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This past week I have been at the second largest biennial global trade exhibition within our industry in Germany and I had an EYEOPENER!
Visitors down by at least half from the usual 60,000+
Exhibitors down by half from the usual 1,300+
Normally 50% of the visitors are foreign however I saw only 3 other Brits and not one American! People who normally visit for 2-3 days staying in local hotels were paying, literally, flying visits...arriving on early flights and leaving on late ones. Hotels which are usually booked months in advance were offering rooms the same day.
So what's the point of this post?
Turning to AdSense and checking my site ads in Belgium, Netherlands and Germany and I was surprised by the lack of inventory. Sure the ads were trade applicable but nothing like they used to be...no wonder my European clicks and EPC are down, very generic. If the USA/Canada etc are the same, well, enough said.
I knew global trade was down however seeing the effect this close-up possibly explains just why my CTR has been falling in many countries. I realise it's not the total explanation however it's a pretty good start for mine and possibly many others.
I know I have been vociferous about G and falling CTRs therefore a new sign will be going up in the office shortly before complaining akin to "Remember Germany!"
At the end of September we have our largest global trade fair...that'll be interesting!
1. International traffic grows at a much faster rate than domestic, or even international traffic grows and domestic declines - this makes it worse. Ad rates in the US are much stronger than the rest of the world and this causes CPCs and CPMs to look like they have gone down more.
2. Traffic patterns change. In certain sites we see that low quality content pages have seen dramatic drops in traffic. However, these low quality pages are often the best monetizing. This is sort of like there is nothing useful to click on, so the ad is my best option to the user. Often, when traffic shifts to higher quality content, the CTRs go down. Some people are just creating better quality content to compete in the SERPs and others are losing traffic to their low quality, but high performing pages. Both of these things can cause adsense earning to decrease.
1. ... Ad rates in the US are much stronger than the rest of the world and this causes CPCs and CPMs to look like they have gone down more.
Most of my traffic comes from the States, yet my earnings drastically dipped from the 1st April, and have only had 3-4 days since where I have reached my baseline figure - a figure that I used to beat easily every day.
2. ... In certain sites we see that low quality content pages have seen dramatic drops in traffic. However, these low quality pages are often the best monetizing. This is sort of like there is nothing useful to click on, so the ad is my best option to the user. Often, when traffic shifts to higher quality content, the CTRs go down. Some people are just creating better quality content to compete in the SERPs and others are losing traffic to their low quality, but high performing pages. Both of these things can cause adsense earning to decrease.
Again, I disagree.
I have high quality pages. All rank high on page 1 of google etc. Still doesn't explain why earnings dropped on the 1st of April - and the same has happened to others here for the same date.
Can it get worse ? Sure it can. Soon we will be paying google for the privilege of having their adverts on our sites.
From another perspective, I am currently AdWords advertiser in the leisure industry and where for specific budgets, keywords and ads I could only get tens of impressions per day just one year ago, I now easily get thousands of impressions. For many keywords I am currently the only advertiser on Google search. I have stopped context advertising on many campaigns, just because advertising on Google search already burns my full daily budget. (Sorry AdSensers)
CTR and CPC on the content network has always been low in my niche because most AdSense publishers matching my campaigns were forums and aggregate news sites. I have stopped most content network advertising now because of better ROI on the search network.
Disclaimer: my niche may not be fully representative of what is happening on AdSense in general because it is in an industry and geographical location which was first hit severely by the credit crisis, then the low oil prices and finally by the global recession.
Yes, CPC is down, but also CTR is considerably down as less people are interested in spending money in my niche.
I've seen average EPC climb to record or near-record levels since the economic crisis began, and I've got a topic where people are spending their discretionary income. If CTR were better, I'd be the happiest camper on the campground.
Why the higher EPC? Is it because advertisers on my topic and subtopics are competing desperately for leads, or is it because improved placement tools and filters make advertisers more confident of where and how they're allocating their dollars on the content network?
Why the higher EPC?
I've been wondering exactly the same myself as my EPC has increased this year. It would definitely seem to be my UK ads that are performing the best and paying the highest EPCs. My US ads seem pretty well-targetted however I get the feeling of no sales rather than slow sales!
Incidentally the Googlock preview tool does not seem to work now, I can only preview in wmtips, are there any others anyone can recommend?
I would think that there would be some niches that would do OK. To state the obvious, you need advertisors and traffic. I surely wish I could figure out what those were.
But, going back to the possibility of hyperinflation. ... That scares me. My primary income is not adsense. But I was hoping to build that end up significantly. To detail a bit more, a Zimbabwe style hyperinflation is something like 65,000 percent per day. So, ... if you earn $1000 dollars at the end of the month, that $1000 dollars would be worth something like .03 cents by the time it got deposited into your account. Spending 3.some trillion dollars is the type of thing that can lead to this.
I don't think you will see a lot of recently unemployed people setting up sites and flooding the adsense publishers market. The barriers to entry were nil a couple of years ago. Today they are a little higher in terms of the knowledge required to get visibility for a site, the software, legal issues, terms of service etc. You can no longer put up a template site with scraped content and adwords and make a billion dollars.
Oh, back to the hyperinflation. ... or even the 20% or so during the carter years... I would not be surprised if google and the affiliate programs slowed down their payout if inflation rises quickly. With interest rates low, the incentive to hold onto the money is lower. When interest rates are higher, I would think that they would have more incentive to hold onto the money, even for a couple of extra days.
(BTW - Economics isn't my strong point so any critique or corrections are welcome)
My point is that there are other causes for AdSense revenue declines than the economy, but you're right in that if ad coverage decreases - relevancy of ads decreases, CTR decreases, and CPCs decrease. All of these contribute to lower earnings.
At the same time the economy and ad market are struggling, there are areas where Google is trying to find publishers where there is considerable unspent ad budgets with premium CPMs.
Then with the interest based ads, they also changed other parts of the system:
1) they reduced the click area by 80%
2) they now blame you if the click is unproductive(which doesn't make any sense)
3) since google is everywhere with adsense and analytics, they now monitor the time you spend on sites after the click...which also doesn't make any sense to blame on the publisher.
4) if you take ecpm divide by 1000 and multiply by pages you get click values that are not multiples of 2 or any round number(i wrote a program to check most probabilities from 0.01 to 100%, closest match is 20% revenue share for a whole round click value).
We're lacking transparency here, we should have the right to know if we're being paid 1 or 50% of a click.
if you take ecpm divide by 1000 and multiply by pages you get click values that are not multiples of 2 or any round number
Every click is a single click with its own price. You aren't paid round numbers because the advertisers aren't charged round numbers. Some advertisers pay in euro (like I do) and exchange rates apply. Furthermore many clicks I get as an advertiser in the content network are discounted by Google by their algorithm which calculates the chance that that click will have a positive ROI. Which means I do not pay the full bid price for the associated keywords.
You should open an AdWords account and start some advertising campaigns to get an idea how the side where the AdSense money is coming from is working. It may give you a better view of the total process.
You aren't paid round numbers because the advertisers aren't charged round numbers.
I'm talking about thousandths of pennies. You are charged a round ammount of pennies, but when you do what I just told you to do(pageviews * CPM/1000) you can see the average value to the thousandths of a penny which is the REAL click value.
Some advertisers pay in euro (like I do) and exchange rates apply.
Yes, true. But statistical analysis doesn't require precise single clicks, if you take a LARGE ammount of clicks and a LARGE ammount of data you can reach a conclusion approximately what your revenue share is by the ammount that reaches a round number the most.
Furthermore many clicks I get as an advertiser in the content network are discounted by Google by their algorithm which calculates the chance that that click will have a positive ROI.
THERE you go! THAT is what's wrong. Google IS discounting all clicks further these days. That's the whole point. You're getting paid less because the algorithm that calculates publisher's worth is diminishing value for publishers to further increase value for adwords customers.
[edited by: eelixduppy at 2:54 pm (utc) on May 30, 2009]
[edit reason] fixed formatting [/edit]
THERE you go! THAT is what's wrong. Google IS discounting all clicks further these days.
This is not something from these days, but has been introduced as smart pricing by Google on April 1st 2004. It is the reason many AdWords advertisers stay in the content network, even though the ROI is worse than in the search network.
My concern is with the HIGH price some large companies are bidding for their clicks. Its almost as if they are dropping tv and print and joining the Google / Facebook craze and bidding anything to get a click!
Well for a small business like mine (with a low value product) I cannot and will not pay high prices just for a click, let alone a sale !
And yes Ebook salesmen suck !
And people with Free offers and $1.00 this or that !
[edited by: Digmen1 at 5:15 am (utc) on June 2, 2009]
I find it ironic that in the whole thread only one person talked of hyperinflation - and was ignored?
Maybe because political discussions are actively discouraged here
While the threat of hyperinflation might be caused by incompetent (or worse) politicians, it is an economic possibility. If you look at other countries that went that route, the US is heading there. The OMB numbers diverge widely, and are LOTS less optomistic, than the Whitehouse numbers.
Keep in mind that printing enough unbacked money will lead to Weimar Republic, Argentina 2000 and Zimbabwe type hyperinflation. I think zimbabwe is something like 250 million percent per year as I mentioned previously.
Let's look at the impact of a mere fraction of that, 120% inflation or 10% per month roughly.
You get a $1 click on day 1 of the month. By the time you get the money the following month, that $1 is only worth something like 87 cents.
Now, if inflation goes up to 1200%, again, a mere fraction of Zimbabwe's rate, you have 100$ per month. IOW, that dollar click on day one will only purchase a single digit fraction of what it would purchase when you earned it.
A lot would depend if the bid prices went up accordingly. IOW, would people be bidding $100 at the end of the month for the same click they were willing to bid $1 on a month earlier.
The problem with this type of economy is that the human mind doesn't wrap around the concept of exponentional growth easily. ie the 1, 2, 4, 8, 16 type of growth instead of a lineal growth pattern .. 1,2,3,4,5 ...
Exponential growth is what makes virus epidemics frightenting, it is also the basis for nuclear fission.. As smart as the googleplex folks are, (and they ARE fantastic statisticians) I have to wonder if their algorithms are robust enough to handle hyperinflation or if they could be adjusted quickly enough to respond. Remember when gas pumps faced the dollar a gallon kerfluffle when the pumps only went to .99 9/10 per gallon?
What I was trying to point out in my original post is that we could end up in an environment of very rapidly changing conditions. Imagine if you had predicted that the US Dow would lose about half it's value in a couple of months? People would have said you were crazy.
You also need to be aware of exactly what inflation means. (Or massive deflation for that matter). In the case of inflation you CANNOT look at the absolute dollar amounts. Take the following statement as an example
"WOW - I only earned $1000 last July. I earned $2000 this July... WOW"
OK, I'm not the best at quick math, but in TODAY's environment, that would be Fantastic. However, it all dependant on the inflation rate. A rate of 100 percent per year would mean that you earned more dollars, but actually earned the same purchasing power. IOW, you are no better off.
At a 200% rate, it would actually mean that you earned less purchasing power than the previous year.
We are living the old Chinese course of "may you live in interesting times"
The global business environment is going to change rapidly and, I think, unpredicatbly.
Who would have predicted some of the things that happened recently
- Gov't takeover of GM
- The Hummer Brand being purchased by a Chinese machinery compang
- Car dealerships closing rapidly.
All I'm trying to say is that if you are in one niche, you want to take a close look at that niche in terms of it's viability and keep looking at it and evaluating the environment. For example, suppose your niche was auto dealers. All of a sudden, you find that something like a thousand dealerships are out of business. Most likely your revenue stream just went down the drain.
I'm 50 and I remember the 20% inflation rates of the late 1970's in the US. Even that rate made business a lot different than when the inflation rates dropped to 3 or 4 percent.
To finish with a nautical phrase "Keep a weather eye out mates"
Down turn confirmed here in USA. May was lowest Adsense earnings since site was fully running in 2004.
Phone calls for software consulting are 1/2 of last year.
I'm seeing pretty much the same thing (US). New business is getting tough to find. There are some niches that are doing OK while other sectors have gone from boom to bust.
I almost always err on the pessimistic side. Thankfully the dow has leveled off a bit. HOwever, that is still only about half of what it was back in November 08.
My adsense gross is actually a bit up BUT that is the result of fixing some really boneheaded mistakes on some of my sites and adding some additional sites. I don't have any way to actually adjust that out without using up a lot of remaining brain cells.
Ad revenues dropped 5% in the first quarter of 2009, according to figures from the Interactive Advertising Bureau (IAB) and analyst firm PwC.
Net ad spend in the US was £5.5bn (£3.46bn) by the end of March, down from $6.1bn at the close of 2008.