Shaken by the AdSense roller coaster? You’re not alone.
Photo credit: MeckiMac
Barely a day passes without more news reports of our foundering global economy. The impacts of the flaky financial markets impact business online just as much as they do our offline counterparts.
We’ve seen this first-hand at Flippa: ad network earnings for sites sold on our marketplace fell significantly in 2012. But we found that not all networks’ revenue declined by the same amount.
Average revenues for sites using AdSense fell by around 40% more than those using other ad networks.
Together, AdSense, BuySellAds, Infolinks, Chitika, DoubleClick and OpenAds/OpenX averaged a fall in median monthly revenue of 13.1% 2012. But the median monthly revenue claimed by sellers using AdSense for that period fell, on average, by 18.6%.
The trend was backed up by this SEO Rountable survey, in which 63% of respondents claimed their AdSense revenue fell in 2012.
AdSense is the web’s most popular ad publishing network, with around 74% market share. So what’s going on?
We decided to take a closer look at the reasons behind the decline—and try to work out whether AdSense still makes sense for publishers in 2013.
Algorithm updates: a likely culprit?
To make money from AdSense, a site owner needs two things: ads to fill their ad space, and traffic—people to show those ads to.
AdSense users have little trouble finding ads to fill their space, which is sold through Google’s AdWords network. But what about traffic?
When we looked at our data for all sites sold on Flippa last year, we found that monthly uniques were down by a whopping 38% on average.
And what do most of us rely on for site traffic? Google.
The SEOMoz Google Algorithm Change History shows that 2012 saw Google continue its campaign of continuous improvement to its algorithms, with large updates—or large numbers of updates—being made throughout the year.
January’s Top-heavy update was directly focused on sites that showed too many ads above the fold. It was followed up in October with what pundits dubbed “Top-heavy 2”.
This update devalued pages that contained so many ads above the fold that it was difficult for users to discern the content—something Google positioned as a user satisfaction issue.
Top-heavy really set the scene for the updates that were to follow throughout 2012. Google’s focus on providing users with quality results remained steadfast.
The Penguin anti-webspam update in April targeted blackhat SEO techniques including keyword stuffing, unnatural links, and so on.
Google said in its announcement about the update, “this algorithm affects about 3.1% of queries in English … but the impact is higher in more heavily-spammed languages.”
But it seemed that many non-spam sites were affected by Penguin too.
August’s SERP Crowding update continued Google’s work to more clearly present search results based on users’ past search behaviour.
The update saw shorter SERPs, which previously appeared in around 4% of results, show up in 18% of the searches SEOMoz conducted.
This meant that less SERP space was available to competing sites.
Hundreds of smaller changes were also made to the algorithm through the year, focusing on links, site authority, search localization, a site’s DMCA takedown history, old and outdated content, and more.
Each update had the potential to reduce traffic to less competitive sites, and indeed, some individual reports of those impacts, like this one, appear linked to the algorithm changes.
As the updates rolled out, many in the online community noticed “ranking flux” as the search engine reshuffled sites within the rankings in the following days. Some sites that managed to retain their rankings overall may still have lost traffic during the flux periods.
While we can’t say how much of the 38% decline we saw in sites’ unique visitor stats was due to Google’s changing algorithms, we can theorize that the changes impacted site traffic—and therefore earnings potential—in 2012.
Of course, Google’s algorithm updates had the potential to affect every site that appeared in the search results, regardless of which ad network they used—if indeed they even served ads.
So can the decline in average AdSense revenues be put down to Google’s algorithm updates? Not entirely. Before we dig into the implications there, let’s look at the AdSense service itself.
AdSense: having an impact?
If Google’s algorithm changes affected site traffic, what about the AdSense service itself? Ranking flux, for example, may have contributed to ad revenue flux for site owners throughout the year.
But there were other controversies. If webmasterworld and other forums are anything to go by, many users whose ad revenues were declining put the blame on what they felt were “irrelevant” interest-based ad placements.
Ad rates in decline
AdSense is fed with ads placed through AdWords advertising network, which also showed poor performance in 2012.
Google was forced to drop its ad rates by 12% in early 2012, following an 8% drop in late 2011.
With advertisers paying less for space, publishers on AdSense would inevitably receive less for displaying those ads. Google itself reported reducing earnings for the period.
Without an analysis of the ad rates for the different networks at the time, it’s difficult to compare the impacts of ad market forces on the revenues of publishers in those networks.
What we can say is that the issue of declining ad rates was market-wide, affecting all networks to some degree.
Not all bad…
Despite all this, some publishers increased their AdSense revenues in 2012—24%, according to the SEO Roundtable survey we mentioned earlier.
So what were they doing that the others weren’t?
According to netmeg, a member of the webmasterworld forums, AdSense success takes time, practice, and dedication.
“When I first started, I got really mistargeted ads too, and it took a slap year or more for Google (and me) to start learning what works on my sites. And I had to make some changes in the way I wrote for it. And I paid attention to who was using it and how they were using it. And I developed some strategies to find where else these people hung out and how to maybe bring them to the sites, get them to share it with their friends, etc.”
An interesting point this publisher makes is that she’s also an experienced AdWords advertiser. She said this experience had helped her get an understanding of how the system worked as a whole, which helped her better target her content and ads—and ultimately grow her AdSense revenues.
Is AdSense still worth it?
From our research, it seems that the AdSense service is continuing to do what it’s supposed to—deliver relevant ads to publishers’ pages—and Google’s algorithm updates are doing what they’re meant to: improve the quality of search results.
And there are, of course, more targeted updates to come.
This means that more competitive sites are getting more traffic, and a larger slice of ad revenues. And less competitive sites get less traffic, fewer ad clicks, and less ad revenue. Regardless of the ad network they’re using.
So why is AdSense revenue so much lower than the industry average?
Perhaps because the service is used by so many more site owners—and, likely, more beginning site owners—than the others.
Making money by selling ad space is hard work, and it’s only getting harder. Experience matters. Yet AdSense may well have a larger proportion of less experienced publishers on its books. These sites will continue to struggle for traffic and ad revenues, whatever network they use.
But those who are willing to dedicate themselves to their users, who watch to see what works, and use that to inform the development of their sites, will find it easier to remain competitive—and make money with AdSense, as well as other revenue streams—in 2013.