Drop in value of £ against $

[nomis5]

I can't get my head round the pros and cons of this as far as Adsense earnings are concerned.

When Adsense accepts money for placing ads on UK websites, does Adsense accept the payment in £ or does the UK advertiser need to convert the £ cost to $ and then pay Adsense? Or does it go to Dublin which is a Euro based city? Or does it stay in a bank account in £ which is then used to pay the publisher their cut?

Does anyone know if there Is there a clear winner and / or loser?

[keyplyr]

I think you're presenting two questions.

I have no opinion concerning the ongoing valuation flux between currencies...

However, all transactions concerning your account are done in the currency where your account is registered.

[topr8]

as keyplyr says ... in the uk transactions are done in pounds.

as far as earnings are concerned, if you are in the uk and you have websites that serve usa visitors (and advertisers) then a weaker pound means you will earn more in pounds .... and vice-versa.

however, the pound is not going to collapse, and there is constant up and down fluctuation over time. (with the general trend over the last 100 years of the dollar gaining value against the pound)

[Peter_S]

topr8 said it right.

An advertiser pays in its own currency, and Google converts into the publisher's currency.

So, if a UK based advertiser pays £1, you'll get £0.68 no matter the evolution of the British pounds.

If a US based advertiser pays $1, you'll get $0.68 which will turn to be (roughly*) £0.53 nowadays. Whereas, in 2014, this would have been £0.39.

As for the evolution of the British pounds toward the US dollar over the last 100 years : [assets.bwbx.io...]

And over the last 10 years : [xe.com...]

Now, the evolution of the British pounds, can affect the British economy, which can make UK advertisers to lower their budget, but that's another story.

* roughly, because Google certainly doesn't apply the exact currency rate exchange.

[graeme_p]

Peter, you mean devaluation, rather than evolution?

The economic effects are complicated and not what was originally asked. Suffice it to say some businesses will do better, and some worse, so it depends who your advertisers are and what your audience is.

[Peter_S]

Peter, you mean devaluation, rather than evolution?

I was just using a "generic" word for "change" (up/down). Sorry if my word was not accurate.

[nomis5]

Thanks for your thoughts

[IanCP]

FWIW - All my AdSense reporting, transactions etc. have been in $A for a great many years now. As for the relationship between the advertiser and Google? I neither know, nor care.

[Rasputin]

I am based in France with reports and payments in Euros, but a significant amount of earnings are from UK and USA.

I do not see changes in CPC from these countries changing directly with changes in exchange rates, and suspect that maybe the exchange rate used is reset occasionally, perhaps every three months ( I saw a significant change around 1 April), with other adjustments taking at some unknown time.

The pound fell after the election this week and our UK CPC is slightly higher since if anything, not reduced.

It would be useful if all was more clear - for example, are those reporting a steady decline in income over time based in countries with a stronger currency but earning in “weak currencies'...

[NickMNS]

@Rasputin I can only speak from my own experience but the variability in terms CPC is order of magnitudes greater in terms than FX fluctuations. I would be hard pressed to attribute changes in daily CPC to anything other than normal randomness.

The pound fell after the election this week and our UK CPC is slightly higher since if anything, not reduced.

Why do you think it should be reduced?
If the value of the pound fell then persons bidding in pounds must bid more pounds for the same asset. If gold is worth USD 1200 an ounce and the pound is worth 1.5 USD then GBP 800 buys you one ounce of gold. If the value of the pound drops against the dollar to say 1.25 USD then the ounce of gold will cost GBP 960. Gold has changed in value, only the pound.

[Rasputin]

You are assuming advertisers are paying in one currency (gbp) for something valued in another currency (usd). But i don't think that is the case for a uk advertiser, paying gbp for an advert.

Example, an advertiser on my site based in UK and paying in pounds...assume CPC of 0.50 gbp.
1 year ago, 1 gbp = 1.4 euros so I would have seen euro revenue of 0.70
Now, 1 gbp = 1.12 euros so I would see euro revenue of 0.56
So my revenues on UK based income will have fallen 20% in that time. The advertiser will have seen no change at all, of course.

In the short term you are right about magnitudes, but generally my cpc and rpm are consistent over months and years (not typical of adsense users, I understand), and I would not expect to see a 20 % fall in rpm over the course of a year, so think currency rates are quite important.

[NickMNS]

You are assuming advertisers are paying in one currency (gbp) for something valued in another currency (usd). But i don't think that is the case for a uk advertiser, paying gbp for an advert.

My argument is that the currency in which Adsense denominates its bid prices is completely irrelevant. The ad spaces has value and that value is not directly influenced by currency fluctuations. So a buyer may need to adjust the amount in his/her home currency to be able to purchase the ad space.

Now if everyone bidding on the ad space is doing so in one currency and the value of the currency falls, then the value of the ad space will likely fall with the currency. The publisher in this case will take home less. The opposite is true as well, if the currency value goes up, bidders will have more purchasing power thus competition will go up and push up the value of the ad space. But this has more to do with general economic conditions then it does with the actual currency fluctuations.

Now if there is a diverse set of bidders bidding in different currencies, then the bidders bidding in devalued currency will need to bid more if they wish their ad to appear, and bidders in revalued currencies will effectively bid less, but will likely see more competition as the price in their currency drops and more buyers move into the market. So assuming demand for the ad space does not change the value of the ad space should not change either.

So my revenues on UK based income will have fallen 20% in that time. The advertiser will have seen no change at all, of course.

What happened to the 20%? If your income falls by 20% then advertisers will have paid 20% less.

[tangor]

the product, whatever it may be, has a specific value (even if it is bidding price).

Currency valuation speaks merely to how much of one currency will buy of the same product as another currency.

The valuation is not between price and product, but currency against currency and what it takes to meet the value of the product offered.