Forum Moderators: martinibuster
the basic reality is this: No one knows how Google makes its decisions regarding Adsense. This means we don't know what the split is with publishers, what constitutes a violation of the TOS, or what the average price per click is. Not to mention that the TOS prohibits partners from discussing their earnings (which is why I think Fred might be in hot water....). In short, working with Adsense is a "trust us" proposition, one that Boing Boing is not willing to make. (Though I do make it, here on Searchblog, at least for now. For more on my own experience, read this.)
If 2000 car sites banded together in for lack of a better word a cooperative and hired an ad rep I would bet that people like GM or Toyota would be glad to deal with you. They would probably welcome the choice of suppliers and a chance to advertise more narrowly.
If it was done correctly everything would be transparent and the net effect would be that everyone made more money, even GM and Toyota.
The only reason I point this out, is because that is likely the type of environment we'll end up with in a few years with advertiser publishing. The split ratio will standardize, which will provide a level cost playing field.
Why would it standardize? It makes far more sense to have a formula that's tied to supply and demand, not just for keywords but for advertising venues (i.e. publishers). Straight percentage splits are a hangover from the early days when ad networks were an alternative to rep firms, and the ad network's pitch to publishers was "Outsource your advertising to us, and you won'tneed reps or an ad server."
Fact is, if the ad network thinks it needs certain topics, types of content, or circulation levels more than it needs others, the smart approach is to adjust compensation accordingly.
Google's automated "Targeted Shotgun" approach is working great for now, but I'm not banking on it for long term viability. Sooner or later, it will become a bottom feeder technology.
It's starting to look like that already, but AdSense is a first-generation product for Google, and we may not have seen anything yet.
Quality publishers will go to better agencies that will allow the publishers to simply say "My site is about (topic) - please feed me ads relevant to that topic."
That's what Sprinks was doing a few years ago. It didn't work very well, though. I had a European travel site on About.com, and one of two things happened: Sprinks displayed general ads for European travel on all pages of the site, regardless of subtopic, or it displayed highly targeted ads (e.g., for a Barcelona B&B) throughout the site. It was "theme advertising" rather than "contextual advertising."
Google's automated contextual targeting works much better, especially for sites with diverse editorial content within an overall theme. The targeting isn't perfect, but it's remarkably good most of the time. Its only real weakness is in being one-dimensional: Ads may be for products or services that the user wants, but the user and publisher aren't necessarily what the advertiser wants.
What Google really needs to do is focus more on the needs of advertisers. More advertisers = more competition for keywords = higher bids = more money for publishers. To get and keep a wider range of advertisers, Google needs to offer more than the existing run-of-network, one-size-fits-all, lowest-common-denominator product. When Google can deliver a wider range of "contextual advertising solutions" (to use the kind of language that marketing people seem to like), publishers will benefit--assuming that they're able to supply the kind of inventory that Google and its advertisers need.
Google pays 10% of what they get from the publisher. No more, no less.
IŽbeen comparing adwords forecast CPC for same keywords related to same subject adsense site of mine:
Bid prices are for AdWords, not AdSense. AdSense clicks are discounted through the "smart pricing" scheme.
Google pays 10% of what they get from the publisher. No more, no less.
I assume you meant "to" the publisher" or "from the advertiser," but in any case, Google's overall payout to revenue partners is more like 77% (according to Google's Q4 earnings statement), although the specific percentages paid to individual publishers aren't likely to be uniform. And again, just because an advertiser bids $1 for a keyword doesn't mean that Google receives $1 when the ad appears on a publisher's site. Depending on the type of content and other factors, Google might receive only a fraction of that amount because of the "smart pricing" discount that it's giving to the advertiser.
That's what Sprinks was doing a few years ago. It didn't work very well, though...
Just because it failed for one outfit, doesn't it mean it will fail for others.
Sooner or later, I believe someone will get it right. The main issue is that you're going to need a company to have a massive inventory of ads right off, and a massive inventory of publishers right off. Or else, a very carefully staged growth plan, where the ad distributor says "Ok, we're going to go after sector A to start, so let's get a lot of ads from Secotr A companies, and really go after sites that talk about Sector A", and then slowly expand, sector by sector.
Google has the ability to do this right now, actually, and I wonder why they don't. If they let the publishers just go in and say "My site is (General Theme) and has a (Target Audience) readership, could you please deliver ads accordingly."
But they don't do it. I think the reason they don't do it is a fundamental culture issue at Google. They trust technology and their algorythms far more than they trust webmasters. Very much of what comes out of the Googleplex is indicative of this attitude. Which, when it comes to search, I really don't have a problem with, because everyone worth their salt is going to try and game the system in their favor (at least a little bit).
When it comes to ad publishing, it's an entirely different situation. It's in Google's interest to be in the game with the publishers.
If they let the publishers just go in and say "My site is (General Theme) and has a (Target Audience) readership, could you please deliver ads accordingly."
That could get real hairy when a site has content about several different unrelated topics. The way it is done now, page by page, works great.
Google has the ability to do this right now, actually, and I wonder why they don't. If they let the publishers just go in and say "My site is (General Theme) and has a (Target Audience) readership, could you please deliver ads accordingly."
1) Contextual ads perform better than "general theme" ads.
2) AdSense already delivers "general theme" ads on "general theme" pages or when it doesn't have contextual ads in its inventory.
Besides, Google is a technology company, and contextual ad matching is the "secret sauce" that sets it aside from traditional ad networks and second-tier rivals like Kanoodle.
We'll probably see a number of AdSense product extensions in the months and years ahead, but I'd guess that general ad matching by category (a la Tribal Fusion) will be awfully low on Google's priority list.
I wonder why they don't. If they let the publishers just go in and say "My site is (General Theme) and has a (Target Audience) readership, could you please deliver ads accordingly."
I should think staffing issues is a reason they don't aswell. If they went to theme related ads I would think they would have to manualy check every single site. and keep checking them how many sites are there out there with adsense?
Google's reputation serves it well with Adsense. Lots of WebmasterWorld members are involved in some form of affiliate marketing. If I began a potentially lucrative new affiliate program, how many WebmasterWorld members would sign up if I said, "I can't really provide details of how much you of each sale you'll get, and that may even vary over time, but trust me..."?
If I began a potentially lucrative new affiliate program, how many WebmasterWorld members would sign up if I said, "I can't really provide details of how much you of each sale you'll get, and that may even vary over time, but trust me..."?
First of all, Google isn't marketing AdSense as an affiliate program, and publishers aren't sales reps. Google's pitch is "Earn money by running our ads on your pages," not "Earn commissions by selling ads." You drop the AdSense code into your page margins, and that's it. No special pages to create, no affiliate links to annotate with sales pitches. Google and its advertisers do the work; you provide the space and collect a fee. If the revenues are satisfactory, you keep the ads; if not, you drop them.
Second, there's the issue of supply and demand. For now, at least, individual publishers (or at least small to midsize publishers) need AdSense more than AdSense needs them. For Google, the risk of having a relatively small number of unhappy publishers quit is less important than the risk of having competitors and corrupt publishers take advantage of the "transparency" that some publishers would like to see.
Also, let's face it: If Google published the details of its compensation formula, "smart pricing" algorithm, and other internal workings, the publishers who are now complaining about a lack of transparency would almost certainly complain about something else. So pulling back the veil would be a lose-lose situation for Google: Competitors would find it easier to cherry-pick the most profitable publishers and categories, the "made for AdSense" crowd would be able to exploit the program more efficiently, and Google might have to listen to even more kvetching than it does now.
I see me as a the publisher and Google as my sales rep selling my ad space.
I see me as a the publisher and Google as my sales rep selling my ad space.
Google is more of a value-added reseller. It buys space from many different publishers and sells the aggregated space (or, rather, the leads from ads on that space) to advertisers.
Of course, if Google were a pure value-added reseller, it would pay CPM rates to publishers (as it reportedly does for some premium partners). That idea obviously isn't practical because the anything-for-a-buck gang would be racking up impressions by the cartload.
Google AdSense has performed a valuable service for my site, and possibly many others in a similar position. I'm not just talking about the money, though that's been a big plus.
As I've said elsewhere, from the experience of having Google ads on my pages, I've learned what those pages are worth (well, what small text ads served by Google on them are worth) and what companies might want to advertise directly on them.
My next project is to develop my own ad rates and start contacting those companies. I don't intend to get rid of AdSense on my site's pages (though if I got a good enough offer for a run-of-site ad, I'd take it), but to add to the mix.
My next project is to develop my own ad rates and start contacting those companies. I don't intend to get rid of AdSense on my site's pages (though if I got a good enough offer for a run-of-site ad, I'd take it), but to add to the mix.
Good Approach! Better than just complaining, like a lot of people do here.
Just do it!
My next project is to develop my own ad rates and start contacting those companies. I don't intend to get rid of AdSense on my site's pages (though if I got a good enough offer for a run-of-site ad, I'd take it), but to add to the mix.
Someone already mentioned: Trust is the main obstacle.
With the web, things don't stay secret for long anyways, so buisnesses might as well be out front an open about their programs.
In the infancy of anything on the web, things are always raw. From there we cook them, season them, and in the end, they end up being a blue plate special raved about around the world. That is the web. It was founded on the principle of the word FREE, so earning any money, for any thing is really just a bonus.
That aside, yes most of us come to the web, or at minimum stay on the web, to earn money. We tend to put everything in the category of business. In the case of Adsense, it would be better to put it in the category of CHARITY at this point in time. We are riding free of charge on the back of the giant like a tic, as he conquers the world, and at any time he might decide to scratch us off. Meanwhile, we get a free ride to the top. Sure, Google needs us, but don't kid yourself, kid. They could do without us as well. NO great business gets backed into a corner. They have many baskets with many eggs in them, and our little egg is but a fleck of protein in their world.
I hear people saying they could earn more selling their ad space instead of using Adsense. Really? You want to think about that.
I sell my ad space, use Google Search and Ads as well, some on some sites, some on others. My cornerstone site I sell ads supplemented with Google search. I have been doing this for a very long time, on the web for 13 years, have been in marketing as a whole for 30 years, and I began Adsense only a couple months ago. The check I will get at the end of March is going to be more than I make on ad space I sell to individual companys, and I have some major advertisers.
In fact, my major Adsense cash cow is a site that until I put Adsense on it, though large and active, had very few advertisers,even though the price of ad space was extremely low.
You wonder, really? Oh yes really. Adsense is doing so well on my network, we are watching it closely and may pull all our advertisers, with 60 days notice, and go 100% Adsense. The way I figure it at this point in time, I could be making 5+ times the income with Adsense, that I am making with individual companys.
The reason I have not jumped on this, is one, I am new to Adsense, and before I cut off my nose to spite my face I would like to make REALLY sure my calculations are correct, seasonally as well as annually. Second, these are the people who helped us survive long before Adsense. We feel like we owe them. So, I'm inclined to let this ride this year, and think about it, watch it, and make sure I'm doing what is right. It took me a long time to get all those advertisers. I don't want to blow that all away in a single upload, gambling that Adsense will not flick me off its back, just because it can.
I have been there. I was on the back of the theglobe.com before it went belly up in the sand. Who would figure the site of the Boston Globe would crash and leave all their business partners/sites high and dry with 30 days notice? It took me a full year to recover from that, and I didn't fully recover for over two years.
If I had Adsense on my site, no advertisers, I would not removed Adsense. Not on a bet.
I will remind you that a major part of the dot com bust was companys who advertised to the teeth, got little out of it other than debt, and left. Others came hoping to make their money on affiliate advertising, found there was not much money in it, but had mortgaged their future on the hunch, and quietly faded away. Why? Let me tell you why honey.
Because on the web more people like to click and look than to buy. Having done over 60,000 hours of research on this topic, I will tell you right now that the largest percentage of clicks on ads are made by people who have no thought whatsoever of buying anything. They are doing research. They are students, media, the government, marketers, developers, competitors, underage users, people doing price research for other who don't have computers, curiosity seeks, and people just killing time. It is the number one reason that the click through to purchase rate is so low.
I click. Why? To sabotage? No. Because I am curious, because I do research, document new products and services so I can give information to my clients, help tweek my own pricing, and improve page layouts.
I LIVE on the web, and I need to know everything about everything that happens on the web, because it is my neighborhood and I am a self appointed neighborhood watch captain. There are hundreds of thousands around the world, just like me.
When you put your ad out there, you HAVE to expect people like me will click on your ads. You will not make any money. Sad, but that is how the web works. The web grows from information, and information is only found when links are clicked. There is no rule that says, "you can only click an ad if you are in the market to buy." It doesn't work that way... something that seems to evade those people in the Adwords threads who think that clicking their ad if you are not in the market is a crime... i believe they call it fraud. lol. Naive.
At some point in time your advertisers will figure this all out and one by one they will leave. You can only hope your sign up desk has a revolving door to it. Mine does, and that is little comfort when I think of what I might be losing, monthly by not using Adsense.
When you look at the web in this light, you should be happy the giant is giving you a ride. His journey is noticed around the world, the greedy will mimic him, and soon enough the world of the giant will be full of competitors, eager to pay us more, tell us how much they will pay us, and even direct deposit our money, so we can spend our money while sipping pina coladas on an exotic beach.
If you think you are a 'partner' or are 'having a business relationship' with him. You are in a fantasy world. Give it a couple more years. Then, we can call it business when the meat really heats up. Until then, take your charity and keep quiet... lest the beast become annoyed by your insipid whining and flick you off.
That's an interesting post with a lot of good observations, but I'd disagree with one statement: the suggestion that advertisers will leave once they figure out that people click for reasons other than to buy. Ultimately, what advertisers care about is their overall ROI, whether they're marketing with PPC advertising, telemarketing, magazine ads with 800 numbers, direct mail, or salespeople doing cold calls. If PPC ads can deliver comparable or better-quality leads at a cheaper cost than advertising in THE NEW YORKER, POPULAR PHOTOGRAPHY, or URINAL TABLET NEWS, advertisers will happily use PPC.
This does bring up an important point: what Web users are looking for when they click on a search ad or a content ad. The conventional wisdom says that search ads do better than content ads because searchers are looking to buy. If that's true (and some advertisers report the opposite experience), it's true only because Google doesn't distinguish between true "contextual content ads" (ads on editorial pages, for example) and ads on DomainPark pages, scraper pages, gmail, etc. Google makes some attempt to compensate for this all-or-nothing approach with "smart pricing," which grants advertiser discounts based (at least in part) on the type of page where an ad click is generated. Still, that's an inadequate substitute for advertising that targets by audience (or at least by type of content) and not just by keyword.
I think there's a risk that you're overgeneralizing from your personal experience....
I was one of the people talking about going direct to advertisers. I'm NOT one of the whiners about the "lack of transparency." I'm very happy about AdSense in general.
By using what I've learned by being in AdSense to set ad rates, I'm not thinking of leaving AdSense. If I go ahead and solicit advertising, it will either go on the same page WITH AdSense, go on a page on which I do not have AdSense code (for various reasons I won't go into here I put the code on less than a third of the pages on my site), or replace the AdSense code only if the advertiser pays a premium that replaces the AdSense income and then some....
I think that's a reasonable approach. You're moving in the opposite direction on your sites--fine. But that doesn't make what I'm planning to do foolish. I will post any lessons learned.
They do figure out how the web works, when the ROI doesn't match expectations. At least the brighter bulbs do.
When I first came to the web, I thought I was conservative in thinking 5% would click the ad. Then, I lowered that to 1%. Still surprised to see that most of our clients were seeing .005% no matter where their ad was seen. Of that, on average, of those who clicked through, only 1 in 20 would buy. While some clients experienced some days, weeks, months, season higher rates of perhaps 1:2 to 1:5, they do not hold up over time.
So, advertising expectations as a whole were, and are unrealistic, models were formed in error, and the ROI never reached even minimal goals. When the math is done, and the conclusions are reached that I stated, companys pull their ads.
We, you and I, have said the same thing. Only stated it from two different perspectives. Yours by the red line in the books. Mine by marketing trend analysis ... which resulted in the red line in the books.
When the math is done, and the conclusions are reached that I stated, companys pull their ads.
I think we agree on that. Where we disagree is on drawing broad conclusions based on specific experiences. PPC is like any other form of advertising: Whether a campaign is successful will depend on the product or service, the offer, the copy, the target audience, the desired result, and so on. Some advertisers appear to be doing quite well with PPC ads, while others aren't.
I suspect that many of the advertisers who are doing quite well with AdSense--and who continue to use Google's "content network" month after month--are those whose topics don't lend themselves to overexposure on general-interest Web sites.
To use an example, an ad for Elbe river cruises isn't likely to turn up on CNN.com or a high-traffic page at scraper-directory-site.com very often. Just because it's so esoteric, it's likely to be displayed mostly on cruising sites, German travel sites, etc. where readers are good prospects.
In contrast, an ad for home mortgages or Web hosting may be displayed on thousands of sites across the Web, and users who click on it may be comparing rates from 10 or 20 or 50 other mortgage vendors or Web-hosting services. Those ads may be profitable for the publishers. But they're unlikely to perform well for the advertisers unless the ad buyers are very clever in picking the right keyphrases to compensate for the inability to select the media where their ads will run. (The ads might perform better if the advertisers could buy ads only on legitimate mortgage-information sites, on real-estate sites that target a certain demographic, or--in the case of Web hosting--on sites that cater mostly to the type of account that the hosting service is targeting, such as e-commerce businesses, media publishers, corporations, high-volume affiliate marketers, etc.)
It's possible that the frequent complaints on this forum about dropping EPC and CPM may be related to a shakeout of advertisers in certain categories. In the AdWords forum, I've seen a number of complaints by advertisers who have had their entire budgets sucked up by one or two high-traffic but non-converting "premium partners." Advertisers who have been stung once may not be willing to reach into the beehive again until they're given the tools they need to protect themselves--and if they're big enough advertisers, their departure may be felt by publishers in their categories.
My concern is that a webmaster will become miffed at Google and their payment policy, and decide to go the B2B ad route. The danger there is this.
We had one very large advertiser. Came to us, liked their ROI, and upgraded to blanket advertising. For us, we had one basket, and only a few eggs in it. When 'Mr Big' found that spring/summer sales were much weaker than fall/winter, even though our traffic and his traffic from us had increased, due to our expansions, he pulled his ads.
Fact is, spring/summer has more lookyloos than fall/summer, as most brick and mortar businesses can attest to, as well as seasoned ebiz owners. Now, my basket was nearly empty. I had figured he would look at fall/winter ROI and decide to stay because we were an excellent value for the buck, using my open road thinking. He was in a tunnel, and couldn't see my open road.
If 'you' (third party) leave Google, ticked off, and go it B2B, the process of building up a wide advertiser base is a long process. One poster said they would hope for a blanket advertiser... and I cringed at that approach. I would never take that route. Is always better to diversify. I use affiliate ads, b2b ads, and google for revenue. The mix doesn't leave us holding an empty basket when a business owner less web savy comes to the web with an unrealistic projected ROI.
We have begun to crunch the numbers on pixel to profit ratios. What we are finding, across the network, is the revenue from Google is surpassing our prior pixel to profit ratio now, in our low season. When we adjust those figures, seasonally, Sep-Feb totals for 2005 will be as much as four times our pre-google high seasons, per visitor.
Perhaps I should also clarify that I intend to build my rates around impressions, not clicks and conversions. My site is an authority site in a niche area, and exposure on it by itself will be worth something.
The next year or so is going to be interesting.
To understand web traffic, is the core of calculating earnings, how they form, and what trends comprise them. To me, it comes back to site stats.
With site stats, any Adwords or Adsense user can come to very solid conclusions, without that whining I referred to. It is alot of work, I admit that. But, when you know how many visitors you get on Mondays from 10:00am to 11:00am, when the Monday is the first day of the month, versus the 15th of the month or the 30 of the month, in January, compared to March, June, Aug, Sep, or Nov and ALL the other variables,including weather in the south or the north east, it becomes very clear why the ads 'work' somedays, and why Adsense revenues change. Lack of education alone is the root problem for the confusion.
There are traffic and spending habits that have very distinct patterns, no matter your product is, and have absolutely nothing to do with Google, sabotage, or what tick jumped on Google's back. When those are understood, the rest all makes sense. Pouring over the site stats, charting them in all possible variables, if not done automatically for the webmaster (mine are), can make advertising a success, and using Adsense even more of a success.
Maybe it is me, but I thought everybody had this type of intense site stats, and had already figured all this out. Seems to me that more webmasters than I thought, are in business on the web by the seat of their pants, flying blind, and have no idea at all about traffic and sales trends. Otherwise, many of the problems posed in these threads, would not be there.
The other big mistake I see is the content you were talking about. So, 'you' (third party) might sell widgets. Why would you not use Adsense? You might say because you don't want competitors's ads. Well, you could block them, first of all. But, more importantly you could develop an informational sister site on that topic, if it is your only expertise, and earn Adsense revenue on it. I even offer to advertise ANY Adsense based site, free of charge, through a site I designed just for that purpose. How easy does it have to get before the masses get the idea?
Do you really only know about widgets? Where you born in a widget factory and have never ventured outside? You know things, tell the world about it, and then put Adsense on the site.
Why, given the cash cow that Adsense is, would any webmaster, with that incredible ability to create fabulous sites, limited themselves to their one and only product/service/information line? Tell me why any of them would not own hundreds of sites, with 100s of different topics, millions of keywords... and instead would rather devote the time to wondering why nobody is buying the widgets? It simply amazes me.
When was the last time the widget seller earned $10,000 per month, NET? If he owned 100 sites that each earned $100 a month from Adsense, (if a webmaster isn't earning at least $100 per site per month, they have a very big problem and nothing I can say will change that... he/she has failed in achieving targeted traffic levels from free sources and really is not applying him/herself) couldn't he make more money that selling those widgets on the web?
Since I have done consulting with thousands of business owners on the web, I can tell you that it is a fact, he could. The average small business owner on the web, seling any product/service/information is not earning anywhere near that botttom line, and they are working themselves to death, long term, for peanuts, compared to what the same man hours could earn just launching sites and placing Adsense on the sites.
I have an article on one of my sites that says, (summary)Spend 18 hours a day, 7 days a week, for 5-6 months and you can quit your job and just live on Adsense earnings. That is a fact, by absolutely no stretch of the imagination. Any one of these webmasters in this forum, if they applied themselves with an open mind, and worked their fannys off, short term, could achieve financial greatness in really very little time. Google has made it easy.
I do think that, over the long term, bigger is probably better and the chances of lasting success will be improved with a site that isn't dependent on any one source of revenue (whether it's PPC advertising, direct ad sales, affiliate programs, or a combination).
Spend 18 hours a day, 7 days a week, for 5-6 months and you can quit your job and just live on Adsense earnings. That is a fact...
That is a possibility, not a fact. Creating a site that can feed you is far from easy. IMO the vast majority of AdSense publishers are earning beer money, not a full-time salary.
I agree with your analysis insofar as I expect there will be continued downward pressure on click prices. But I think your idea that there is a revolving door of AdWords advertisers is just wrong. Most of the advertisers I see have been placing ads for quite a while, and/or appear to be sophisticated enough to know whether they are achieving their objectives.
The only purpose of that statement was to illustrate that time would be better spent getting on the high speed route, than whining about lack of earnings due to problems with Adwords/Adsense. Those problems, gone over time and time again in many threads, are not addressing the real issue. The real issue is personal accomplishments, and is better addressed by looking at our own short comings, not Googles.
We are all here to make money. If we are not, we don't do Adsense, or Adwords. Since it is about money, then it is my assumption, that we would all like to take the easiest and fastest route, that takes the least amount of effort. That would be logical.
If not, then why not go out and dig ditches? We are here, because for us, the web is easy, and we like easy.
