Over time, CPC has dropped a LOT

[csdude55]

Sometime around 2013 I began using ad networks like Barons Media, MonetizeMore, and Sulvo, so it's hard to compare apples to apples. But July 2020 I exclusively used Adsense again, and the last July that I used Adsense exclusively was 2012.

Even though I have about the same number of users, Adsense shows that impressions are WAY down... 7.8 million to 2.2 million :-( Analytics shows that I have a lot of people using ad blockers now (a problem of its own), but I also have a lot of mobile users (who only see 1-2 ads per page, where a desktop user sees 5-6 per page). I also began blocking non-US IP addresses at the firewall.

Interestingly, though, I had 15% more clicks in 2020 than in 2012.

But in spite of having more clicks, the average CPC is way, way down. I don't know if I can give real numbers here, but I can say that the average CPC for July 2012 was 235% more than the average CPC for 2020.

Thinking this could be COVID related, I looked at January 2012 vs. 2020, and had roughly the same results.

I can understand that Adsense has improved a lot since then, eliminating false impressions and clicks, etc. But why would the CPC be so far down if the number of clicks are up (and presumably, more qualified clicks)? Is it a universal problem of fewer businesses using Adsense, or an issue with my website that I can fix?

[Pixby8]

There are likely a confluence of factors that contribute to this. However, the most likely explanation is that 8 years ago there were, far and away, fewer publishers. I'm sure the number of advertisers has risen dramatically since then, too. But, not at a rate equal to publishers. Not anywhere close. And, since all advertisers work within a budget, the amount of money going around is finite. This is why you will often see much higher CPC earlier on in the day, versus later in the day. As advertisers max out at the daily budget they've set, the ads stop showing, there's less competition, and therefore lower CPC across the entire ecosystem.

Unless your site has exploded in popularity since 2012 by an order of magnitude, your impressions should be way, way down from 2012. Back then, Adsense was not as adept at filtering bot traffic as it is now. So, you're likely not getting fewer real impressions today than you did back then. I mean, maybe. It's difficult to tell. But, my guess would be that's not the case.

Covid has forced many to stay home more than usual, which has lead to an increase, not a decrease, of online advertising interaction.

That said, my CPC back in 2014 (when I started) was under 10 cents per click. Today it is over $2 per click. It varies dramatically depending on your niche, site design, how many ads you have on each page (as those spots compete against each other, keep in mind).

[NickMNS]

This is why you will often see much higher CPC earlier on in the day, versus later in the day. As advertisers max out at the daily budget they've set, the ads stop showing, there's less competition, and therefore lower CPC across the entire ecosystem.

This is incorrect, the reason one sees higher RPM earlier in the day has to do with how the numbers are reported. Daily numbers are not truly daily, as they do not account for 24 hours except for at 11:59:59. The daily numbers are based on a ratio where the denominator increases over the course of the day. At 12:01 the daily number is a measure over 1 minute and 12:02, 2 minutes and 1:00am it is over 1 hour, etc... up to the end of the day where finally it coincides with 1 day.

Note I use time for simplicity (standardized measure), but it is actually impressions or in this case (CPC) clicks.

So if you have your first click at 12:01am for 10$ your CPC will be 10/1 or $10 CPC, if your next click comes at 12:02am and is for $1 your CPC is then $11/2 or $5.50 and thus as the day progresses more clicks accumulate and the denominator grows resulting in a lower CPC, eventually the CPC will converge to a value close to its average value. The opposite can also be true, where you start the day with a few very low click values. But, given the skewed nature of distribution of click prices, the impact of low prices is more muted. Compare a difference of $0.01 to say $0.50 (some arbitrary average value of click price) which gives a range of 49 cents as compared to a high value click of say $3 where the difference is 6x.

This same impact is seen in all the daily measure including RPM and CTR.

The bottom line is don't use the "daily" figure for comparison until the day is completed, because the daily figure is an in progress and changing measure.


I agree with the general principal of:

8 years ago there were, far and away, fewer publishers

But I don't think it is a number of publishers per se, ultimately I doubt Adsense really cares about which publisher is serving the ad. What matters is that there are more pages, more impressions available. I think that this is an important distinction, because simply publishing content does not guarantee you impressions. So competition doesn't really occur at the level of pages created by the publisher but at the Google SERPs level, or where ever you get your traffic from.

In addition to more publisher, and more concerning in my view, is that there are also more channels to advertise on, for example, social media or directly in the Google's SERPs. Now take the first point, if you are competing at the SERPs, Google can skim the clicks before you the publisher ever see the user. If I were an advertiser, I would try to get my user at the top of the food chain, instead of waiting for the user to clicks through many pages in the hope that maybe my ad is seen.

So as publishers not only is there more competition, we are excluded from the high value ad spend that all goes directly into Google's pocket.

What has Google done more than anything else in the past 8 years? Increase the number of ads it shows it's users in the SERPs. Think, knowledge graph, video/image carousel, people also asked, etc.. each of these leads to another Google page with yet more ads to distract the user. If the user even gets to your page, they have already clicked on ads.

@CSdude55
From my description the above, I conclude that you should probably focus on trying to draw your users into your site directly as much as possible.

[Pixby8]

Nick, I already understood how CPC pricing can seem to be more skewed early on in the day. While your mathematical explanation is correct, that doesn't change the fact that, as the day progresses, CPC will almost always fall (no matter how skewed it seems in real time), because as certain advertisers max out daily budgets, and are removed from competition, the CPC naturally decreases across the board. Take it from someone who has both used Adsense as a publisher for a decade now, as well as purchased advertising on Google Ads, this is the case. It works the same way for advertisers and publishers. When I pay for ads, the CPC I pay lowers throughout the day, and is at its lowest near the end of the day (or when my budget maxes out).
Now, my point in saying this is simply to establish that the amount of revenue is FINITE in the ecosystem, because nearly all advertisers work within budgets. So, if you increase the number of publishers showing ads over time, yet the amount of advertising doesn't keep pace, this will obviously reduce the CPC a specific publisher is likely to see over time. There are large variances, of course, across niches. But, generally, this is the case.
In other words, Google saying it is more concerned about content these days isn't the only motivation regarding them being so picky about approving websites. They're able to be so selective because they have a glut of publishers already, and not enough advertising. If it were the other way around, Google would be approving every publisher who even came close to offering something original.
A final thing to consider is that the vast majority of advertisers are no longer setting a specific CPC max they will pay. Instead, they use a selection that allows Google's algorithms to determine when a click from a specific site might be more high value to the advertiser (lead to conversion), than another source, and raise the CPC dramatically because that advertising slot is of high value. So, you can two websites, in the same niche, with the same website design, offering pretty much the same content, but because one site is leading to better conversions for the advertisers, its CPC will be a lot higher. Back in 2012, by contrast, each advertiser set a CPC max, and it was pretty much a straight up action of advertisers competing with one another. Today, Google asks advertisers to allow the increasing of the CPC (up to a certain percentage) in instances where Google feels it's going to be a really good click. Thus, it's no longer as straightforward as it once was. And, if your site is getting lower CPC than you're used to, this can be a good factor. In other words, for whatever reason, the traffic your site has is leading to less conversion for the advertisers who display ads on your site, and therefore the clicks are less valuable, so CPC is lowered. Google will always protect advertisers over publishers. Which is understandable.

[NickMNS]

CPC will almost always fall (no matter how skewed it seems in real time), because as certain advertisers max out daily budgets, and are removed from competition, the CPC naturally decreases across the board.

I understand your point, and have was lead to believe the same thing but on a longer time span, quarterly or monthly. While there is a lot of anecdotal evidence to support these claims (on longer time frames) I have yet to see any statistically sounds studies that support it. The biggest problem with your claim is that there is no way to see it. Adsense does not provide any means of measure this effect. There is no way to see the value of individual clicks let alone to match clicks with time of day. If there is a means of doing this that you know of please share as ithat would provide me with a lot of valuable insight. You are stuck using the intra-day CPC numbers that are biased as described in my post above and there is no overcoming this bias. There is no way to substantiate your claim from within Adsense.

You also raise point that as an ad buyer you were subjected to the end of day budget constraints, yes you and other ad buyers, potentially many ad buyers are subjected to this. But the ad market is efficient, this means that no single buyer can influence the market. There are many buyers from many localities with a wide variety of budgets and budget constraints. If one buyer's budget is consumed early then there are many more waiting in line to take the next spot. In fact, what you are claiming were true, then you could simply delay your entry into the market each day, and then you could be buying ads later in the day at a deep discount. Essentially in economics speak this would suggest that market are not efficient and that arbitrage opportunities exist. But that is certainly not the case. If you can prove to me that markets are not efficient, then we a have an opportunity to make millions (which we don't).

Now, my point in saying this is simply to establish that the amount of revenue is FINITE in the ecosystem, because nearly all advertisers work within budgets. So, if you increase the number of publishers showing ads over time, yet the amount of advertising doesn't keep pace, this will obviously reduce the CPC a specific publisher is likely to see over time.

Yes and No. Let me explain this differently. Let me paraphrase you using economics speak, "supply has outpaced demand". Yes, fully agree, 100% What I take issue with is the notion that the drop in CPC is related increase in the number of publishers. It is not. I realize that this may be counter intuitive but follow my example.

In a fictitious ad market place you have 100 publishers, and the leading traffic source, call it Gorgle provides 1000 impression divided evenly among the publishers. Each publisher shows one ad per page, thus the resulting ad market has an inventory of 1000 impression. The market price (supply == demand) is $1. This Utopian paradise also provide a 100% CTR (for simplicity). Thus, each publisher earns $10, and the CPC is $1.

Then because users are so pleased with quality, they begin to view more pages and total impressions increase by a factor of 2, which gives 2000 impressions. The advertiser's budgets don't grow. Now supply has doubled and demand is the same, prices drop to 50 cents a click. Each publishers gets twice as many clicks 20 but only gets a CPC of $0.50 and thus earns the same amount as before $10.

But now since other publishers see how much money is begin made, they jump in on the game. You now have 1000 publishers, everything else remains unchanged, because Gorgle doesn't care who the publishers are. So instead of 20 clicks, publishers now get 2 clicks, each with a CPC of 0.50. So each publishers earns far less only $1, but the CPC remains unchanged.

The point of the example is to show that supply in the ad business is the number of available impressions and is not a function of the number of publishers participating in the market. Yes the pie will be divided up among a portion of the publishers and if more publishers enter the market that your piece of the pie may get smaller, but that only impacts the size of your inventory or your share of the supply and it does not impact CPC (the price you are paid). Furthermore and most importantly, the share of your supply is not determined by Adsense, it is determined by your ability to achieve and maintain a high rank in the SERPs or your ability to acquire impressions.

[Runfun]

Same here with both being a user of Adsense and Google Ads. Later at a day the CPC drops. It's just simple as you'll see the AVERAGE CPC lowering through the day. Just compare the CPC between 8 AM till 3 PM and the CPC between 3 PM and 10 PM.

With Google Ad Manager I'm serving most Adsense ads at the beginning of the day because it pays of the most.

[tangor]

The point of the example is to show that supply in the ad business is the number of available impressions and is not a function of the number of publishers participating in the market.

So ... the game is rigged. Already knew that. :)

It is the advertisers who are protected (fixed budget) and the publishers available get whatever part of the pre-paid pool will allow.

And g will slice that fixed amount of ad dollars among as many as possible down into the pennies range.

[ronron]

CPC and RPM definitely does lower as the day goes on. However, daily exhausted budgets are likely the cause. When 12 AM EST hits, I notice new ads, and the CPC and RPM pickup again.

[Edge]

I've been running AdSense since 2003 and not to step on anybodies toes but.., nobody but Google AdSense knows what's behind the black curtain on your earnings, referrals, etc.. Your revenue will go up and then go down and you'll wonder and maybe do smart or less-than-smart and still not know what happened. Scientific method requires a known sample or starting point and Google can change all kinds of unknown stuff behind their curtain and you will not know if your experiments actually worked or not..

Just make sure your site is delivering value, good content and does not do anything shady and you'll do the best that AdSense will allow or whatever they are doing. I don't remember who wrote it here on WebmasterWorld - but build a business model that does not rely on AdSense "Welfare" money..

Good luck.

[csdude55]

Great in theory, @Edge, but it's getting harder and harder to pay the bills around here :-( By which I mean, I'm running out of credit cards to put things on. Seriously.

I failed to add in my original post, mobile traffic is a big problem for me, too. With a nice 1024x768 desktop I can put 6 banners + 3 direct-sell banners, and it doesn't interfere with content at all. On mobile I can get away with 1 Adsense and 1 direct-sell (and it looks kinda crowded). That's another big reason why my impressions are down while my number of users is the same, but there's nothing I can really do about that until a single mobile banner is somehow worth as much as 6 desktop banners.

[NickMNS]

@csdude55 are you using ad-manager? Is Adsense competing with the direct sales or do you place 1 Adsense ad and the other regardless of price? Ideally you should use your direct sales as a floor price for AdSense. If AdSense can't beat the direct sales price then no Adsense. But this is only possible with a tool like ad-manager.

[csdude55]

Ad Manager might as well be written in Latin, man. I set it up for infinite scroll (which is still in beta), but as for competing with direct sales? I can't figure out how to do it, I can't find any decent tutorials, and even though I get emails from Google reps every few months none of them have been able to explain how to do it, either.

I know that the concept exists, but beyond that? I don't have the first clue.

Instead, I've been selling direct ads at a flat rate. On desktop I show them between two Adsense banners, and on mobile I replace a Google banner with it for the day. I wish that I could set up a bidding system or something, but most of my local advertisers can't even figure out how to submit a basic form *! So a bidding system feels like a pipe dream.

* honest to God, just getting them to log in... at least once a week someone tries to log in to my ad manager by typing in their email address and the password to their email. They haven't registered an account with my site or anything, they just try logging in with their ISP's email info. And when it doesn't work, they leave.

[Edge]

Great in theory,..

You should consider moving beyond that perspective, my post is NOT theory but factual, well known and reality.

Look, you don't have real control with your AdSense revenue nor Google and if you're focusing on the short term to make AdSense work today you'll likely continue to be frustrated. I doubt that there is a quick fix to your AdSense revenue drops – again not theory. BTW, did you read my last sentence?

Seriously, you need to explore other revenue streams.

Can you sell something, product or service? Memberships, classified advertisements, have you looked at other online business models for ideals? Training in your vertical? Can you do advertorials for customers? Have you worked direct marketing effort with your vertical(s)? Do you have a sales strategy beyond the grace of Google, et. al?

I could go on for hours...

And yes, I get it – you need money today..

[csdude55]

I totally get it, @Edge, I really do. And 4 years ago I would have been right there with you. But like you said, it's beyond the point where a long term strategy would help, I'm at a point of needing more money today.

Can you sell something, product or service? Memberships, classified advertisements, have you looked at other online business models for ideals? Training in your vertical? Can you do advertorials for customers? Have you worked direct marketing effort with your vertical(s)? Do you have a sales strategy beyond the grace of Google, et. al?

I started out doing web design with a focus on custom programming, and my average contract was $2,000. But now there are several local companies that specialize in Wordpress, and they've forced the average contract down to $200! I stopped trying to compete, it's not worth my time to spend a weekend writing a proposal for the hope of getting $200.

Hosting used to be a good source of revenue, but now I'm competing with free hosting sites. Worse, most of the local businesses think that a Facebook page is all they need. So where I used to bring in $2000 /month on hosting, now it's more like $80. I've tried to get the local Wordpress developers to use me for hosting, but none are interested; they would rather pay more to GoDaddy than support a local business! I guess they're afraid that I would take their client list or something, I don't know.

I haven't been able to come up with anything else to offer that's worthwhile. I tried selling promotional items and made about $10; I set up a "donate" page and made nothing; I set up memberships where users could go ad-free and had 1 person sign up (a high traffic user, so I'm sure that I lost money on that deal). I've promoted a ton of affiliate programs and made about $2, total. I set up to resell credit card processing to my advertisers and made nothing.

I've set up local events and brought in sponsors, but that ended up being a LOT of work for very little profit. It was good marketing for my company, but in some cases I lost enough money that it left a bad taste in my mouth. My last event lost $2,000 :-( Since then, the local towns have liked what I was doing so they started doing it themselves, and I can't really compete with that.

I've brought in numerous third party systems, like Coupons.com. Most of them have died away, though, or their value has dropped to nothing, and I don't know of any new ones. Flipp.com was bringing in about $100 /month, but they just stopped their affiliate program this month.

I do direct sales, but that's gotten tougher and tougher to the point that it's really not worth the effort, either. I desperately need salesmen to do that full time, but have had NO luck finding a decent employee. I'd love to find a company that would do direct sales for me on commission, but they don't seem to exist.

I'm constantly building new features, but it seems like every time I do then someone creates a Facebook group to do the same thing... making my idea irrelevant. And it's super frustrating to come up with a cool new idea, spend a month building it and perfecting it, then someone just steals it by clicking a button on Facebook. The local Chamber of Commerce is killing me with that, they use tax money to advertise numerous Facebook groups that they've created to directly compete with me >:-( How do I compete with that?!

I have my dedicated followers, but the more they move to mobile the less they interact with the message boards and other features. The average pages-per-session for desktop users is 12, versus 4 for mobile. I have a near 100% penetration for my audience, though, so there's nothing I can really do to pick up more users; there's definitely no way to increase it by 300%. I've expanded my reach to incorporate new demographics, but it's hard (and expensive) to build that demographic up when they're already used to Facebook.

My company turns 18 years old next month, and over the years it's hard to remember everything I've tried. The only thing that ever really brought in enough revenue was Adsense, but now it's bring in less than half of what it used to. I've cut my overhead to the bone, and have honestly been staying afloat for over a year by supplementing with credit cards.

I'm all ears to new ideas! I've tried everything I can think of, and I've been stagnant for awhile now while trying to think of something new.