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Easy automated solution for the MfA/arbitrage problem.

         

ecce

3:48 pm on Aug 30, 2007 (gmt 0)

10+ Year Member



MfA sites are neither good for publishers, nor advertisers, not even for Google since they only take out, but don't bring in new money into the system.

The automated solution to this problem imo would be to have following feature made available for adsense publishers:

"Don't show ads paying less than $x.xx per click".

With that option/control a publisher could simply raise the level of earnings per click above those of MfA ads, but keep it below those of legit ads so MfA ads wouldn't show anymore and MfA sites would soon vanish. The process of determing the level of earnings per click would be a market finding one for the publisher and the level would depend on the topic of his website.

This will work and won't hurt the adword advertiser by raising the levels of cost per click for him, because if a publisher would raise his level too high (above the market price) no ads would show on his website. So he would be forced to lower it again, until enough real bidded ads appear. aso.

I am puzzled why Google hasn't implemented this feature yet, since they love automation. Atm, they have to manually clear out MfA sites, so why not let the publisher do the work?

What do you think? I, as an publisher would love to have this tool.

koan

5:47 am on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member Top Contributors Of The Month



BigDave, I don't understand the big fuss you're making in your example. Say that the big $0.50 ads are distributed equally among equal publishers in terms of CTR, eCPM and conversion rates, the people with a minimum bid would simply have PSA ads (or better, trigger their alternate ads) when the advertisers daily budget runs out while the one without a minimum bid would fall back to lower paying ads from other advertisers. In the end, the guy with a minimum bid would probably be making LESS money than the other one, but at least, it would be under his control and choice not to send his traffic away for a price he considers unattractive, and could use alternative strategies when it happens.

The point isn't to push for more money, but to have a better control over what type of ads you're showing, if you want to allow low bidders or not. If in your sector, 95% of advertisers bidding under $0.10 are scammers, arbitrageurs, MFA sites, ring toners, spammers, etc. than it would be an excellent form of automated quality control.

Nobody likes to have a competitive filters filled with 200 entries, it's not a matter of being fussy over advertisers, it's the simple fact that when you have many sites, over many different topics, it gets full rapidly by even just adding the worst of the worst.

Minimum bids and/or block by advertisers (instead of domains) would crush the MFA industry and improve dramatically Adsense's image among publishers, advertisers and users.

zett

6:38 am on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Your profit shoots up to $50 and mine drops to $5. You are thrilled, I move to YPN. Google loses money and the publisher that was helping them make money. The only one that comes out better is the publisher that made it *harder* for them to move their inventory.

You're making the assumption that this is the only one way out.

Before moving to YPN, maybe the disappointed advertiser turns to Adsense support and asks, "what is wrong with my site"? He might get the optimization tip "you are not using your minimum EPC tool". In the end he might be increasing his minimum EPC. Also, advertisers will realize that if they want to see their ads on Google, $0.20 is the price the market (i.e. the two publishers of your example) demands.

It all boils down to the question whether the advertiser wants/needs to be seen on Google or not, and what the advertisers ROI for the ads running on Google is. If the answer is "yes, I want to be seen", then please pay the market price.

Those who can not afford to advertise on Google, will look for other traffic sources. Maybe they turn to parking providers or cheaper ad networks? But where do these guys get their traffic from (hint: it's not type-in traffic). I.e. if the parked page gets its traffic from Google, they need to do what? Right, increase their bids (because you two have decided that the minimum price is $0.20 instead of $0.05).

If he runs an arbitrage site, his margin will be smaller and his risk increases. Given the huge number of market participants, I guess the market price will be fixed quickly, and most arbitrageurs will be out of business.

But back to your example. What is the risk/opportunity bandwidth?

WORST CASE: 100 x $0.50 = $50.00 in total (no publisher wants the ads for $0.05, no advertiser is willing to increase their bid to $0.20) - Loss = $5.00

BEST CASE: 100 x $0.50 + 100 x $0.20 = $70.00 in total (all $0.05 ads bid now $0.20 to get the same exposure as before) - Profit = $15.00

I understand that, realistically, not all advertisers will just jump to $0.20, but for Google to "break even", they need just $5.00 or 25 clicks @ $0.20. In other words: 75% of the previous $0.05 bids can jump ship, yet Google is earning exactly the same as before. AND they cleaned the house.

The tricky part now is to get the price right. And this, as ecce explained, will happen pretty quickly in a highly dynamic environment.

Yes, I am all for unleashing the true market forces upon Adsense.

Scurramunga

7:26 am on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



It all boils down to the question whether the advertiser wants/needs to be seen on Google or not, and what the advertisers ROI for the ads running on Google is. If the answer is "yes, I want to be seen", then please pay the market price.

Spot on. Let market forced prevail.

Publishers who 'overestimate' the worth of their ad space will have two options; show alt ads or accept lower bids.

[edited by: Scurramunga at 7:28 am (utc) on Aug. 31, 2007]

BigDave

3:36 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



BigDave, I don't understand the big fuss you're making in your example.

Just as with MoTi, you did not read my original post on the matter. What you suggest is EXACTLY what I put in my first post as the only fair way to implement this suggestion. Ecce responded with

For one thing, the only way to implement this that would be fair to all publishers, is to replace any ad that was not shown because it was under the minimum bid, with a PSA. You should not get a higher percentage of the higher paying ads than those who have not messed with their minimum bids.

Nope, those pubs that don't mind MfAs and don't set a min EPC can display 1 cent EPC ads. Why not? If that is what they want.

ecce wants to get full ad blocks with higher paying ads, and seems quite willing to have the publishers that don't set minimum bids make less money so he makes more.

ecce

4:10 pm on Aug 31, 2007 (gmt 0)

10+ Year Member



ecce wants to get full ad blocks with higher paying ads, and seems quite willing to have the publishers that don't set minimum bids make less money so he makes more.

BigDave, I understand you concerns. I think you misunderstood that sentence. Maybe I wasn't perfect in formulating it, but then I thought it is obvious what I meant. The answers of koan, zett and tim222 actually shows that it was understood correctly. They also answered better than I could to your example. So I don't want to repeat everything again, except little additions. Let me add a few words to the sentence you took offense with, just for the sake of clarity, so you see how I meant it:

"Nope, those pubs that don't mind MfAs and don't set a min EPC can display 1 cent EPC ads, among the other higher paying ads that everybody gets and only after the inventory of the higher paying ones is empty. Why not? If that is what they want."

See, in your example you assume, the pub with the highest min EPC gets all the high paying ads, while the second pub gets only the lower paying ads. That is not how adsense works, because higher paying ads are distributed at the same time to all pubs that have a min EPC below the ad price. Only after the 50 cents ads are gone, will the pub with a 20 cent min EPC see PSAs, while the second pub with 5 cent (or 0 cent) threshold will display the low paying ads as well.

What do you think the pub with the 20 cent min EPC will do when he sees PSAs half the time on his site? Well, that is obvious. He will lower the min EPC to increase his earnings from $25 to $27.5. I bet on it. That is also, why this is not discriminating against advertisers. The only effect you will see, and I have to repeat this again, is that the spread between ad prices in one sector will decrease. Therefor making arbitrage impossible. And with arbitrage gone there will be a lot of other positive effects on the system we haven't discussed in this thread, but are all over the forum.

ecce

4:10 pm on Aug 31, 2007 (gmt 0)

10+ Year Member



double post, sorry.

europeforvisitors

4:18 pm on Aug 31, 2007 (gmt 0)



The ONLY way a minimum would be acceptable to other publishers would be if BigDave's rule applied (i.e., "If you've set a minimum, you'll have to live with PSAs when your fair share of ads above the minimum isn't available").

But even if the idea were acceptable to other publishers, you'd run up against the fact that Google needs inventory for all of its advertisers. To sell your concept to Google, you need to demonstrate convincingly that a publisher-set minimum EPC would benefit Google and its advertisers.

(Side note: Do you think Google has never considered "what if" scenarios such as what would happen if publishers were allowed to set minimums or if the minimum rate per click were raised?)

jimbeetle

4:50 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member Top Contributors Of The Month



Since it's generally accepted that ads are served in descending order of payout, don't we as publishers already have this somewhat under our control?

Assuming Ad Units only, we can choose to display up to 12 adverts, which would include higher to lower paying ads. Or, we can display only one ad, presumed to be the highest payout. Or we can fiddle around with any number in between until we hit our sweet spot.

ecce

4:50 pm on Aug 31, 2007 (gmt 0)

10+ Year Member



i suspect you don't understand the performance model at all. it's NOT about epc only. it's the combination of epc and ctr.
with set minimum price, in any case you cut out some of your best performing ads.

I actually do think I understand the model. See, the min market EPC for every sector that would settle in would never be above or at the average ad market price. Because who wants to waste his ad space on PSAs? So, it would probably be low enough to filter out only 10-20% of the distribution meaning the lowest paying ads. In that range, as mentioned, you probably find almost all the MfA/arbitrage ads. For the rest of the range there will be enough room for the Google model of showing different priced and performing ads.

now why does google show low epc ads at all if there are advertisers who pay more in your niche? because cheap ads with high ctr earn more money than a high paying ad few people click on.

I don't object that.

how do you think an mfa will earn money under these circumstances? the mfa lives off the fact, that he is able to trigger higher paying clicks. actually even a 100% ctr earns you nothing if you can't realize higher click prices.

Exactly, and ones arbitrage sites are gone because they don't earn anymore (because costs to attract traffic is too high), ad spaces on non-arbitrage sites will get more higher paying ads, the ones that were formerly shown on arbitrage sites.

now how do they do that? different niches. niches you want to be handeled seperately.

That is actually one of the issues I have with MfA/arbitrage sites. They take my visitor, that expect a certain topic/product/content to their ad page with a different topic full of ads. That increases ad fatique, distrust in Google Adsense ads etc.

A fictional example: I run a poetry site and talk about "dreams" alot.
So I get a lot of ads with texts like: "Dreams - search, compare, buy. All about Dreams here:" etc. Now this alone would be funny if it wouldn't be so sad. But then, this ads leads to an MfA/arbitrage site selling "dream cars". This shouldn't be, I am 100% sure it's not what my visitor wanted, he will probably never again click on an Adsense ad on my page plus I was milked of a higher possible income from a non-arbitrage site. This also damages Google financially and their reputation.

BigDave

5:07 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



But the site that set the minimum will be getting a higher percentage of the higher paying ads while they are still available. And Google still needs the site inventory to move those low paying ads.

So early in the month, you get 2 high paying ads and I get a high paying and a low paying ad. So the high paying ads disappear 2/3 of the way into the month, in the simplified example. It still ends up a bad deal for me.

there is something called "critical thinking". It involves looking for problems in your suggestions. You are not doing that. You are telling google that they need to do this because it will solve one of your problems and potentially help with one of their's. But there are SERIOUS problems with the suggestion that you are not considering because they complicate what you consider a wonderful plan. Well, Google will consider the downside, they have considered the downside. That is why they haven't implemented it even though it has been tossed around the fora for years now.

They might yet implement it, but if it was as perfect as you say, it would have been there since around 2004.

ecce

5:57 pm on Aug 31, 2007 (gmt 0)

10+ Year Member



But the site that set the minimum will be getting a higher percentage of the higher paying ads while they are still available.

I don't know how you come up with that. I never said nor suggested this. The site with more impressions and/or clicks will get the higher percentage of higher paying ads, not the site with the highest minimum. That is how it is now and that is how it would be with the minimum bid. You can't just say I said something that I didn't and then blame me for it. lol. You can't filibuster this.

there is something called "critical thinking"...

See, what I am really doing is opening up a thread about it, to discuss it and get pos/neg feedback and critics out of which a fruitful dialog appears. I think this is already very interesting here and I am the first to admit mistake if you can show one to me. So please attack my ideas and the concept, but not my person nor my way. Tell me the SERIOUS problems, instead of just hinting there could be some. You haven't done so, nor succeded in logically proofing a mistake.

it has been tossed around the fora for years now. They might yet implement it, but if it was as perfect as you say, it would have been there since around 2004.

If that was indeed so, there could be hundred reasons why it wasn't applied yet, that have nothing to do whatsoever with this feature at all. Meaning just because it wasn't implemented doesn't mean it is not a good idea. You could also ask, why did Google ever waste money and develop Google Video, when their intention always was to buy YouTube? Maybe the reason why they didn't develop the minimum bid was because they needed the engineers to develop Google Video? Again, who knows.
See, things change, and things become obsolete or necessary in different times. Sometimes decisions turn out to be wise and sometimes to be very stupid.

This is not my idea here for sure and it's probably not the first time discussed. However I just see it as a possible natural evolution of the system. If it will come or not, who knows? It's still good to talk about it.

europeforvisitors

6:11 pm on Aug 31, 2007 (gmt 0)



This is not my idea here for sure and it's probably not the first time discussed. However I just see it as a possible natural evolution of the system. If it will come or not, who knows? It's still good to talk about it.

And if it is talked about, it deserves to be talked about rationally and critically--not simply from an advocate's point of view. All of us should thank BigDave for bringing his objectivity to the party. :-)

tim222

6:25 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



The more I think about this, the less I think this would have very much effect on advertiser bids. The thing is, there will *always* be plenty of publishers willing to display those one-cent ads. From an advertiser’s point of view, performance is always poor on the AdSense network, anyway. So they probably won't care if their ads aren't appearing on a handful of AdSense sites.

If a site on the AdSense network is good enough to influence a higher advertiser bid, then that site can already be targeted with CPM ads. That's a much better way to focus on certain sites anyway.

Let's say that I'm a blue widget advertiser and I notice my ads are not appearing on bluewidget.com because my bid isn't high enough. If I increase my bid to appear on BlueWidget.com, that means I might have to pay more money for clicks from BlueWidgetMFA.com. It makes alot more sense to target bluewidget.com with CPM ads than to increase my bid to meet their minimum.

BigDave

6:51 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



I did tell you some of the serious problems. I suggested them and you said "nope". That "nope" was in a specific repy to what I said, therefore you negated my suggestion, which is the same as stating a positive. You now seem to be claiming EXACTLY what I originally suggested.

What Google would need to do to make this work is to ration the high paying ads. Unless they have a steady surplus of ads above the minimum set by a site, which is unlikely because they would already be showing them in that case, they would have to show PSAs in those spots where they would otherwise show a lower paying ad, and they would have to do that during the entire month.

Consider the probability that no one would make more money.

The person setting the low bid (you) would make less money because all your low paying ads, including high ctr ads, are replaced with PSAs.

Google makes less money because they have less ad slots and have to serve up a lot more PSAs for free.

The person who sets no minimum bid could end up getting flooded with cheap ads, or could end up with the exact same balance.

If this forces bid prices up, legit advertisers will have to reevaluate their advertising priorities and budgets. Many of them will not simply bid up to what the publishers demand. Online retail has some incredibly tight margins. You expect a lot from people that are not willing to write better copy than the MFAs.

So, yeah, it could hurt legit advertisers too.

This could lead to Google losing publishers, and advertisers. It could lead to everyone making less money, not just the MFAs. Are you willing to consider that to be a serious potential problem?

europeforvisitors

7:36 pm on Aug 31, 2007 (gmt 0)



Let's say that I'm a blue widget advertiser and I notice my ads are not appearing on bluewidget.com because my bid isn't high enough. If I increase my bid to appear on BlueWidget.com, that means I might have to pay more money for clicks from BlueWidgetMFA.com. It makes alot more sense to target bluewidget.com with CPM ads than to increase my bid to meet their minimum.

Site-targeted CPM ads are merely an AdSense product extension; page-targeted CPC ads are the network's bread and butter.

BigDave

8:07 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Site-targeted CPM ads are merely an AdSense product extension; page-targeted CPC ads are the network's bread and butter.

True. But the balance could start shifting if the cost of participation in CPC went up because of websites setting minimum bids. Especially when you consider that MFAs would be able to set their minimum bids as well.

Having more advertisers deciding to switch their campaigns to CPM wouldn't be good for the little guy.

ecce

8:21 pm on Aug 31, 2007 (gmt 0)

10+ Year Member



You now seem to be claiming EXACTLY what I originally suggested.

You never originally suggested it. I said this in my FIRST post and in some leading up to your post. You just copied and rephrased what I said all along and claimed it counters my suggestion, while it actually is my suggeston. Nice try. Here, I repost this from my first post as one example:

because if a publisher would raise his level too high (above the market price) no ads would show on his website.

OK? (No ads = PSAs = something/nothing that doesn't pay) Ads with a price lower than minimum EPC don't show. Did you ever set up Adsense? When Google asks you what to show when no ads are available, you can choose an image (= no ad) or a PSA. It's the same.

That "nope" was in a specific repy to what I said, therefore you negated my suggestion, which is the same as stating a positive.

You said:

For one thing, the only way to implement this that would be fair to all publishers, is to replace any ad that was not shown because it was under the minimum bid, with a PSA. You should not get a higher percentage of the higher paying ads than those who have not messed with their minimum bids.

And I answered:

Nope, those pubs that don't mind MfAs and don't set a min EPC can display 1 cent EPC ads. Why not? If that is what they want.

Ok, now what did you say here? You said, replace any ad that was not shown with PSA. The way I understand it is, that you suggest to kill/cancel the ad that isn't shown, in other words take it out of the system, so pubs without min EPC won't be able to show that specific ad, right?. So they don't get a higher percentage of 1 cent ads, right? Yes, that is what you said.
I don't agree with canceling ANY ad, that's why I said "Nope ~ keep the ads for people who don't mind showing them." This is a basic market you hear about in pre-school and is used everywhere around the world. Actually it's more a twisted "dutch auction" since the highest bidding ads come first*1. So why not let Adsense/Adword be a real market too?

The rest of your comment is only valid under the assumption that publishers will be happy to show "no ads/psa" most of the time, while waiting for a high paying ad to pop up from time to time. Maybe you are right, and my idea would indeed not work at all (Hey, I am thinking critical.) and you were right all along.

But I can speak for myself and any rational thinking person (imo most if not all publishers) and say I don't want to maximize "EPC", but maximize my "total income". Maybe we should have a vote which is prefered by publishers, max EPC or max income?

edit *1: to clarify: the highest bidding ads are shown first on an ad space.

BigDave

9:18 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Wrong, they are very different.

You said that if they raise their minimum too high, that no ads would be shown.

What I said was that they they replace any ad slot that would have contained a lower paying ad with a PSA, whether or not they still have inventory. You run the exact same number of higher paying ad slots as you used to, and any slots that used to be lower paying would now be PSA or alternate ads.

Your method reduces the higher paying ad inventory for other publishers. My way preserves the other publisher's access to the higher paying ads.

Ok, now what did you say here? You said, replace any ad that was not shown with PSA. The way I understand it is, that you suggest to kill/cancel the ad that isn't shown, in other words take it out of the system, so pubs without min EPC won't be able to show that specific ad, right?. So they don't get a higher percentage of 1 cent ads, right? Yes, that is what you said.

Then you understood wrong. Of course those ads sty in the system. What I suggested is that Where *YOU* would have shown that ad, it would be replaced with a PSA instead of another higher paying ad.

[edited by: BigDave at 9:21 pm (utc) on Aug. 31, 2007]

ecce

10:01 pm on Aug 31, 2007 (gmt 0)

10+ Year Member



Wrong, they are very different.

Imo, it's the same.

You said that if they raise their minimum too high, that no ads would be shown.

Exactly.

What I said was that they they replace any ad slot that would have contained a lower paying ad with a PSA, whether or not they still have inventory. You run the exact same number of higher paying ad slots as you used to, and any slots that used to be lower paying would now be PSA or alternate ads.

Just what I said. You just describe the state for any minimum bid that is in between the high paying and the low paying ads. I also said that this state would not be satisfying for the publisher, and that he will decrease the minimum bid further so even the lower paying ads show again (at least some of them).

Maybe somebody neutral following this discussion can tell us, why we don't understand each other?

Your method reduces the higher paying ad inventory for other publishers. My way preserves the other publisher's access to the higher paying ads.

No, my method doesn't reduce the higher paying ad inventory for other publishers.

Then you understood wrong. Of course those ads sty in the system. What I suggested is that Where *YOU* would have shown that ad, it would be replaced with a PSA instead of another higher paying ad.

Ok, good. At least we cleared that up. Because I never said what you suggest I said. Please show me my words where I said, that I want to show higher paying ads in lower paying slots! Why don't you get this?

But I think I am slowly understanding where your confusion comes from. You think, I am talking about a publisher with min EPC that has two ad slots on his website. One of them is a high paying slot and the second is a low paying slot. I think you are in the believe, that I suggested that the low paying slot on that page will be filled with high paying ads ones the publisher sets a higher min EPC. I never said nor suggested that. And I think you are the only one that got that idea somehow. Of course once he sets the min EPC no high paying ads will show on that lower slot, only on that higher slot.
Is that were the problem comes from?

BigDave

10:14 pm on Aug 31, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Because the ultimate goal for publishers is to have the maximum EPC while having ALL the add slots ALWAYS filled with ads.

If setting a minimum bid is to have ANY effect, under my system, what you said here would be pointless.

ecce

11:37 pm on Aug 31, 2007 (gmt 0)

10+ Year Member



If setting a minimum bid is to have ANY effect, under my system, what you said here would be pointless.

Great. I feel like we cleared up another thing. About your quote of mine:

Because the ultimate goal for publishers is to have the maximum EPC while having ALL the add slots ALWAYS filled with ads.

You're right, that sounds wrong if you look at it isolated, and I admit it's wrong to say that in this way without setting a condition I have in my mind (but for pure laziness didn't mention before, because I thought getting the basic idea across first and see if there is any interest to talk about this topic at all. Why making everybody fall asleep? Mainly I wanted to say with that quote that legit advertisers won't be discriminated by the min EPC).

So this state from my quote will only happen, if the amount of inventory is bigger than the available ad slots! As I said before the goal for the publishers is to max income. So in this case maxing income will mean all ad slots filled (goal reached). So what's the difference to the current system? Lowest paying ads (likely mostly arbitrage ads) will not show, which also includes the better performing but lower paying ads that are showing now under this condition. Most better performing ads at the lowest price level are probably arbitrage ads. So it is ok they don't show, because only the absolute lowest will be affected. I think that is ok with most publishers, I quote koan:

I'd rather have a user leave my sites for $0.10 than having 11 users leave it for $0.01 each.

So yes, Google algorithm will be limited by the min EPC. Is that the reason they don't implemented it until know? Because they have to surrender I tiny bit of control over to the publishers? Google actually shouldn't mind, because they don't have to pay pubs who do it out of pure self-interest. Well, however, imo this is not that bad, cause the net effect will be positiv, since arbitrage becomes impossible. So sure, pubs and Google would loose some income from that the first days, but later gain back more income, because the higher paying ads are not appearing on those MfA sites anymore, but instead showing up at non-arbitrage pages. Because that money drain from the system is stopped, the money will effectivly increase the income of all other parties still involved (depending on how Google tweaks its algo). Payout to publisher will rise, ad cost for advertisers will sink and Google can charge more.

The opposite situation is when the ad inventory is smaller than all ad slots. Then of course you will see psa, but you will also see them with the current system. However, publishers would still have the tool of the min EPC to squeeze out the arbitrage ads. Yes they would do it too and again, they would loose some income from that first, but later gain back more income because the higher paying ads that are not appearing on those MfA sites will show up at their pages, effectivly increasing their income.
So, under the second condition my quote that the goal for pubs is to fill all slots is false, because even if they wanted they could never reach that goal. Nevertheless, they will still use the min EPC to discriminated against arbitrage sites, because it increases their total income.

What we are seeing right know is arbitrage sites milking a huge amount of money out of the system, that costs all other parties. Imo, even advertisers should demand the min EPC tool for publishers, because that will help kill all arbitrage.

ecce

12:14 am on Sep 1, 2007 (gmt 0)

10+ Year Member



To sum up this thread:

-Arbitrage happens because price span of ads in same sectors is too big.
-To reduce that price span, publishers need pricing power/ability to set min EPC for sector ads.
-With such a tool price span would shrink
-Arbitrage would go away
-Money drain to arbitrage would stop
-Ad cost for advertisers would fall, while ad earnings for publishers would increase.

Why is it not implemented?

-Nobody knows
-Google has no serious competition
-Google is lazy?
-Google doesn't trust publishers (not good)?
-Google wants to have total dominance over ad placement (why?)
-Google so far has successfully convinced most arbitrage accounts to keep their income in the system, helping build a house of cards, inflate the ad bubble and fuel an ad ponzi scheme. (is that really true?)

What will happen without min EPC in the long run?

-Ad prices in all sectors will come closer and closer to 1 cent, like a stock with only sellers and no buyers, once sellers realize there are no buyers or advertisers realize they can sell ads even lower.

Will a global min EPC help?

-imo absolutely not.

Anyway, interesting to watch. :-)

europeforvisitors

12:57 am on Sep 1, 2007 (gmt 0)



You're making some pretty wild assumptions, such as your assumption that average click prices in all sectors will approach one cent. In any case, averages are likely to become less and less meaningful in the months and years ahead, because AdSense product changes (such as placement reports and site-targeted contextual ads) will lead to a multi-tiered system and greater disparities between the haves and the have-nots.

ecce

1:18 am on Sep 1, 2007 (gmt 0)

10+ Year Member



Yub, but I didn't say they will ever reach 1 cent. Probably most publishers will jump ship before that happens, holding up the price because the amount of ad slots decreases. lol. So there are still self-regulating elements, but maybe they are not the most efficient ones.

I am looking forward to those product changes you named to fully blossom, thinking they will have a great effect. Hey, it might not always sound like it, but I love what those guys at Google including Adsense are doing. This is a great system they developed.

It will make for an interesting argument, if those disparities are actually increasing or decreasing growth and income. Heck, it reminds me of that never ending discussion in economics whether a big wealth gap actually increases or decreases growth.

One thing I will always sign: averages will stay meaningful. No matter what.

Tiger98

2:30 am on Sep 1, 2007 (gmt 0)

10+ Year Member



This thread got me thinking about profit maximization, and I came to realize that the way the AdSense system currently works only partially aligns the interests of Google with those of publishers. It comes down to the following fact:

A publisher wishes to maximize total revenue (of all types) for the site as a whole, while Google's auction algorithm acts to maximize AdSense revenue for an individual impression.

A click on a low-paying ad causes the user to leave the site prematurely, resulting in a loss of potential other future revenue for the publisher. Only the publisher, not Google, knows the value represented by a visitor continuing to browse the site instead of leaving via an AdSense click. Google's algorithm is greedy (in the computer science sense, not the monetary sense.) It optimizes only for the current ad impression and cannot figure out what might be more globally optimal. This can be sub-optimal not just for the publisher, but for Google as well. If a user is browsing the site and exits via a low-paying Google ad instead of sticking around to exit later via a more expensive Google ad, then both Google and the publisher have lost money.

It seems to me that allowing the publisher to set a minimum CPC or CPM for AdSense placements would go a long way to make this situation better, and in the long run may actually be better for Google as well. In fact, I believe setting a min-CPM may already be an option for premium AdSense publishers, so I don't think Google is unaware of the potential benefits for publishers.

inactivist

4:51 am on Sep 1, 2007 (gmt 0)

10+ Year Member



This discussion is fascinating, but I just can't imagine Google ever giving up their position of control unless and until they see it as a good business move. I'll leave it up to others to argue whether it is or not.

Seriously, why would G implement this?

(I'd love to have this level of control, as it would put *me* in control of the price of my own real estate... but I'm not holding my breath, as EFV and others have made it very clear on many occasions: Google ain't going to give you this kind of control without a damn good reason - damn good from Google's perspective, not yours.)

zett

7:40 am on Sep 1, 2007 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



inactivist:

Google needs to strangle publishers because they do not have any content of their own. But in the end it will not help them. The second a quality ad network shows up, the Google bubble will burst anyway.

Imagine this -from today's viewpoint highly hypothetical- scenario:

1) A high quality ad network appears on the scene.
2) This ad network attracts most quality publishers and quality advertisers.
3) Now Google has more and more mediocre sites. People will recognize this and not click on Google ads any longer. ("You just get more ads, you know.")
4) In reaction, Google needs to cut off traffic to the sites that have left Adsense. So, as a last weapon, Google might change their search algo, removing/punishing sites that belong to the new quality ad network.
5) As a result, the Google SERPs lose quality and are dominated by (Adsense) pages with thin content.
6) At the same time, the quality ad network teams up with a competitor of Google in order to deliver quality SERPs. It's easy, because the ad network has all the quality sites anyway. Or: the quality ad network develops a search engine of their own.
7) More and more advertisers turn to the new ad network and to the new search leader to place their ads on quality sites only. By now, everyone has figured out that Google does not stand for "quality".

Fast forward to August 2019: "Dad, I found a reference on 'Google' on an old web site. What exactly is a 'Google'?" - "Well, son, that was a web site that used to help people finding other web sites, pretty much like live.com today. But it's long gone, they were dropped by the people before you were born. Never mind."

;-)

Genuine1

11:50 am on Sep 1, 2007 (gmt 0)

10+ Year Member



But I have complete sites and sometimes seperate pages that pay well over 1 dollar a click. They earn maybe a quarter of my total income.

The sites with much bigger traffic and many times more clicks maybe paying 2 to 10 cents a click.

So how could a minimum click work?

I would want to choose a say 25cent lower limit to protect the sites that average a dollar. But now most of my other sites will only get PSAs? Makes no sense.

wyweb

12:56 pm on Sep 1, 2007 (gmt 0)



Good point Genuine1. I'm basically in the same position. Any minimum click price would have to be implemented on a site by site basis or I wouldn't even be able to use it. Obviously I'm not alone here.

ecce

1:06 pm on Sep 1, 2007 (gmt 0)

10+ Year Member



So how could a minimum click work?

One word: channels. Define min EPC per channel.
And since channels already exist, it shouldn't be hard for Google to implement.

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