survival of the whole company. Yes, that's right, survival. AdWords represent 99% of their income so they totally depend on ads. Far-fetched hypothesis? Who knows.
[edited by: jatar_k at 3:24 pm (utc) on Jan. 24, 2007]
[edit reason] manners [/edit]
Yes, that's how typically stock market works these days, the shares you can buy in public have basically 0 voting rights.
However I'd like to see geek boys going against a decision backed by 25 mln shares of Fidelity (let's see...25mln*$500=$12.5 Billion dollars invested) And how fast their stock tanks the day Fidelity starts a pull-out
Far-fetched hypothesis? Who knows.
Farfetched only if you are a Googlehead. There was a similar thread running parallel to this one and came to the same conclusion as this one has. The Googleheads saying Google is not evil and others, like me, saying they could be smart business people (read as evil by the Googleheads) nowadays.
JAG
If Google can be accused of anything I think it is the fact that they need to police better who they give AdSense accounts to - there has to be some kind of editorial standards for advertisers to want to spend with us. By putting "easy" money out there, Google has given a lot of people an excuse to flood the web with crappy web sites - IMHO
I'm inclined to think that 2007 will bring some major changes for AdSense, just as 2006 did for AdWords. Google isn't known for hiring stupid people, and some kind of shakeout seems inevitable--whether it comes in the form of a purge, a quality-scoring system (not unlike the one that's caused so much teeth-gnashing on the AdWords side), site-targeted CPC ads, or something else. The assumption that Google will stand by while the inmates take over and ultimately wreck the asylum seems pretty farfetched to me.
Yes - not everyone is being affected negatively, which is a great point and to me proves that Google isn't doing anything behind the scenes to control bids or prices or pay outs or anything.
My region is suffering this year, due to warm weather, the passport fiasco, and maybe even economic concerns. In a way it makes sense that my ad revenues are down - I know I have pulled back on my ads in both print and the web.
It is what it is - everyone here with their head on straight always talks about not having all your eggs in one basket - I still think it (on line advertising) is the future of advertising, and as print becomes more obsolete and the language of eCPMs, CPC, etc. become more universal, the rates are only going to go up. Maybe not tomorrow, maybe not in 5 years, but it will happen.
A possible explanation is that they take 50% more money from selected high-earning established publishers to mask their losses caused by possible mass exodus of advertisers (and possibly publishers).
Let's think about this theory... They are going to mask their losses by denying those that bring in the most earnings? What would keep these publishers from leaving too? And by the way, if advertisers leave, that shows up as a decrease in revenues - which is pretty easy to detect.
Corp shareholders can sack boards if they dont make money and do as they are told
Sorry, it doesn't work that way in the real world unless their is a scandal and they are getting pressure from instituational investors or someone is heading for jail.
I think they genuinely work to give the best ROI for their advertisers.
I like this theory because it makes a ton of business sense. When they increase ROI everyone wins - Google and their quality publishers.
As long as we can see that there are a big number of webmasters on WebmasterWorld affected by this drop, we can call it a statistically significant event.
Not statistical at all. Most likely biased in a big way.
Er...shareholders have almost zero effect on organizational culture, says I, management consultant, and management book author.
As a major shareholder (board) for a publicly traded small company, I can say without doubt that this is not true. You may be a management consultant, but you are seriously confused.
they are getting pressure from instituational investors
happens all the time ..for a variety of reasons ..not just scandals ..they just dont tell the public if a remark was made on the golf links ..or at the club ..thats the real world
And just how would that conversation go? Is the institutional investor going to ask Google to do something illegal? Cheat your best clients?
You can continue with your conspiracy theories. I'm not buying what you’re selling. I work for a big company and our executives don't want to go to jail and what you're talking about smells like a SOx issue to me.
or do you think ebay pay the same price for their adwords as you do
After a while I just became fed up and decided that something had to be done. I had a few advertisers that had contacted me previously about advertising directly, but it was always easier just to use Adsense.
Anyway, we began adapating our site to accomodate direct advertisers. One client at a time, we started cutting Google out of the middle and adding our own PPC advertisers. As a result, my advertisers are thrilled because they get ads at a much lower CPC. I'm also thrilled because I get double the EPC. My earnings are almost back to our highest levels yet.
It's a little more work, but well worth it. I'm slowly taking back what Google has taken from me and I'm loving every minute of it. The ultimate goal is to be Adsense free.
My overall opinion of the situation is that Google is slowly taking more and more of the pie. While my earnings continued to fall, I know for a fact that CPC for keywords in my industry has gone up, up, up over the past year. My advertisers tell me this and I see it for myself. I also know that my site produces good ROI. If not then advertisers would not have been coming to me. So the whole drop in earnings makes no sense.
I tell this because I really hope to see more webmasters take matters into their own hands. One webmaster at a time and someday Google may wake up and realize that we will not stand for this. I know they are a giant force to fight but in my case they will be missing a substantial amount of revenue this year.
Cheat your best clients?Squeezing margins that are not set is not cheating. Happens everyday.
You can continue with your conspiracy theories.
It's not a conspiracy theory. It's good business (good for Google that is).
Why does this have to be a conspiracy every time someone thinks Google is trying to make more of a profit? It's just business folks.
JAG
One client at a time, we started cutting Google out of the middle and adding our own PPC advertisers. As a result, my advertisers are thrilled because they get ads at a much lower CPC. I'm also thrilled because I get double the EPC. My earnings are almost back to our highest levels yet.
I've said that since day one and posted it here a few years ago. AdSense is the absolute best and easiest way to find direct advertisers :-)
JAG
As long as we can see that there are a big number of webmasters on WebmasterWorld affected by this drop, we can call it a statistically significant event.
Not statistical at all. Most likely biased in a big way.
WebmasterWorld is the best approximation we could probably come up with. It represents webmasters who are actively pursuing Adsense earnings. Who would be missing - webmasters who don't use Adsense, who don't care, who don't care to post. Also, probably webmasters who didn't have drops or didn't look for it. In either case, we may have N number of webmasters who report the drop, and at the same time equal number who got a magical 50% increase did not - a not very likely scenario, as I would be expecting "hurray! I've got 50% jump in adsense revenue" posts :) Anyhow, this is as close to a statistical significance as we can possibly get.
My overall opinion of the situation is that Google is slowly taking more and more of the pie.
and unless Google comes out in the open with how they price things, this will be the opinion of the majority of those who understand.
I don't blame, or do not plan to blame Google. But situation is quite obvious. Over 90% of Google's revenue comes from advertising. So far, with the exception of maybe Google Checkout, I don't see anything close that can significantly improve bottom line. Gaining market sare - yes, that is happening, but VISTA just came out, and one should be cautious as to what MS can do. Getting more advertisers will improve earnings. But these two are very time and resource consuming.
However $500/share needs to be justified. There's one thing that is not resource consuming and has a potential to significantly boost earnings. ALGO. It is a big red button that flashes into upper management's eyes when they need to meet performance numbers. Their hands are itching to press that big red blinking button. All it takes is a tweak of an ALGO - and voila, mo money, awards, rewards, yachts and tropical islands.
I personally think that is too much of an itch not to be scratched.
Expect adwords increased costs, and reduced adsense earnings. JMHO.
People who are currently doing well with AdSense might not even bother to read, let alone get involved in, yet another thread with a title like "Are UPS-club sites seeing big revenue cuts?"
As for your share price analysis, I can see where you're going with it but the obvious response is that if they cut payouts too much, they're going to lose publishers and lose revenue overall. They might even open the door for additional competitors to start making a dent in their business. You're not so much making an argument as telling a story, and IMO it's better to stick to discussing the numbers.
I've said that since day one and posted it here a few years ago. AdSense is the absolute best and easiest way to find direct advertisers :-)
I wish I would have listened to that earlier. I think Adsense was just too easy. Slap in a line of code and collect a check.
For those who didn't get bored reading above. :)
Yep, that was my long-winded way of saying, let's focus more on ways to make things better for webmasters rather than only trying to figure out why they are bad.
and unless Google comes out in the open with how they price things, this will be the opinion of the majority of those who understand.
First of all, Google isn't going to "come out in the open" with its smart-pricing and compensation formulas, because that would be stupid. Why would Google want to help its competitors cherry-pick or play catch-up?
Second, the only publishers who will share your opinion (or who'll care enough to have an opinion) will be those who have experienced big drops in earnings.
Third, if you're correct in your hypothethesis that Google has chosen some publishers for big payout cuts, have you considered the possibility that Google is trying to send a message to such publishers?
And by the way, if advertisers leave, that shows up as a decrease in revenues - which is pretty easy to detect.
Is the institutional investor going to ask Google to do something illegal? Cheat your best clients?
have you considered the possibility that Google is trying to send a message to such publishers?
The point is that if you take more from a portion of publishers, there will be no decrease in revenues when advertisers leave.
It doesn't work that way... Google reports all money coming into the company - that's revenue. When they pay us, that's an expense. Less money coming in means less revenue. If they keep a larger share, expenses go down and profit margin increases. You can see those line items on their income statement.
You're mixing up the concepts of net income and revenue.
WebmasterWorld is the best approximation we could probably come up with.
Well then here is my vote - page views up, revenue up.
Why does this have to be a conspiracy every time someone thinks Google is trying to make more of a profit? It's just business folks.
Um..., because you're talking about two or more parties planning to commit an illegal or evil act - and that's the definition of conspiracy.
[edited by: BillyS at 12:03 am (utc) on Jan. 26, 2007]
