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8 Theories For AdSense Fluctuations

In brief: find another basket for your eggs

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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.

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 Award—i.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 cost—the portion of revenue shared with Google AdSense partners—went up only 1%.

The short version: Clicks are up, revenues are up, amount shared with publishers is level.

Search clicks are better

One proposal says that Google is lowering the estimated value of content clicks in order to protect the value of search clicks, as advertisers shift from network ads to search ads in a slower economy.

You’re being better-dealed

Not much explanation needed on this one. Google’s making more money from big-name advertisers and big-name websites. Smart-pricing is hitting you hardest because you can’t compete with international brands and websites with millions of page views. It also serves as a decent explanation for why Google is sharing the same amount of money with publishers while increasing clicks and revenues.

No fixed advertising contract means no fixed advertising pay-out

One theory is that Google is making deals with others (bigger, higher-budgeted companies) for fixed compensation while slowly increasing their take among AdSense publishers, who have little-to-no control over CPC, or even context. If you don’t have a very specific deal with Google, they can pretty much do what they want.

Ad blindness and Firefox adoption is hurting you

This is an interesting theory because it is simple and plausible. People are ignoring ads at a higher rate, and this has been evidenced by eye-tracking studies, especially when the ads appear in the places they expect them to appear. But also there are ad-blocking programs available via the Firefox browser (and other browsers) that block ads altogether.

It may be that your visitors just can’t see your ads, either by choice or by software.

Google needs a real competitor

Not only does Google run two-thirds of search, but also controls 75% of the search advertising spend. Yahoo gives them a run for their money in display ads, but nobody is even close to knocking the king off the hill.

If you were in that position, what would you do? Would you make it easier for publishers to make money while you made less? When there’s no alternative, you can pretty much do what you want.

What we’re left with

We’re left with what we’re always left with: the same as when webmasters lose ranking in the SERPs. If there’s a sudden drop in search ranking, businesses are on the line, most often because the business is relying too much on Google. We could theorize all day, but if your entire business model is based on what Google can do for you, then your entire business model has a good chance of being sunk.

All your eggs + one basket = fail.

 

 

 

8 Theories For AdSense Fluctuations
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  • http://www.linkthru.com Wily

    Eggs in basket makes sense. 

  • http://www.mainspot.net MainSpot

    We have to realize that most of sites really depend on Google to drive traffic (and generate revenue).

    Just imagine if Google is not there someday.

  • http://explorenobo.com Nobo

    So, would google really be the one who has final says ?

  • http://www.bestcashcow.com/mass_market_tech MMT

    I used YPN.  My ad revenue has tumbled lately also.  Could be economy or could be Yahoo looking for bigger piece of the pie.  Or could be both since they are related.  Either way, I’m thankful I don’t rely on them for most of my revenue.

  • Guest

     

    I as a PPC client of Google’s adwords have turned off my campaigns totally since google will not allow a refund for $1000 of content match listing I did not authorize.   It is a default setting and Yahoo provided a refund but Google no. 

    And google customer service told me I was confused.

    So I let them know that the customer is always right and turned everything off.

  • Google buyer

    The situation that caused me to stop buying clicks was having to compete with junk sites that have nothing but key words and AdSense. It dropped our site revenue significantly. (We are just little guys, but used to buy over a million clicks per year)

  • Guest

    Google is always claiming to be at odds with Microsoft and all into open source, offering a free online word, which it no way compares to the Quality product offerd by Microsoft. And for years Google has been hiding and now, the truth is out, they are just as money hungry as the rest. They are making a lot of money with no appology, interesting why Microsoft is expected to appologize.

    AdSense is a great system that has one major flaw, it is not properly protected against fraud. Website owners are throwing their money away into a system that is going more and more down hill.

    Unless they can control IP Addresses, geo-protection, as well as bot security, more and more people will lose confidence in Google AdSense.

    I would like to point out, that advertisers are the ones that arre making google rich by not using other methods to advertise thir services. There are many great services out there to help you sell your product and be out the clutches of Google.

  • http://www.genesiscreations.biz Bonnie Vent

    I too have experienced about a 55% drop on 3 different websites.  These calculations are invisible to adsense users.  Nowhere does Google provide any detail of what ads  generated what revenue.  Unfortunately they can pay us whatever they want.  There is no set percentage of revenue that I am aware of and we only receive a total clicks number.  It is a huge "trust me" that they are reporting actual rates to us.  There is no accountability.   

     

     

  • Guest

    dont forget google bought youtube and puts lots of  adverts there :))

  • Jack

    Note to MainSpot-

    I would love to see a more level playing field, with Google as one of the group, rather than as leader of the pack.

    In two years, we have seen ad costs triple, for half the results.

    During this time our CTR and click numbers have stayed "remarkably" consistent.

  • http://www.jrlanguage.com/ Sergio

    I have seen that when we pull an oad off and publish a new one, or reactivate one that has been off for a couple of months our CTR  go up significantly, then after a week or two it goes down again.

    Could that be click fraud?

  • http://www.yourfreefiles.com Dan

    Everyone complains about how big of a bully Microsoft is, when Google is far more of one.  Microsoft creates a great environment for developers to make money by selling applicaitons.  Google doesn’t seem to be doing the same for advertisers.

  • http://www.greedy.com Creeper

    Ohhhh Google seen this coming "months ago" when they did the "paid links" scandel in an attempt to get more people to use adwords rather then organic linking and since that backfired ( search results show NO improvement whatsoever ) now they are skinning those whom are irrelavant in their eco system… The "G" in Google stands for "Greedy".

  • http://freemusicdownload.blogdrive.com Bill

    OK i just discovered how to find what public is seraching for it’s a free SEO tool  here is the link !

    http://www.webconfs.com/keyword-playground.php

    also i ‘m getting way mre clciks past 3 days posting answers to questions in Yahoo answers showing my whole list of adsense blogs and sites

     

    300 impressions and 75 clicks yeasteday !

     

    works trust me and it’s free to use yahoo answers !

  • http://www.bigjoeknows.com Smokin Joe

    Google is making more money off of the clicks they are getting off of

    our websites but passing on less and less of the profits.

    Yea….

    Smokin Joe

     

  • Shaun Cartwright

    Earnings per click on one of my sites was near $1 per click in December. The same site is now pulling around .05 per click, SOMETIMES, more, but not very often.

    I have already pulled most of the code from my other pages, thinking maybe lower quality on the other pages was "smart pricing" the rest of my pages as Google doesn’t smart price only 1 page. I pulled the code from the other pages on Tuesday and I will wait and see if earnings increase, if not, I will more than likely be switching to another network.

  • http://www.hemorrhoidshemroids.com/ Doanld

    So much interesting info.  Have always trusted Google, but with out accountability, is it unfounded trust?

    I have affiliate marketing on some of my web sites and I find the trust issue a biggy.  In spite of nice stats that they provide, how does one know that affilliate program stats are accurate?

    Sure, throw in a middle man to lower your profit to attain accountability, but the middle man normally wants to make money too and there the ones controlling the stats for the affiliates.  So can you trust them not to take a bigger slice?  Who keeps them accountable?

    The key issue here is accountability.  No accountability means you  are putting your trust into flim flam – but what other option have you?  Really?

     

  • http://www.shopnEz.com Nestvman

    I whole heartily agree.

    This past holiday season they really pissed me off when I noticed in my logs that my money was being spent to reach 1 page Parked sites.

    They tried to express my displeasure that Parked pages where just as valuable.  I didn’t agree and have found other options for my hard earned budgets.

     

  • http://CashTheWeb.com Sathees Navaratnam

    I agree with all the points mentioned above. Thus sticking with adsense is not a good idea as stated in one point that you as a publisher have no say, no do or what’s over!

    Quite adsense and join AdSense alternative No nonSense!

    Sathees Navaratnam

    http://CashTheWeb.com

    Promote your site FREE with http://CashTheWeb.com/forum

  • http://www.guitarreference.com Guitar Guy

    What I learn in my offline business is not to put your eggs in one basket. I have to diversify my source of income. If you solely rely on Google then you might end up very disappointed.

  • http://englishsinseh.blogspot.com englishsinseh

    How about distributing your eggs other baskets such as link exchange and affiliate marketing?

    • Guest

      Hi;

      Please tell me about any other choice for a web site for international visitors.

      Thanks

  • Wes

    In my experience Since November 2007, my site has become more popular and  my click throughs have increased , yet the amount of my earnings has decreased 30 – 40 %.

     

    The funny thing about it, is that the amount I need to spend in google adwords for my keywords is steadily increasing.

     

    Therefore all I can see is that google is getting more money in from advertisers, yet paying out less to publishers.  This is a great business they have got going here, and is probably why they dont disclose how much percentage they actually pay out to there publishers which I wouldnt be suprised if its very low.

     

    Google is a monopoly company and there is nothing we can do.  They seem to be screwing the people who actually make them so popular, which is not a very good idea in the long run.

  • James D

    I will have to agree with this theory:

    Google is another good company gone public

    we are earning money from AdSense over 3 years now,

    last year we notice drop in the earning in that time too Nov-Dec06.

    but this year it was a major drop. more then few thousands.

    I guess Google really need to show more earning by the end of the year and to cut the AdSense publisher make a lot of sense.

    Another testing that we did in that time was on 3 sites we change for one week the ads to yahoo publisher, and we receive 300% more money from yahoo in that week. during the year Google always were paying more money when we did that testing. on NOV – DEC 07 every test that we did changing the ads to yahoo we received more money from yahoo. we

     everything went  back to normal ( almost) still 10% off from Google. but that can be something related to our sites.

     

  • Guest

    I can’t believe that you are so friggin’ stupid that you would SAY or even REPEAT the phrase, "and the oil profiteers in the White House". 

    I read no further.  You have lost ALL credibility with me.

    Have a nice life……………..

    • Jason Lee Miller

      Sorry I offended you, but really? It never struck you as odd that two men with oil company backgrounds didn’t see an oil/gas crisis coming? Okay, we can leave them out of it and go back to Ford, Carter, Reagan, or Clinton. 30 years ago refineries cut their capacities and report after report warned of a crisis and nothing was done all that time? No search for alternatives. No choice at the gas pump. No choice of what kind of engine is in your car. Nothing, and here we are, after all that time “addicted to oil” like a crack baby is addicted to crack…it didn’t have a choice and neither did we.

      But your anger surprises me not because you disagreed with my opinion, which I expected a few might, but because I presented it in the context of a conspiracy theory, like the Google AdSense conspiracy theory. Not that it was necessarily true, just that it was a possible explanation.

      Everybody’s entitled to an opinion, I think, and everybody’s entitled to disagree, and I’ve never held disagreement against another person. There are lots of smart people I disagree with. If we want to talk about unifying the country, we need to stop viewing countrymen with other viewpoints as the enemy, and focus on real enemies.

      Again, sorry I offended you, and sorry I lost you as a reader.

      • Deborah

        Thank you, thank you, a million times thank you.

        You may have lost one reader but, you have just gained me and everyone that I know, in this business as readers, with your thought-provoking article and your intelligent response to an angry reader. This reader obviously, didn’t even attempt to look at your logic because he is so ridgidly stuck in the propaganda of his political view-point. Whatever happened to go old-fashioned debates of theories. Our country and free-enterprise system is strong enough to withstand a difference of opinion and your article is a very good example of the use of "Freedom of Speech" to take a look at an issue affecting many businesses.

        Thank you again and keep on writing those thought-provoking articles (even if they are considered controversial by some). =)

      • Google buyer

         

        Mr. Miller,

        You have to admit that you included a political cheap shot in an article that had nothing to do with either politics or oil. I would guess a fairly large percentage of your audience discounted your story to some extent at that point.

        Your a journalist of some sort, why don’t you report on the only president, or presidential candidates we have had who’s personal house is ‘green’ and ‘off the grid’. You will have to search several pages of google results, but when you finally find a fair evaluation, you will be surprised who you find.

        Next find out which state has the most wind farms and produces the most power by wind. Find out who was governor of the state and was a major supporter of the switch to wind power.

        Maybe then research actual votes on issues and which political party are really for energy independence like pumping our own oil in the gulf, Anwar or pretty much anywhere in the U.S.

        Report which party is more likely to support actually building alternative energy sources like nuclear.

        If you wonder why the greenies and liberals are so up in arms against Bush, it is because they want the federal government to mandate you buy a Prius, whether that solution works for you or not.

        If the government mandated you must have solar cells on your house, innovation in this area would grind to a halt because you are forced to buy them whether they are good or not. Let the technology improve and mature to the point where it is a benefit to the individual and people will use them.

        Conservatives know that ‘free trade’, capitalism, and freedom work (in a nation of laws/justice) every time it is tried. On the other hand they also know government mandates and socialism has less desirable results and usually will fail.

        I would have sent a personal email, but failed to find your email address.

        Kind Regards,

        Douglas M.

      • Guest

        Actually that reply enhanced your standing in my mind as a reader

  • Guest

    Hi,

    My web site is for people living in other continents. It should not have any effect of US Election or economy. I think instead of just discussing this tragedy with one another, we should send emails to google as many as we can; to make them realize the seriousness of the issue.

    So please send one email just now and tell them that you feel.

    Thanks in advance

  • Guest

    Why can’t I read the full article? I keep getting sent to this comments page!

  • http://www.mostwantededucation.com Anonymous

    Articel is really worth . Thanks for the author !

  • http://www.kochicalling.com Desmond Pool

    From a website developers perspective, this document is an asset and it can help adding more money in to his bank account by boosting the page rank up and getting the maximum users.

    Quite sure that getting a page rank 6 or more out of 10 is not a cake walk and not a herculian task if you can invest 4-6 hours of time per week on your dream website.

    Brad Callen’s SEO e-book could be the one to reffer at the time of development of your pages. Even the page design and development cycle should get filtered through SEO facts and strategies.

    Kochi Calling Home

  • http://www.hemroidshelp.com/ Hemroids

    I would tend to agree with finding more than one basket. Learn to divertsify. Setup an ‘in house’ advertising program and get the website to the point where it is an authority in its niche.

    Many people create great websites, then rely on adsense to feed them, which is dangerous in today’s day and age.

  • http://samsmartguy.50webs.com/ Sam

    I think economy is the reason why there are drops in Google AdSense earnings now

  • http://www.crbuses.com used buses

    I love this post, it really delves into the mechanics of Adsense, and more than that – the mechanics of how a powerhouse serach engine like Google can flux the very fabric of online business.

    Any business nowadays who relies on Google rankings for traffic is in for a big surprised. If you offer a unique product or service, then there are alot of ways to get that product or service noticed and in front of customers – and Google is only one angle or channel.

  • http://www.net-income.com.au Net-income.com.au

    Well that explains why I am earning 37% less now than I did 2 years ago. Add the aussie dollar against the US$ and my income has nearly halved from adsense. And in those 2 years I have added 4 sites and many 1000′s of pages.

    I think the time has come to place some eggs in another basket. 

  • http://www.websitesforjewelers.com jewelry website design

    In today’s marketing more is less. What I mean by this is, more channels that are relevant and convert customers for you means less risk and more diverse sources of leads.

  • http://www.cafepaylasim.net CafePaylasim

    thank u

  • http://www.skintagsolution.com Skin Tag Removal

    I remember the days when GA never used to flux this much. Now, I feel it is just part and parcel of the delivery system and smartpricing.

    Also, I believe topic and semantics are heavily mixed in to give the advertiser the best band for buck.

  • http://www.homeremedyhaven.com Home Remedies

    My question would be how much the market effects overall adsense fluctuations. Since the economic issues started in the US, adsense has flipped or flopped wildy for some people.

  • http://www.amoils.com/warts.html Wart Removal

    Quality score and smart pricing are the keys to running both an effective adwords campaign or adsense website.

    Knowing the ins-and-outs of how the process works is what helps the biggest publishers continue to rake in money.

  • http://www.m4s73r.com/ Internet Marketing Indonesia

    thanks for your article. Very help me. I will more like visit to webpronews site. :) Fantastic

  • http://www.seovisions.com SEO Company

    As good as the idea of Google Adsense is, its pretty obvious that fluctuations are becoming more and more of a problem for publishers. Most larger websites that have the ability to create further advertising channels do so simply because Google Adsense is often unpredicatable and the payouts are less than welll established products or services.

  • http://www.coloncleansecentral.com/colon-cleansing.html Colon Cleansing

    I agree with what Jason agrees with when he mentions that there is not a decent competitor. It is very true. Yahoo ads pay way too low and are not targeted enough, and all of the small click networks have lousy payouts, and often questionable ads.

  • http://www.firesprinklersystemsinfo.com/ Fire Sprinklers

    There is no conspiracy theory, it’s simply the law of supply and demand, very similar to how the gas prices have fallen so far recently due to the economic issues which have arisen.

    Adsense is based on bid amounts, which is controlled by Smartpricing, but is dictated by publisher volume. slower economic times means slower ad volume and reduced competition, so lower prices and lower amounts paid out per click.

  • http://www.sendegel.org SendeGel

    Yes, agree on this issue until the end of your article

  • http://www.dulyon.com/ Loose Gemstones

    It’s more than just a wobble – overall cpc has been declining for years and continues to decline, which is why Google Adsense is becoming less and less popular to the large market websites.

  • http://www.curehemroids.com/ Cure Hemroids

    I think that adsense earnings have dropped for some publishers because of smart pricing and I think it is a fair protocol to estimate the value of a click based on the conversion rate. I know many websites that their earnings/click have increased considerably because they are highly converting sites. Google is protecting himself and his advertisers from low-value websites! So, there is no place except for serious websites.

  • http://www.getanybus.com Major Vehicle Exchange

    Thanks for this article. It shows that PPC is ineffective in a market where Goliath (Google) is king without any slingshots around.

  • http://www.vaziyet.net Vaziyet.Net

    I think it’s wrong because google is very very clever.

  • http://treatmentforscabies.org Treatment For Scabies

    Google are dominating search related advertising. Yahoo and Bing cannot complete with them at all, so I do agree that they need some competition just to shake them up – but with such an iron grip on the market, it would be hard for any new competitors to even make a dent.

    I personally do not use AdSense – but each to their own.

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