The assumption that is wrong here is that what you get for a cpc/cpm is somehow relevant to what your visitors want. There is NO corrlelation. You tie "quality" to price. There is NO relationship; We aren't talking about used cars here.
You have to accept that in an ad block of say 160x600, for example, where five ads show, that the top ad is not always the most relevant to the visitor. If your website page is about fitting kid's shoes, and the top, high paying ad is for girl's pageant shoes, how will that lure a click from somebody looking for dress shoes for a boy, which may be the fifth ad on a page where the topic is fitting children's dress shoes properly? If the fifth ad is paying only $0.10cpc and the first ad is paying a buck, you cost yourself a dime. Now multiple that by 10,000 times in a year and you just lost $1000.00 because you thought you deserved more cpc, blocking out the low bids. It's irrational and an anti-profits business model.
Any wholesaler can tell you that they make a bundle pushing out millions of products at a cheap price every year. In fact, they make more than the retailers they sell to do. Why? Because when you make a buck profit on a million products sold to 1,000 retailers, you earned a cool million bucks, processing only 1,000 orders (less than 3 orders a day of 1,000 piece lots pack in 10 boxes each). The retailer is trying to take a product he bought for $5.00 and sell it for $10.00. If he sells 10,000 products a year, one to each of 10,000 customers (27 a day), he made only $50,000. He packed and shipped roughly the same number of boxes each day as the wholesaler did. In order to make a million, he has to bust his hump, sell 200,000 products(547 packages shipped a day). I figure that out early in my retailer career and switched to wholesale. Try as I might, I could never convince anyone that wholesalers made more money with less work than retailers. Though my bottom line clearly demonstrated it. I don't wholesale any more, because I managed to evolve to the next higher level of commerce.
So, why would you want to 'retail' clicks instead of 'wholesale' them? The problem here is not what you get per click, it's how many impressions you get. That has nothing to do with Adwords or Adsense, and everything to do with you and your ability to market your website(s). People are blaming Adsense for their own short comings here. If you don't take 100% responsibility for your earnings, you'll never succeed. If you're not making enough money, it's your fault, fix the problem.
Now consider this. In an ad block on one of my pages, I allowed both image and text ads. When I did that an Adwords image ad was taking the entire slot. Minutes later after removing the images ads, allowing text only, an Adwords text ad was #5 in the block. I've seen this numerous times before, not just with the Adwords ad campaign.
Since cpm ads compete on an equal playing field with cpc ads, did I shoot myself in the foot by blocking the image ad, which may have been a cpm ad, actually paying more than the text ad? Using the theory that higher cpc/cpm ads are better, I did.
Though I don't think so. My thoughts on the process are that it's better to give my visitors 5 options in an ad block, than one. The range of relevant ads seen in a single ad block can vary widely and still be highly targeted. I get 5 shots at a click, period. Forget smart pricing. Focus on the ctr and impressions, the rest will take care of itself.
My reasoning is supported by the wild card in play, interest based ads. Do I really want an auto dealer image ad taking the entire ad block simply because yesterday the visitor searched for an auto dealer's phone number at google.com to schedule an oil change, which they did, on my page about children's shoes? What are the odds they will click on that ad today? Virtually nil. So, by having five text ads in a block, even saying one is paying only $0.10cpc, I have a decent shot at the ad that visitor really wants to see being shown and clicked. If every ten visitors to my page see an ad that interests them and click on it, I'm in the money. That 1 in 10 ratio is critical, which is why I have 10 TEXT ads on each page. They get variety, choices, more ads to peak their interest.
I just gave you the auto dealer ad scenario because that happened to me, only two days ago. Another time, for weeks I saw an ad for hitches for my Hummer, long after it was purchased and installed. Every time I saw that image ad on a website, those site publishers potentially lost revenue, because there was NO way I was going to click that ad. Sadly, they all had enabled image ads, so I never got the five text ad option to choose from. Ironically, when I was searching at Google.com for a supplier for the hitch, that ad never showed up.
I consistently have an ecpm/rpm that is high double digit whole numbers for my account. I typically have a varying daily ctr of 7-12% on several million impressions a year. Do the math. I'm doing something right and that is how I manage the ads.
Just my thoughts.
