What makes AdSense AdSense?

That question is very important to understand why AdSense will undoubtedly take damage in the financial crisis. AdSense is the leader in CPC advertising because they have a large pool of advertisers which allows them to show relevant Ads on the publishers’ websites. Because of the fact that they can show extremely related ads both the advertisers and publishers earn money. The advertisers have a higher ROI (return of investment) because they get a lot more conversions per click compared to other advertising programs. The consequence is that the advertisers are willing to pay more for every valid  click they get and as a result the publishers earn more as well. Relevancy is the key of AdSense’s success it’s what makes AdSense different from other CPC networks. (Actually it’s no more a real CPC network it’s a CPA network. It’s an affiliate program because the ROI sets the price of the click.) If you generate less sales then your CPC will be adjusted by AdSense. A lot of sales can only be achieved by relevant advertisements.

"There are niches that have a higher conversion rates than others. For
example if you run a website about a computer game then your audience
mostly consists of kids which don’t have a lot of money, however in the
dog niche for example, you have adults as visitors and they tend to buy
products more often." - Adsense CPA or CPC

What could disbalance Adsense’s system?

Google is the king of advertising programs simply because they are able to display relevant ads. If they are somehow no longer able to display that relevant ads their whole system could collapse. That danger now occurs because of the financial crisis. Companies are collapsing and so are advertisers. If all those companies are no longer able to pay for ads then Google will now longer own the relevancy throne. Not only companies collapse, but also individuals. There are a lot of individuals working together with AdWords and a lot of individuals no longer have the money to pay for advertisements. To sum it up, once Google lacks the advertisers the whole system of showing relevant ads no longer works as it did the past year.

The losers: both Advertiser and Publisher

If Google is no longer able to display display relevant ads both the publisher’s CTR and CPC will lower. There is already one form of drastic CPC reduction: Smart Pricing. Google uses smart pricing to make sure that the advertiser still earns something with AdWords, in other words they want to make sure that the Advertiser still has an adequate ROI. The current situation could result in smart pricing for every publisher.

The publisher continues showing ads with the difference that because of the lack of advertisers he is showing less relevant advertisements. Less relevant advertisements means less clicks. The reason: On website about  “car insurance Hollywood” the probability that someone from Hollywood clicks on “Car insurance Orange County”  is lower. It’s not what the visitor is looking for. The rate of miss clicks/interested clicks changes as well. With no more relevant ads the interested clicks decrease whereas the miss clicks increase. The result of both is a lower CTR. With the lower CTR the publisher (you) earns less.

Now that the Ads are no longer relevant the quality of the clicks for the advertiser also reduces. The previous “car insurance Hollywood” ads will be replaced with alternative “Car insurance Orange County”. A visitor clicks on the advertisement (could also be a miss click) and either closes the website right away (missclick) or has a look on the website and says: “NO! I was looking for Hollywood car insurance, I won’t buy anything you Orange County cammers!” The result are lower conversion rates for the advertiser. Lower conversion rates means lower ROI. Lower ROI has the consequence that the advertiser is no longer willing to pay that much for the ad. To make sure the advertiser continues advertising Google has to cut the publisher’s CPC (same effect as with smart pricing). That consequence’s consequence is a chain reaction. Some advertisers might discontinue advertising and therefore aditionally reduce Google’s ability of displaying relevant ads. I explained the result of that above.

Now that the publisher earns less he is also unable to continue investing in AdWords. I know a lot of publishers who use their AdSense revenue to finance AdWords campaign. What is the result of that? You know it, less advertisers and less relevant ads again!  Lower CPC means less earnings for the publisher. The lower ROI means less money for the advertiser. Both are the losers of the crisis. It sounds horrific and yes, it is horrific. Let’s now see whether some bloggers already experienced unusual changes.

The (AdSense) world is out of joint

I asked several AdSense publishers on Twitter to @hendricius me whether they noticed any change in CTR and CPC.

Matt Smith from SmithSense said: I earn about $30k/month in adsense. I’ve seen No reduction in CPC or click through over the last 6mo. despite econ situation. (See our interview – very inspiring.)

@JamesFrancisIM from JFIM said: Not really. I still get good CPC even now, although I suppose it depends on what niche you’re in

@joelcomm from JoelComm said: yes, AdSense is definitely down. But traffic is great and overall revenue is UP!

@PassTheBoll from PassTheBoll said: I am experiencing some pretty bad results so far. Just a year ago I would’ve made close to $100/mo with my current stats.

@ellenm1 from DesignSpace said: yes, adsense has dropped, mostly over the last month.

@jacky_brown from CasaOfCash said: getting lower cpc on adsense sites, but may need to do some remodeling.

@rajupp from TechPP said: its very inconsistent. Yesterday it was damn good, today its just the opposite, not sure what to expect from Google. Note: I previously helped him to up his CTR.

I myself noticed a decreasing CTR and CPC. My earnings compared to 4 months before lowered by around 30% whereas the traffic increased by 10%.

What’s gonna happen next?

Good Bye AdSense?

AdSense will have to struggle with less advertisers, less publishers and less money. Advertisers and publishers will start direct advertising to make sure that they earn most (100% compared to 75% is a difference). An alternative for them would be to move to other CPC networks, to try affiliate marketing or publishing ads on a CPM basis with other companies. What worked extremely well for me was Chitika. Chitika has even more relevant ads than AdSense in some situations as of their way to identify what the visitors are interested in. The improved relevancy allows them to pay more per click: The CPC is around 20% higher on my gaming site than with AdSense. Ad layout is also an advantage, but that’s not part of this post.

Sticking to AdSense? Make sure to take precautions!

The key to success with AdSense is as said before having relevant Ads on your website. We are unable to influence the negative advertiser trend. However, we can take some precautions to make sure that our Ads give the advertiser an high ROI.

1. Use Section targeting to make sure your ads are as relevant as possible.
2. Use Text ads, they are known to be more relevant than Image ads.
3. Remove your Ads from unrelevant content such as About me, Contact me pages. Forum Owners: No Ads in General Chat forums.
4. Not too many ads.The more ads, the more missclicks, the less the quality of your clicks. Low quality clicks don’t convert and are thus not worth that much for the advertiser = no CPC.

Thanks a lot for reading and I hope to have explained the current situation quite well. Make sure to comment and check out the forum thread for further ways of discussing.

You gotta decide between PPC (also known as CPC, stands for Pay per click), PPA (also known as CPA, stands for pay per affiliate and CPM (PPM, pay per impression). Some blogs tend to work better with CPA programs, others with CPC programs and others with CPM programs.

I made the experience that CPC programs run best when you have a niche blog. Your blog should not be about different topics, only about one. That way the CPC-programs can easily put related advertisements on your website which then tend to be clicked by your visitors more often. One very good advertising program is Google Adsense (you probably know it, if not you must be a newby lol). Because of the intense amout of advertisers Google is able to put extremely relative ads on your websites. As said before, the advertisements are appealing to the visitors and will consequently get clicks. To make it a little easier to understand: Let’s say your blog is about lawyers in a district of New York – there is an advertiser interested in putting advertisements on websites about exactly that topic. The ads are shown the user and they click on them because they were looking for a lawyer. Always keep in mind that the success to Google Adsense is the niche relevancy and the amount of clicks. The more clicks, the more money. The relevanter the better earnings per click (general sites suffer from smart pricing). I have mainly worked with Google as CPC program, but alternatives are Yahoo, Bidvertiser and some others of which I currently forgot the names.

The next category of advertisement are CPM ads. Those advertisements will get you money per impression. Sounds great because it is independent on clicks, however, those advertisement programs usually tend to pay out less. They do not have as targeted ads as the CPC programs, therefore do not have a large ROI (return on investment) for the advertiser. For me they pay out around 50% of what google-adsense pays. Usually you are forced to use those programs simply because you either got banned on adsense, or notice that your money per click gets lowered drastically. I worked togehter with some of them and made best experiences with: Adsdaq and Tribalfusion. If you need wellpaying pop-unders then Valueclick is the network to go. Their pop-unders pay out like on no other network. Cpxinteractive is good if you want income without really doing something. Just place their code and you can expect medium-earnings. The prior networks pay out well if you dedicate some time to play around a little. I will be writing a post about ad tiering for more money soon (helps to get more money out of CPM ads).

An alternative might be CPA advertisements for you. There some niches that are known to payout very well with affiliate advertisements. The dog niche for example will make you rich with CPA ads… You probably ask yourself why – in fact I did so too… It is fairly easy to understand – look at the audience of people that are interested in dogs. Most of them are 30+ and already have an income. Those people have money and usually (at least in Western-countries) do everything possible for the health and good of their pet. Those people are eager to buy products, the conversion rate is extremely high. An example: A dog is suffering from a disease – the person owning the dog searches for help on the internet and then finds your website. The person sees an advertisement related directly to her problem. The chance is high that she will click it and perhaps buy the product. So if the product costs around 500$ (some people pay that for the good of their dog) – then you get around 15% – what is 75$. Some friends told me that their sites where extremely well converting with a conversion rate of almost 5%! Wish I had such a blog and could run CPA advertisements hehe. Popular ones are the Ebay Commission Junction, Amazon-ads or Google Adsense. I have once been trying Zanox – but they scammed me around 200$. I am still waiting for a payout. Would love to know if you made better experiences with them.

CPA advertisements really depend on the niche – for example on my main website (it is about computer games – D3scene.com) – I would not be able to make any profit from Affiliate advertisements. The audience is maily around 15 years old. Most of the users do not even have a credit-card or paypal account. The chance that they really buy the product is very low. And the money behind a computer-game is not higher than 50$ – making it unattractive for gaming niches to run CPA ads.

Another possibility if your blog is about a specific software would be to use Pay-Per-Install advertisements. Those advertisements get you money whenever someone installs software. However, you will need to merge the software’s .exe with some kind of sponsor program .exe – which will make the audience of your blog never come back. Trust me, if a website tries to install crap on my computer I will NEVER even open them again. Zangocasg is the most popular one.

All in all you need to experiment – there is no 100% perfect advertising solution for your blog. The advertising niche changes every year and has new products which might increase your money. I recommend you to try out different advertisement programs and to see which one performs best for your blog. Not that I know everything, but I already know a decent amount – still – there is so much that influences your advertisements and I can not tell you the perfect solution. As stated above – experiment.

Analyze the design and layout of your blog or site. Pick which spots your visitors are most likely to look. In research studies, visitors tend to start by looking at the top left corner of a page, and then proceed to move downwards throughout the page. It is much like reading a book, you start at the top of the left page, and then you read from left to right, down to the bottom of the page. This is what visitors do when they look at a website or a blog. One of the best spots to put your ads is the place where people start to read on your page before they start pressing the scroll down button.

You want to make sure that there is a good sense of flow throughout your site; everything needs to blend to keep your visitors from becoming confused and frustrated. A great way to blend your ads is to use tables. Tables offer a clean and appealing look to your ads, that turns a visitors attention to the actually ad, instead of passing the ad by. If you can get the visitors attention to the ad, you can earn money. If you are having some trouble with the position of your ads, and you are not getting the amount of clicks you desire, try checking out some of the larger Adsense sites, just to get a more comfortable feel of how they position their ads. After all, they are larger Adsense sites for a reason, so they must be doing something right.

Heat map where users click

Play around with your ad positioning, do not just stick your ads anywhere on your pages, and wait for money to roll in. Try to experiment which positions work for your visitors, and for you. You should eventually reposition your ads every once and awhile to keep your regular visitors from getting bored with your ads, make sure to keep it fresh and new! Try to keep from making your site or blog look like just a site full of ads. People do not want to visit a page and be bombarded with loads of ads, this tends to make people want to immediately press the back button, and move onto another page.

Adsense allows you to have up to three ads, so try being strategic about this, and take full advantage! Remember that location is key factor here in the Adsense process; you need to test things out, and see what is working and acknowledge what is not working. Once you can see what is working you can continue with this strategy, while moving your ads around to keep things alive. People these days tend to get real bored real fast, you want to make sure that you keep your visitors wanting to come back for more, liven things up!