AdSense Earnings 2008

AdSense vs. Bloggers ?

There's word around the Webmaster World forum that publishers have been experiencing a sharp decline in AdSense earnings over the past month. There's been little consensus, lots of possible explanations, but nothing you might call conclusive.

A small poll at Search Engine Roundtable (43 participants as of this writing) shows just over half reporting a decrease in AdSense earnings, the other half reporting that things are on the level or increasing.

It's hard to say that's a representative sample with just 40 respondents, but it does match a bit with the reports at Webmaster World: some are losing, some aren't.

Many plausible explanations have been proffered without any real, thorough site examinations, as no URLs have been given by those complaining. The center of conversation though, has been around Google's "smart pricing," and whether that is the cause of lower returns on ad clicks.

An ad's cost-per-click is determined by a number of factors, according to the AdSense blog's explanation:

"More than conversion rate goes into determining the price of an ad: the advertiser's bid, the quality of the ad, the other ads competing for the space, the start or end of an ad campaign, and other advertiser fluctuations."

Keep in mind also that Google has the leader in CPC Inflation Rate,

Google denies that clickthrough rates affect the price of an ad click, though they don't go into how much weight is put on user action beyond the click, i.e., sales completed, forms filled out, engagement on the site that follows. Google describes smart pricing this way:

"Google's smart pricing feature automatically adjusts the cost of a keyword-targeted content click based on its effectiveness compared to a search click. So if our data shows that a click from a content page is less likely to turn into actionable business results -- such as online sales, registrations, phone calls, or newsletter signups -- we reduce the price you pay for that click."

But observers are right also to note that the higher quality the site, the higher likelihood the publisher gets high quality, costlier, better-converting ads. AdSense Publisher Support pretty much says so, reminding publishers that content is king:

"[Smart pricing] leads to higher payouts for publishers by drawing a larger pool of advertisers and rewarding publishers who create high quality sites…. The best way to ensure you benefit from AdSense is to create compelling content for interested users.

"This also means driving targeted traffic to your site -- advertisers don't gain as much ROI when paying for generic clicks as they do for quality clicks that come from interest in your content. Good content usually equals a good experience for user plus advertiser, which can be much more valuable than CTR."

So, this is Google's usual stance: create some relevance and we'll help create you some revenue.
Things like that have added to the cynicism in the aforementioned forum, as one member notes the lack of examples to test, and, without naming names, notes that some complaining members' sites are nothing to write home about with potential quality problems like:

• Obviously made for AdSense (which implies lack of content)
• Too many ads, including unrelated ads (lack of focus on content, lack of central theme)
• Confusing layouts (not end-user focused)

Webmasters also reported conversations they had with the Google AdSense team, who told them the sharp decline likely has to do with advertiser budgets, many of which would understandably be tightened after the holiday crunch, and perhaps even more so during economic uncertainty.

So recession in the economy might mean recession in your AdSense take-in, too.

An interesting frustration was also presented. Google's smart pricing, according to forum members applies account-wide. A webmaster with many sites but one AdSense account could experience a hit on all of his or her sites, instead of just one or two. This brings down the revenue potential of the more popular sites the webmaster owns.

The suggestion, then, is that Google adjust so that smart pricing affects individual sites and pages, rather than targeting an entire account.