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 you may know already, 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.
Article Source: http://
www.articlesbase.com/ppc-advertising-articles/why-your-google-
adsense-earnings-drop-1734157.html
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E-Business 101
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