Thursday, Feb. 7, 2008
Recently, many web-publishers reported drastic drops in their Google AdSense earnings and offered up many theories as to why that occurred. The problem was reported in web forums, on popular SEO blogs, and in the comments section of the last WebProNews article on the subject. After all that, we've narrowed it down to 8 possible explanations.
Editor's Note: There have been a lot of theories as to why AdSense earnings have fluctuated for some publishers recently. We collected them here, without giving weight or ascribing truth to any specific explanation; all are just food for thought. Any of the theories striking a chord with you? Let us know in the » comments section.
In other words, we're closer, but not there yet. It could be innocent, accidental, natural, or orchestrated, but the majority of you seem to be reporting steep (and for some of you, I mean steep) drops in AdSense earnings. The Search Engine Roundtable poll mentioned last time grew to 135 respondents, and the percentages stayed the same: 55% are reporting decreases in earnings.
It could also be that angry people speak the loudest, but many seem pretty sane in their reporting, saying earnings are declining despite level page views and click-through rates.
But we're going to err on the side of the smaller guy, assume you're getting screwed by the big guy, and propose the most possible and/or likely reasons for that. Included with this assumption is that all of you are on the up-and-up with great content, great SEO, great business savvy, and have done everything right but still find yourselves victims of the corporate machine.
See how nice that is? Here goes.
It's the economy, stupid.
This explanation wins the Occam's Razor Awardi.e., the simplest explanation is the correct one. As the economy enters a slow-down period, many advertisers are trimming their budgets, decreasing how much they spend on branding-related advertising and redirecting those funds to more direct response ads, which would include AdWords.
One commentator noted the golden rule of the economy: It will fluctuate. This could be what's happening, and that fluctuation could be swelling on the political side of the content fence as Presidential primaries take center stage on the Information Highway.
Advice: Look into AdWords and improve organic SEO. Otherwise, wait it out like the rest of the economy.
Google got stingy with the AdSense real estate
During an increased focus on conversions rather than clicks and intensified efforts to combat click fraud, Google made AdSense ads more difficult to click. A few have reported that since "the clickable area" of ads was decreased, CTRs have also decreased. At the end of the day, the AdSense drop many publishers are experiencing is a direct result of Google's offensive against accidental clicks.
Google is another good company gone public
This is a more cynical, greed-driven, conspiracy explanation that may resonate with more distrustful element of the audience. You know how everything seems designed to make you pay more at the gas pump? Reports come out that $3.71 per gallon is the tipping point where Americans will drive less, oil is at record prices as companies collude on what to charge on a street-by-street level, and Exxon cites less supply while setting yet another quarterly profit record by pulling in $1,300 per second, and the oil profiteers in the White House hadn't seen any type of crisis on the horizon for the past 30 years.
Phew. Try to say all that in one breath. But the theory goes like that. Shareholders like profit.
So, between the third quarter 2007 and when the fourth quarter report came out last week, Google's stock plummeted from $747 to just a little over $500. No doubt they saw this coming well in advance of their earnings report and looked for ways of tightening things up earnings-wise. It's especially troubling for Google because not only do they control two-thirds of the search market and 75% of the search ad spend, they report consistent growth that would impress anybody, that would be calls for champagne for any company, except the analysts who expect more of them.
If so, it should make you feel better that they missed estimates anyway.
But as a part of that plan to maximize earnings, Google found a way to decrease what they paid out to publishers while increasing what they took in from advertisers. This would also help offset Google's recent moves against made-for-AdSense sites developed expressly for domain tasting, an action that costs Google a reported $3 million.
Admittedly though, when you're dealing in billions, a few million isn't much unless you're trying to make estimates. But Google also reported a 30% increase in AdSense clicks over the fourth quarter 2006, and a 9% increase since the third quarter 2007. So over all, clicks are up.
Even though clicks are up, and revenues seem down for publishers, Google still reported a 34% increase in AdSense revenues over the same period last year and a 12% increase quarter-over-quarter. This is interesting because Google's traffic acquisition costthe portion of revenue shared with Google AdSense partnerswent up only 1%.
The short version: Clicks are up, revenues are up, amount shared with publishers is level.
» Read the rest of the article.
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