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AdSense Earnings Down? You Are Not Alone

AdSense earnings regularly go down for some sites and keep growing for others for many, many reasons. But some disturbing trends point to red flags about the future of the product for AdSense partners.

AdSense logoFirst, some background. Google AdSense is one of the greatest product developments on the Internet. The company brilliantly decided to expand its search advertising inventory by allowing other Web sites to publish its ads and split the revenue with a healthy 68 percent going to its publishing partners.

Even better, AdSense RPMs (revenue per thousand impressions) were much higher than RPM shares from other ad network providers.

Massive growth followed suit. Some publishers derived all of their Web site revenue from AdSense while others used it to fill unsold inventory.

But Google learned that not all publishers deserved the amount of revenue they were getting. Some were using shady tactics such as clicking on their own ads. Some didn’t deliver quality clicks for the advertiser.

The list of reasons to downgrade an AdSense partner started to grow.

Valid Reasons for Declines

Google itself has listed some reasons why earnings will decline on a site in addition to the two big reasons above. They include:

  1. Declining page views and ad inventory
  2. Declining click rates because of poor targeting, ad blindness or invalid activity
  3. Declining cost per click because of blocked advertisers, an emphasis on low value content (i.e., forums), seasonality and even the economy

It also is commonly known that revenue is shifting from desktop to mobile, but mobile RPMs are lower than desktop.

Site speed is another reason for a possible decline. Ads often appear last on a page because of a combination of image size and the javascripts needed to display them.

If the page loads slowly because it has a lot of other images and scripts for content, the visitor may move on before the ads have a chance to appear.

Major Trends That Impact AdSense

Google generally doesn’t discuss the company policies and decisions that affect AdSense, but some information is revealed in its quarterly SEC filings.

Those reports show the trend in how much revenue gets shared with partners every year:

2005 – 44%
2006 – 39%
2007 – 35%
2008 – 31%
2009 – 30%
2010 – 30%
2011 – 27%
2012 – 27%
2013 – 24%
2014 – 22% (first three quarters)

The total amount of revenue shared with partners continues to grow, but at a much slower rate than the revenue Google keeps for itself.

The reasons are clear. The company has to grow its earnings and stock price. Keeping only 32 percent of the revenue for itself from the partner network will be little help in growing its earnings at the same pace every year.

It’s logical to assume that the company is keeping more of the higher-paying ads for its own sites and distributing the lower-paying ads to the partner network.

Even though the partner share of AdSense grew 5.2 percent between 2012 and 2014, total online ad revenue grew 18 percent through the first half of last year, according to the Internet Advertising Bureau.

In the meantime, one source said that the number of Web sites grew by 20 percent in 2013 and another source puts the growth in Web pages at about 60 percent a year.

In other words, the competition for Web ads is growing much faster than the available number of ads.

This means that sites that have been doing the same thing for years may see  a loss of ads to other sites that are new and also doing the same thing.

What to Do about It

Google of course has a right to do with its ads whatever it wants. A site that sees its AdSense earnings go down needs to consider options other than the ones described above. There are plenty of ways to increase revenue.

“What it probably means in the long run is a major shakeout in ad-supported content sites. Only the strong and lean will survive.”

First, review current site practices to focus on higher-value content, better SEO practices, active participation in Google+, development of a mobile version of the product (hoping that the volume of audience growth will compensate for lower RPMs) and development of higher-quality content.

Second, look for alternative revenue sources such as direct sales, classifieds, affiliate marketing and alternative remnant providers.

Third, reduce costs to increase profit, even if the revenue continues to go down. For individual site publishers, that cost reduction can come in the form of higher productivity with labor — faster, leaner, simpler.

Unfortunately, the growth of Web sites and Web pages is far outstripping the growth in ad revenue.

Even if Google grew partner revenue at the same rate, it is inevitable that the average site will see at least a moderation in its revenue growth if not an outright decline.

What it probably means in the long run is a major shakeout in ad-supported content sites. Only the strong and lean will survive.

One Response to “AdSense Earnings Down? You Are Not Alone”

  1. Baba Says:

    I’m going to try using a combination of ad networks instead of relying on AdSense

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