Why Your Google Adsense Earnings Drop

Not a long time ago I saw a guy opened a post in a famous webmaster forum, asking why his Google Adsense earnings were dropping gradually overtime, whereas at the same time his traffic remained almost the same and his site underwent not a single change. Well, as I mentioned in my previous post (Don't Go Too Extreme When Choosing Keyword For Google Adsense)
, Adsense earnings equal Traffic * Click-Through-Rate (CTR) * Pay-Per-Click (PPC). Given that the traffic and website are unchanged, the only factor that could have to do with his declining earnings should be PPC.

So why is his PPC declining? PPC, as the name told us, is the per-click price that the advertiser is willing to pay to Google in order to get his/her ads display in a favorable place either in Google search engine network or Google content network.(In reality, the PPC will be divided between Google and website publishers. Here for the sake of simplicity, I don’t distinguish between PPC that goes to website publisher and the one that goes to Google). Clearly, the reason that PPC is declining overtime is that the advertiser is paying less and less for Google’s Adwords. Why is that the case? Basically, I think there are three major reasons here.

First, online advertising industry is increasingly competitive. That means, advertising companies need to adopt every means in order to compete with each other. One direct result of the fierce competition between advertising companies is the lower advertising price that companies/individuals could enjoy nowadays, which in the mean time means that poor website publishers have to accept much smaller ad revenues than before.

Second, Google advertising network is evolving rather quickly. No matter the search network, or the content network, the volume of ad places is exploding at an unprecedented pace. As the demand and supply law of economics tells us, higher supply of ad places will lead to lower equilibrium price of ads, which is exactly the case for Google Adwords’ PPC.

Third, advertisers are becoming more and more adept at Google Adwords. As you know, the ad place that one’s ads will display in Google’s advertising network is not only determined by maximum CPC bid, but also by so-called quality score. Quality score is reversely related with the PPC that a company or an individual has to pay for Google Adwords program. That means, the higher the quality score, the lower one has to pay for advertising. Generally speaking, quality score could be largely increased by achieving a high CTR, writing a highly relevant ad text, optimizing the landing page and so on. Nowadays, a lot of people are so good at these techniques that they could actually lower their PPC without sacrificing the advertising effect.

In sum, it’s not surprising that website publishers earn much less from Google Adsense program compared with several years ago. With the increasing competition within the online advertising industry, the continuing thriving Google advertising network, and more and more savvied advertisers, there is not much a website publisher could do to stop the trend. However, it’s not the end of the world. Never forget the equation: Adsense earnings equal Traffic (Or number of visitors) * CTR * PPC.  So, here are my suggestions:

• Never sacrifice quality of content or service for the sake of any kind of short-term gain. It’s the very basic that determines your traffic.

• Never stop optimization and promotion work. Otherwise, your traffic or CTR can’t be high

• Always pay attention to new industry. New industry means not only less competition but also less familiar to advertisers, which might lead higher PPC.
  

Don't Go Too Extreme When Choosing Keyword For Google Adsense

Pay-Per-Click (PPC) of keyword for Google Adsense is a hot topic in all webmaster or advertising forums. Some guys blame their low PPC keywords for their humble return. Some guys tend to ask what are the keywords which the highest PPC and plan to build up independent websites or write blogs around them. There are still some guys trying to make money by providing an updated list of keywords sorted from high PPC to low PPC. Needless to say, no one who hopes to make money purely through Google Adsense will be so stupid to choose the keywords with the lowest PPC. However, should the webmasters follow the strategy of targeting the keywords with highest PPC in order to maximize their return?  Not really.

To facilitate your understanding, let’s go through the mechanism of making money from Google AdSense briefly. If a visitor comes to your site and clicks an ad, you and Google will share the revenue from each click, which equals to the Pay-Per-Click price set by some advertiser. Based on this logic, the determinants of your Google AdSense earnings including the followings:

• The traffic of the website. More accurately, the number of unique Visitors of your site. Let’s designate it as N.

• The Click-Through-Rate (CTR) of your ads. 

• The average PPC of the keywords determined by your website content.

So, the total revenue R equals N*CTR*PPC. Obviously, PPC is not the sole factor that determines your return from Google Adsense. You have to maintain a relative high standard of quality of your website and implement effective and continuing promotion strategy, so as to ensure a good deal of traffic. Meanwhile, in order to achieve a satisfactory CTR, you have to make effective use of ad places in your websites and in the meantime not overuse your website’s ad capacity so as not to scare your visitors away. Content quality and relativity are quite important for CTR, too. Thus, although centering your topic or content around keywords with high PPC is quite important, you have to achieve a satisfactory result of your website traffic and CTR as well.

However, a high PPC never means a highest PPC. If you automatically believe a highest PPC will secure a highest return from Google Adsense, normally you are wrong. Based on my own Adsense data, the keywords which bring me the most return accumulatively are those ones who have middle to upper level of PPC, but far from the highest. Because the web pages related to middle to upper level of PPC are, in a statistical sense, always have a much higher amount of traffic and a much higher CTR than those web pages with the keywords whose PPCs are among the highest,  and the traffic and CTR advantages together far outweigh the disadvantage out of a relative low PPC. Of course, this conclusion is purely based on my experience. If your experience is totally different from mine, don’t hesitate to leave your arguments here in the comment section.

Anyway, I suggest you not go too extreme when choosing keyword for your Google Adsense program. My experience tells me that targeting at the keywords with a middle to upper PPC will bring you a much larger return. Why not take a shot?