Forum Moderators: martinibuster
Please list your theory, speculation, or wild idea why you think AdSense earnings were higher before than now?
Here is one theory. As I recall, there were thousands of dollars worth of AdWords coupons flooding Internet conferences. Those AdSensers who have not attended conferences several years ago won't know what I'm talking about so before you comment on this theory, hear me out. (Here is a recent example [google.com] of an AdWords promotion that would inject Google money into the system, though probably not on the same scale as in the beginning).
Every conference I went to there were thousands of dollars worth of coupons available from denominations of $250 on down (as I recall). I think there may have been $500 coupons available, too. There were so many coupons floating around that some people were selling them, exchanging them between themselves, and opening multiple AdWords accounts to take advantage of them.
Could part of the higher payouts have to do with there being less publishers in the system? Is it possible that another contributing factor in those early days of higher ECPM was the flood of AdWords coupons?
[edited by: martinibuster at 8:27 am (utc) on May 2, 2009]
The Google money machine still works. I just don't think it works as efficiently as it once did, and that many of the players are finding that out. It also seems that Google is searching for the lowest common denominator to keep income generating (for them) while keeping the masses of potential revenue seekers satisfied with...lowest income possible. When dealing with several millions of players that makes sense. Those that can pay more to play get a shot at high stakes returns against investment. All the rest get something to make them think they have a chance.
Then again, I don't use Google for my on line sales. The niche focused is too small, too high priced, and word of mouth works better. There's also no middleman so ROI is spot on!
- Slow down in new fresh to the net ad clicking users.
- Ad blindness for veteran net surfers.
- Less MFA has to affect a segment of publishers.
- Landing page rules turning off some advertisers.
- AdWords complexity ,, ,, ,,
- Doubleclick acquisition injecting more publishers than advertiser leads.
- Doubleclick injection into the system leading to AdSense flirting with ad blocking.
- SmartPricing algo becoming more aggressive to balance supply with demand and not just conversion.
- Google dropping the ball on code quality due to lack of competition for too many years leading to data loss that is later artificially unfairly balanced out.
- More advertiser control positively affecting few and devastating the rest.
Some of you folks have been running with G since inception. Did pretty well for a time. Now not so good and you have changed nothing. So what changed? From my perspective the game changed and the players aren't quite sure of the new rules.
* Google silently taking a bigger portion of publisher's earnings to meet the market expectations.
There is no reason to believe the cause is ad blindness (although it certainly plays some minor role), because there have been at least two occasions where far too many advertisers saw an "inexplicable" and abrupt drop by ~50% during a very short period (a few days).
Advertisers change their budgets over time.
I'm the perfect example. We use to spend $1000/month just for branding on Adwords. Now we spend $50/month due to cutbacks.
I serve mostly local markets; if anything, those have *more* advertisers, as Google refines its geo targeted search and advertising. I have the same and new advertisers, and my EPCs are through the roof.
No, what's fallen off so precipitously for me is CTR. And I'm *trying* to think of a way to blame Google for that, but I can't, because there's no reasonable scenario in which a disastrous CTR does Google any good. Also I've seen the same thing in other ad networks, affiliate ads, etc. What drops off is CTR.
So I'm attributing it mainly to ad blindness and the economy, till a better idea turns up.
I guess that it probably have to do with quality of your site's and number of advertisers that would like to advertiser right on your site and pay extra for space.
My philosophy was always to make quality site where people will come back and then with good SEO campaign you can not be wrong.
a lot of weird things came in to play since the good days (such as smart pricing). The drop in 2009 will surely be largely down to the recession, and my CTR has halved over the last few months, and more recently EPC has taken a battering.
I'd like to put it down to smart reporting. Moved a massive rectangle from the heat spot at the top down to the footer. Absolutely no difference in any stats - CTR, eCPM, CPC. Could be a co-incidence, but experimenting with size and position doesn't seem to give any sensible results these days.
1. Fewer publishers were in the system.
2. Changes to the SmartPricing algo have decrease some publisher earnings.
3. Ad quality restrictions and landing page restrictions have disrupted some advertisers.
4. The world economy was stronger than it is now.
5. Ad blindness had not begun, but it has now.
1) When AdSense launched, advertisers were forced to buy clicks from the content network by default. What's more, all clicks were sold at full retail--there was no "smart pricing" to adjust the nominal CPC based on anticipated conversion for the advertiser.
2) Over time, Google introduced smart pricing, separate bidding for the search and content networks, placement (site) targeting, domain filters, and other tools that let advertisers spend their money more selectively than they did in the early days. Google also tightened up its definition of a "valid click," which undoubtedly had at least some effect on CTR in many cases. The net effect of these changes was to bring the cost of AdSense ads more into line with its actual value to advertisers.
3) The number of publishers using AdSense ads has probably grown hugely over the years, and in this era of automated keyword- and SEO-driven sites that spit out pages faster than a machine gun, it's a safe bet that the number of Web pages with AdSense ads has grown faster than advertisers' expenditures have grown, thereby cutting the revenue pie into smaller and smaller slices (on average, if not for every individual publisher).
4) Another factor may be the growth of Web display advertising, vertical ad networks, and media-buying tools. On my own site, display advertising has become much more important than AdSense is, and nearly all of the ads that I see on my site from big corporate advertisers are display ads from my vertical ad network, not AdSense ads. If you doubt the impact of vertical ad networks, read this ClickZ article [clickz.com] from April 30 (taking note of the fact that, in the last year, the U.S. audience for vertical ad networks has grown from 40.3 million to 109.8 million unique visitors).
Side note: Over the past 12 to 18 months, I've seen earnings per click return to the levels of 2003 and early 2004. CTR, on the other hand, has declined, bringing down eCPM. I attribute this to a combination of factors, including ad location (AdSense no longer gets "pride of place" on my pages), Google's stricter definition of a "valid click," and--over the past year or so--a worldwide recession that has discouraged casual clicking.
[edited by: signor_john at 3:04 pm (utc) on May 2, 2009]
[edited by: Play_Bach at 3:09 pm (utc) on May 2, 2009]
Back in 2003 when I started, in my niche there were only about 6-7 of us. Now, I couldn't even tell you, there appear to be hundreds.
To combat that a LITTLE, I have four online shops, plus numerous informational websites. I am an expert in my niche.
However, advertisers only have so much money to spend and with all the competition that we have, it will only stretch so far. So, those of us who used to make more money than we do with less impressions, less work, and less sites, it has to be mostly due to more publishers.
My two cents worth and my personal experience.
More publishers
Some advertisers becoming better at managing their AdWords costs.
Other advertisers dropping out as AdWords has become more complicated. (As an aside, I'm getting many more contacts from businesses about buying ad space on my site.)
More publishers
Some advertisers becoming better at managing their AdWords costs.
Add to this an element of ad blindness which is reflected in slightly lower CTR.
All these 3 factors combined make a BIG drop in revenue.
This is worrisome to me, but I understand. It is very, very hard for many people to get their head around the rapid change we have seen in available cash for spending. I suggest that the economy in the last 12 months is driving a lot of what you might be seeing in terms of money from ads.
Here's a suggestion. Where has most of your traffic been coming from in the US? What states? Pick five or seven.
Now go here,
[google.com...]
and look at the menu on the left and pick those states. Now you have some data. If it's not the economy in your prime area, then you can look at other things.
My humble opinion is that the cause is:* Google silently taking a bigger portion of publisher's earnings to meet the market expectations.
I agree that this is the cause. Since Google keeps their revenue share secret, when times get tough for them, they can simply take more money off the top and pretend that business isn't as bad as it is.
But will they stop when the economy gets better?
I don't think the publisher's share has changed much in the last two years, so we know that the money flowing to publishers is higher than it was two years ago.
If everyone agrees this is true, and they also believe payouts (per click) are lower, then we can reasonalbly conclude that...
The opportunity for clicks (impressions within the system) grew at a faster pace then revenues. Therefore less revenue per click (assuming the CTR remained steady).
Since Google keeps their revenue share secret, when times get tough for them, they can simply take more money off the top and pretend that business isn't as bad as it is.
Google's quarterly earnings reports tell you what percentage of AdSense network revenues were paid out by Google. If Google were "taking a bigger portion of publisher's [sic] earnings to meet the market expectations," we'd be able to see that in the quarterly earnings reports. (And yes, I know that Google doesn't reveal the percentage paid to any individual publisher, but that's beside the point in a discussion of Google's overall revenue share.)
I've tried many experiments with colours and layouts since October but it's pretty pointless as it's virtually impossible to test anything these days as ctr and ecpm are all over the place from one day to the next.
Adsense provided exceptional returns, many people saw this so they entred the market to get their share. That's why revenue has fallen. Now it's falling, some will withdraw and the earnings will go backup again but not to previous levels.
That explains why Adsense / Google is till pulling in increasing retrurns.
One question puzzles though. Some analysts refer to Google's lion share of income coming from paid ads in their SERPS. Has any one analysed if that income is decreasing or increasing. If its increasing significantly then the Adsense pot may be getting smaller but no effect on Google's bottom profit line.
In the early days of AdSense there were fewer publishers, I now compete with many more than I used to for those AdSense clicks. Fewer publishers meant more money.
Also back in the day Google didn't have their local search they way it is now so your site showed up by default worldwide and you got more clicks, then the local defaults kicked in, gone.
Advertisers realizing they had been garbitraged pulled out of the content network.
Google killed garbitrage, profits dipped further.
AdSense targeting changes over time may or may not have altered which ads your site displayed compared to earlier years.
Thanks to Google Cache, Google Maps and other services the customer stays on Google longer, possibly sees the same ads on Google first, and perhpaps doesn't visit your site in the first place, can you say NOARCHIVE?
Blah blah etc.
[edited by: incrediBILL at 9:04 pm (utc) on May 2, 2009]
Back in 2003 when I started, in my niche there were only about 6-7 of us [publishers]. Now, I couldn't even tell you, there appear to be hundreds.
And yes, I know that Google doesn't reveal the percentage paid to any individual publisher
