8 Theories For AdSense Fluctuations

Recently, many web-publishers reported drastic drops in their Google AdSense earnings and offered up many theories as to why that occurred. The problem was reported in web forums, on popular SEO blogs, and in the comments section of the Search Engine Roundtable poll mentioned last time grew to 135 respondents, and the percentages stayed the same: 55% are reporting decreases in earnings.

It could also be that angry people speak the loudest, but many seem pretty sane in their reporting, saying earnings are declining despite level page views and click-through rates.

But we're going to err on the side of the smaller guy, assume you're getting screwed by the big guy, and propose the most possible and/or likely reasons for that. Included with this assumption is that all of you are on the up-and-up with great content, great SEO, great business savvy, and have done everything right but still find yourselves victims of the corporate machine.

See how nice that is? Here goes.

This explanation wins the Google is another good company gone public

This is a more cynical, greed-driven, conspiracy explanation that may resonate with more distrustful element of the audience. You know how everything seems designed to make you pay more at the gas pump? Reports come out that $3.71 per gallon is the tipping point where Americans will drive less, oil is at record prices as companies collude on what to charge on a street-by-street level, and Exxon cites less supply while setting yet another quarterly profit record by pulling in Shareholders like profit.

So, between the third quarter 2007 and when the fourth quarter report came out last week, Google still reported a 34% increase in AdSense revenues over the same period last year and a 12% increase quarter-over-quarter. This is interesting because Google's traffic acquisition cost—the portion of revenue shared with Google AdSense partners—went up only 1%.

The short version: Clicks are up, revenues are up, amount shared with publishers is level.

One proposal says that Google is lowering the estimated value of content clicks in order to protect the value of search clicks, as advertisers shift from network ads to search ads in a slower economy.

Not much explanation needed on this one. Google's making more money from big-name advertisers and big-name websites. Smart-pricing is hitting you hardest because you can't compete with international brands and websites with millions of page views. It also serves as a decent explanation for why Google is sharing the same amount of money with publishers while increasing clicks and revenues.

One theory is that Google is making deals with others (bigger, higher-budgeted companies) for fixed compensation while slowly increasing their take among AdSense publishers, who have little-to-no control over CPC, or even context. If you don't have a very specific deal with Google, they can pretty much do what they want.

This is an interesting theory because it is simple and plausible. People are ignoring ads at a higher rate, and this has been evidenced by eye-tracking studies, especially when the ads appear in the places they expect them to appear. But also there are ad-blocking programs available via the Firefox browser (and other browsers) that block ads altogether.

It may be that your visitors just can't see your ads, either by choice or by software.

Not only does Google run two-thirds of search, but also controls 75% of the search advertising spend. Yahoo gives them a run for their money in display ads, but nobody is even close to knocking the king off the hill.