AdSense Reveals Negative Trend in Mobile Advertising

AdSense mobile ads provide great clues to the trends and the future of mobile advertising.

The ad network from Google allows publishers to put advertisers on their Web sites and earn money every time people click on the ads.

The two most common versions of Google AdSense are display ads — both textual and graphical — and “ad units,” which are usually just a few concise text ads.

In recent years, Google has rolled out a mobile version of its advertising for sites that entirely cater to mobile visitors or desktop-friendly sites that also have a mobile product.

The standard size is 320×50, although more recently the 320×100 and even the desktop-oriented 300×250 have become more popular because of their higher clickthrough rates.

AdSense Reporting

Publishers who click on Performance Reports will see the ability to generate reports over a specified period of time based on:

• Ad size
• Ad type
• Ad units
• Channel
• Country
• Ad networks
• Targeting type
• Bid type
• Platforms

It is the platform report that is revealing about the trends in mobile advertising — at least as far as Google is concerned.

The platform report is broken down into four types at the time of this writing — desktop, tablet, high-end mobile devices and other devices.

Numbers That Matter

The report has four numbers that matter the most in understanding the trend for mobile advertising.

They are page click-through rate, cost per click, ad unit RPM (called simply Impression RPM in the report) and especially the page RPM (revenue per thousand impressions).

Tablets are considered mobile devices, but for many of them their larger dimensions make them a hybrid between desktops and smartphones in terms of user experience and behavior.

The more important numbers in the case of mobile come from the high-end mobile devices part of the report. It shows the trend and performance for mobile advertising.

A site with a high RPM for mobile devices without a mobile product or a limited one will indicate one of two things: that the site has a relatively good user experience for mobile visitors or that visitors are using the ads to exit the site after a brief visit.

Analytics will show if they are using ads to exit the site if the pages per visit is low and the bounce rate is high. Sites that are poorly optimized for mobile almost always have a low PPV and high bounce.

A site with a strong mobile product using the Google AdSense mobile code will find even more revealing numbers.

These mobile advertising results will offer guidance on how much effort should be invested in a mobile product and at what pace.

How do they compare to the same period a year ago? Is the RPM lower or higher than the RPM for desktop?

If it is close to the desktop number or even higher, it makes sense to invest more resources into mobile.

What Some Sites are Revealing

The trend is not positive. At least one group of more than a dozen sites shows a steadily declining unit and page RPM over the last two years.

Several factors may be responsible for the trend:

1. More sites are competing for mobile advertising, which puts downward pressure on rates.
2. More sites are putting more mobile ads on their pages, which also creates rate pressure.
3. Google has been shifting more high-paying ads from partner sites to company-owned sites to benefit its earnings and stock price.
4. Sites that are able to keep growing their audiences aggressively may simply be outpacing Google’s ability to provide enough ad inventory.

It’s important to note that the online audience in the U.S. is now growing at a single-digit annual pace. Online advertising is growing annually at a low double-digit rate — around 15-18 percent a year.

But the number of Web sites and the number of published pages continues to grow at a high double-digit rate. Some of those sites and pages don’t hesitate to put three to five ad positions — or even more — to capture as much ad revenue as possible.

That means the demand for advertising is far outpacing the supply. The basic supply and demand theory in economics will produce lower prices as a result.

How to Increase Mobile AdSense Revenue

Sites that grow their audiences faster than other sites will either see a growth in mobile advertising — if they grow their audience fast enough — or a reduction in decline. It’s better to have a small decline than a big one.

Proper placement is another way of increasing revenue. Ads placed at the top of a page on a mobile site might not fully load before the visitor starts to scroll. Placing them slightly below the top may improve the click rate.

The size of the ad also matters. As mentioned above, the 320×100 and 300×250 are becoming more popular because they have a higher click rate and more appealing advertiser graphics.

Publishers that created a mobile-optimized site should look at their AdSense performance for mobile platforms before and after the switch.

They will probably reveal a higher cost per click before the switch because visitors were clicking on the much larger 728×90 and 300×250 ads.

But that doesn’t mean a site should give up on mobile because those same visitors may have been clicking on the ads to exit the site as soon as possible. They certainly were producing a lower pages per visit and higher bounce rate. The search engines also were certainly ranking those sites lower in mobile search results.

Audience market share is key. Volume always seems to win online.