Here is an AdSense question which we were asked during a AdSense consultancy skype call:

Adding more ad units to a page lowers the CPC drastically, and eventually the total earnings?

To answer this question, take a look below or at our forum’s post: CTR increasing, CPC decreasing.

Several people reported to me that their AdSense CTR is actually increasing but their CPC (PPC) decreases. This is an interesting phenomenom especially because it seems to make CTR optimization useless. I noticed the same thing and would like to share my thoughts on this.

It is not the CTR optimization that is flawed. The AdSense CPC is determined by:

• Quantity of ads on the website, simple offer/need relation.
• Quality of the clicks
• Bid on the keyword

Previous CTR optimization always included adding more ads, however it seems like that adding more ads will actually lead to reduce the CPC of each of the Ads. CTR increases but CPC decreases resulting in zero change of AdSense income. Furthermore adding more ad units to your website ruins the user’s experience resulting in both more missclicks and “get me outa here” clicks, lowering the CPC.

So, from my point of view you should definitely be doing CTR optimization, however not add more ad units. Optimize your current ad units by relocating them and changing the design, that’s it, nothing more.

I will be trying this out, removing 4 out of my 6 ad units on my main website. I’ll share whether I actually notice a CPC increase.

UPDATE:

So far my earnings have been around 30% for a week. My CPC did not go up. My CTR decreased to around 30% of what it has been before.

It could take some time until google re-calculates the price of the ad so I’ll test this for another week.

My CPC is extremely low (or: dropped by 50-75%), how did that happen?

Because Google’s income comes from Advertising – they give great care to their advertisers. After all “they”, the advertisers, keep Google alive. When you get hundreds of clicks on your ad units, but the advertiser is not selling anything from your clicks. Then Google will penalize you to PROTECT the advertiser. And yes if it happens on one of your websites, all your websites will suffer from it. This myth is called: AdSense Smart Pricing.

What basically happens is that you, as a publisher, will still get some money per click although this will be around 1 cent to max 5 cents per click. Simply put: this is a penalty because you are not optimizing your pages which you are using AdSense on. Help the advertiser, and he will help you!

Hendrik wrote a long post on how he got out of smart pricing, a must read. And for the record: a low CTR (click through rate) has nothing to do with smart pricing. A low CTR could mean 3 things:

• Either your page is poorly optimized for AdSense to show relevant ads
• The adsense placements are not ideal
• Your traffic is not targeted

Getting targeted traffic is actually only possible with search engines or niche forums. Social traffic will not convert into sales for advertisers. Google will see that because on every computer you have are doubleclick cookies, which track what sites you are visiting. Google understands that so they introduced interest based advertising. Visits from StumbleUpon or Digg are pretty much worthless. They come with thousands and they leave with thousands in 8 seconds.

You might want to check out the post Hendrik wrote on increasing the CPC.

What are the best performing ads?

The best performing ads are not necessarily the highest paying ads.

…yea?

I’m going back to the first example I gave in this post: Would you rather have an ad that gives you $1 per click and gets clicked 10 times, or an ad that gives $0.40 per click but gets clicked 100 times?

Understand that some ads are just better written than others and will attract the attention of the visitors more. Google knows what the best performing ads are and will likely display them since it gives Google a good amount of money as well.

If your ads have a high quality score, meaning getting a lot of clicks. Google actually rewards you by taking less money per click for themselves and give more to you as a publisher. Normally Google takes about 25% of the CPC, and the rest to you. (noone knows for sure though, it’s more of an estimate)

Note this: the best performing blogs are the blogs that are best optimized for one keyword (a.k.a niche blogging) and have targeted traffic.

How do you know when you fully optimized your blog fully to one keyword phrase? If the majority of your web pages get the same ads regardless of the individual posts then you have successfully optimized your blog for a keyword phrase. If, however, you get different ads on every single page, then your blog is not optimized for one topic. If you want the best performing ads for your main keyword phrase then you have to optimize your entire blog for them and not just a few pages.

Social Traffic and AdSense

If you are a profound user of any social media website, you must understand that any digg or stumble visitor is not targeted. Most of these social visitors will hardly ever click an ad – and that’s a good thing. Because Google tracks every user and where they come from (double click cookie) – they know that Digg doesn’t send in targeted traffic. Meaning that you could be smart priced if most of your clicks come from that source. Unfortunately a few will click an ad from time to time. And when they do Google knows where they came from and knows that they aren’t targeted traffic looking for that what you offer on your website. They are just casual browsers and if you get too many of these casual browsers clicking your ads then Google will discount the hell out of your CPC in order to compensate the advertiser who is getting really untargeted traffic from your site.

Google will smart price you until you provide quality traffic. Social traffic is not quality traffic and if you get a lot of it then you had best not have Adsense on your site. Because you have a lot of social traffic that rarely clicks ads you will have a very low CTR – hence the misconception that low CTR means you are smart priced. You aren’t smart priced because you have a low CTR, you are smart priced because your traffic is crappy and not targeted for the ads you display. You get a low CTR just because most of your traffic doesn’t click any of the ads.

Sure social traffic might be good for affiliate sales, but that’s not my expertise.

If you have further questions regarding this post, and I’m sure you do, then do not hesitate to drop a comment below.

Oh and be sure to jump in the forum if you have tons of questions :)

Greets,

Mark