Friday, April 04, 2008

Adsense earnings up or down?

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 (108 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, 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, also.

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 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.

Seller Boycott Fails To Impress eBay

No plans to roll back fee or feedback changes

Several times in the past, eBay sellers protested changes in site policies with boycotts. Though sellers received more attention this time, they had the same result in effecting a change: zero.

Editor's Note: All that sound and fury isn't signifying much to the newly-dubbed FeeBay. One commentator says the impact could be on delay as eBayers exit stage left. Nevertheless, Atlas (FeeBay) shrugged, opting for the Wal-Mart approach. You guys had lots to say last Wednesday about it, so this time the conversation should be just as lively in the comments section.

eBay Logo eBay Logo
(Photo Credit: Ebay)
The impact of the eBay seller boycott comes down to a they said/they said kind of argument. Sellers claim a multi-million listing downturn during the boycott week, while the company claims it had no effect.

At one point, sellers boycotting eBay due to an increase in Final Value fees claimed a drop to 12 million listings would represent a victory. One third party count at DealsCart found a low of some 13.5 million listings on one day last week.

eBay shrugged off the boycott without comment, other than to claim the action had no effect. We don't see that as being completely true, since thanks to the Internet this boycott received significant attention leading into its run.

Ultimately it played out in the way we believed it would. EBay isn't going to shift out of a volume-driven model it wants to engage, by rewarding bigger sellers with generous fee mark downs.

There could be a Wal-Mart way of thinking in place at eBay's San Jose HQ. The world's largest retailer makes a lot of money in volume at its brick and mortar stores. For eBay to gain a similar bottom line, they have to scale upwards.

Many of our readers generously commented on our earlier thoughts about the start of the boycott. One commenter claimed the boycott had the desired outcome:

I'm technically not in the boycott, because even if eBay changes the rules, I'm not coming back. I have abandoned the account and when the 180 mandnatory waiting days have passed, it will dissappear. That's $50-$80 per month they've lost out on and I wasn't that active of a seller. To our boycott delight, many of the sellers that are leaving eBay are the kilobuck powersellers. THAT is what will hurt eBay the most.

Another commenter embraced those departures:

Goodbye boycotters, and good riddance. I'll enjoy taking your customers.

We were impressed at the number of people who cited how they bootstrapped their ecommerce sites after departing eBay, not to mention the number of suggestions for online auction alternatives. They voted with their feet and substantial action in response to conditions at eBay they found less than desirable.

Boycotts come and go whenever eBay makes a change. We said it before and we'll say it again: eBay saw minimal impact from the latest one. Faced with another boycott, eBay dropped its listing fees with a one-day special in advance.

Think about that for a second. Boycotters threatened to deprive eBay of business. EBay responded by giving up fee income on top of whatever impact the boycott could generate. If that didn't reinforce the message of eBay's shift in strategy, nothing else will.


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SEO NEWS - Social Media Advertising Will Succeed

Despite the fact that social media advertising has yet to hit its stride and is taking some lumps for low click rates when compared to high pageviews, it will succeed. Social media is a different type of advertising platform from information-oriented websites and the two should not be compared.

The top 25 social media networks delivered over 155 million unique visitors in Feb. 2008 with 70 percent coming from MySpace, Facebook and Add in YouTube and Flickr and you get another 60 million totaling an estimated 215 million humans viewing social media monthly.

Compare that to television where an average 24-hour period delivers around 50 million unique viewers. The highest viewership day of the year, Super Bowl Sunday, has an estimated 110 million unique U.S. residents viewing television. Even over an entire month there is arguably less than 200 million total unique television viewers.

The Internet has become a powerful platform for advertisers to reach mass audiences via user generated video too. According to comScore Video Metrix, U.S. Internet users viewed over 10 billion videos online in the month of December alone. Imagine a 15 to 30 second commercial with each video view and the Internet seems ready today to compete with broadcast TV in delivering commercial views.

Advertising on social media is not about clicks or click rate any more than TV commercials are; it's about quickly reaching reaching a huge U.S audience. Sooner rather than later, advertisers will see social media as a great way to reach mass audiences. After all, in terms of audience size there are several Super Bowls every day on Facebook, MySpace and YouTube!

It simply doesn't matter what the click rate is for Facebook, MySpace and YouTube because they reach huge audiences that major advertisers like Ford, Pepsi and McDonald's can't help but see the value in. Predictably, Adwords buyers will see the value too.

Click rates are a reflection of pageviews and social media sites similar to TV have a large overlapping audience that hang around them all day, every day. Television would have a low click rate too if an ad campaign were measured over the course of a months worth of programs on the same network, assuming you could click the screen.

People also tune in and out of TV just like they do with social media. According to Compete's figures for every unique visitor to YouTube there are 54 pageviews. With Facebook, a unique visitor creates an amazing 564 pageviews in a month and on MySpace each person generates a staggering 1,110 pageviews.

The social media audience is loyal, large and habit-oriented just like broadcast TV. They also hit the prime youth-tilting demographic who are big spenders online and are considered a high value audience by ad agencies and advertisers. Ultimately, what advertisers value is the audience, not just the clicks.

Rumor: Google Limiting Site Exclusions

AdWords advertisers to be encouraged to exclude by category

The debut of the broader Site & Category Exclusion tool will
mean capping individual site exclusions to 5,000 per campaign.

Probably not many advertisers have more than 5,000 sites tagged
as ones where they do not want their AdWords advertising to
appear. Those that do, or want to, will have to abide by a
per-campaign cap.

Barry Schwartz at SERoundtable caught wind of the change via
comments made at WebmasterWorld. For advertisers with campaigns
over the cap, they won't be able to add any new sites until
they get below the 5,000 limit.