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 for AdSense partners.

First, 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 websites 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. They were higher in part because of Google’s ability to target viewers with contextual advertising. It also uses cookies from its search engine to follow viewers around the Internet and “remarket” ads.

Massive growth followed suit. Some publishers derived all of their website 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. Others had weak content that didn’t provide good context for the ads.

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 reasons above. They include:

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

Mobile Impact

It also is commonly known that both revenue and audience are shifting more from desktop to mobile. Mobile revenue is often lower than desktop because mobile sites struggle to display as many ads as desktop. Mobile sites also require more scrolling, which reduces click rates.

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.

The total amount of revenue shared with partners continues to grow. But growth is 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.

Most importantly, the competition for Web ads is growing much faster than the available number of ads. The number of new websites and new pages on existing websites is outpacing the growth in online advertising.

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.

Tactics for AdSense Earnings Down

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.

Tactics include:

• Focus on higher-value content
• Implement better SEO practices
• Grow product and audience faster than the competition
• Continue development of a better mobile version of the product (hoping that the volume of audience growth will compensate for lower RPMs)
• Seek alternative revenue sources such as direct sales, classifieds, affiliate marketing and alternative remnant providers.

A successful website generates more profit as a result of more revenue. But it also generates more profit as a result of better cost controls.

Profitable publishers work to 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.

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.