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Boost Ad Impressions to Make Up for Declining CPMs, CPCs

Stored in: Online Advertising and tagged: ,

ArrowsThe largest online advertising company on the planet is proving that it can increase revenue every quarter, but it is finding that it must overcome a steadily declining cost per click.

Google has been reporting quarterly earnings that include two interesting statistics.

One is that the volume of paid clicks is increasing. The other is that the cost per click is decreasing.

Despite the cost per click decline, total revenue from all Google sites continue to increase.

It is further proof of a basic online advertising trend that has been in place for years with banner ads, which have had steadily declining average CPMs thanks to the massive volume of ads online along with ever-growing ad blindness on the part of consumers.

In the case of Google ads, one of the most commonly accepted reasons why the cost per click is declining is because of the rapid growth of mobile usage and advertising. Mobile ads have a much lower CPC and are leading a shift toward a higher volume of cheaper ads.

What to Do About Declining CPMs, CPCs

Google has revealed a simple strategy in addressing its declining cost per clicks: increase total ad volume faster than the declining CPC.

This solution has been in place for years in dealing with the fall in CPMs for banner ads.

That’s one reason why the company has the Google AdSense program — to increase the volume of ads by offering a revenue share with partners who distribute extra inventory. Microsoft’s Bing has done the same thing with the more recent launch of Media.net.

For sites that want to increase ad volume, one tactic has been to increase the number of ads per page, but that comes at a cost in site performance. In fact, it became such a problem that Google announced it would penalize sites that had too many ads per page by reducing their search ranks.

Every ad requires at least one javascript and sometimes more. Animated ads have large file sizes. Even with three ads per page, the total file size of a page can reach 500 KB or more compared to 10 years ago when pages were considered heavy if they exceeded 100 KB.

Audience Growth with a Twist

The second and much better answer has been to increase unique visitors, the frequency of visits and the volume of page views, which in turns increases ad inventory.

Increasing unique visitors seems obvious, but it’s not always the best answer. It’s not uncommon for a site to increase unique visitors while seeing a decrease in pages per visit because the audience is going to a page with a high bounce rate.

If the tactics result in a shift away from high-performing pages, such a site could literally end up with no increase in page views and therefore no increase in ad inventory.

Better results come with tactics that increase visit frequency and pages per visit. This simple approach has a dramatic impact on the number of ads on a site.

Try the following scenario.

Site A has each month:

  • 1,000 unique visitors
  • 2,000 visits
  • 4,000 page views
  • 12,000 ad impressions

The key ratios are two visits per unique, two page views per visit and three ad impressions per page.

After a great deal of effort, Site A transforms its audience performance:

  • 1,000 unique visitors
  • 3,000 visits
  • 9,000 page views
  • 27,000 ad impressions

The new ratios are three visits per unique and three page views per visit but still three ad impressions per page.

Notice that the unique visitors didn’t grow, but the visits per unique ratio grew 50 percent, pages per visit also grew 50 percent and, most importantly, ad impressions jumped by 125 percent.

Ad Volume is Key

The numbers from Google and the scenario above shows that total ad inventory is key in compensating for declining CPMs as well as declining CPCs.

It’s tough to grow unique visitors in an increasingly competitive online environment. It’s also somewhat tough to grow the visits per unique.

But it’s easier — not easy but easier — to grow pages per visit by following some common tactics:

  1. Increase site speed.
  2. Improve navigation and search.
  3. Focus promotions on entry pages that lead to more pages per visit.
  4. Prioritize promotions based on the best return on investment.
  5. Hold every link to the highest standard for clicks.
  6. Analyze user behavior at least weekly.
  7. Adjust the product accordingly.

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