On Sept. 2, Google announced that they would now allow their AdSense clients to post ad code in two or even three places on their site.
Envisioning a doubling or even tripling of ad revenue, clients from around the world immediately set to work to add more ads to their site.
However, instead of seeing an increase in revenue, the revenue actually dropped.
Why?
Think dilution.
Google ads work well because they deliver page-relevant ads. Site visitors click on them because they are pertinent to the subject of the page that they are on, which they went to because they were looking for something of interest to them.
However, Google’s supply of advertisers is not limitless. More ads on a page means fewer ads will be highly relevant to that page. Lower relevance means fewer clicks. More ads of lower relevance begins to be anoying to visitors. Anoyed visitors do not click on ads.
The law of supply and demand kicks in.
One site reports that from Sept. 1 – 5 the click-through ratio went down nearly 30%.
But click-throughs rates are not the only thing effected by the dilution of the ads. The payout per click dropped nearly 20%.
Combined, this resulted in lower revenue, not higher, even though most pages of the site now had two places showing ads — one in the right margin, and one at the bottom of each page.
The site’s traffic, which presently is around 12,000 impresssion per day, increased by 17% during this period, yet ad revenue dropped by a whopping 46%.
The bottom line is that relevance is what drives click-throughs. It is what makes an advertiser’s dollar worth while. More ads means less relevance, and an overall impression of irrelevance effects all the ads in the ad group.
The strategy, therefore, is to reduce the number of ads in order to increase revenue, not the other way around.
Finding the optimal number and placement may take some trial and error.
Perhaps Google will come up with a way to adjust the number of ads automatically, by guaging click-throughs and adjusting accordingly.
Meanwhile, even if others continue to dilute the general pool of ads by having too many ads on a page, a site that cuts down on the number of ads is still likely to increase its revenue.
Fewer ads means greater relevance. Greater relevance means higher click-through.
Until the ocean of AdSense clients in general backs down, though, the income-per-click will be watered down.
It may take some time to recover from this recent improvement.
Meanwhile, the general sentiment remains one of gratitude to Google because their AdSense program has enabled thousands of sites to generate significant revenue while also providing their customers with additional meaningful content.
We recommend that Google send the following proposed letter to all of its AdSense clients.
TO GOOGLE ADSENSE CLIENTS:
Based on the statistics we have gathered and analyzed from this recent change in policy that allows AdSense clients to post ads in two to three locations, we would like to make some recommendations regarding the volume and placement of ads on your site.
Many of you have noticed that even though you are placing more ads on your page, that your revenue has actually decreased. Your click-through percentage rate for many has gone down.
This is because the more ads you have on your page, the less able the system is to deliver ads that are relevant to your site. It is a dilution factor. Think supply and demand. The fewer the ads, the more relevant.
We have found from our statistics and feedback that what your visitors like most about Google ads is that they feel more like an interesting “see also” than an advertisement. Advertisements sometimes evoke a feel of intrusion. Relevance changes that. The more relevant the ad, the higher the probability of a click.
The trick is to find the balance.
On one extreme, a site filled will adds will be a turn-off to the customer, and the ad relevance will be greatly diluted, giving a general impression of non-relevance, and therefore a diminished interest on the part of your site visitor.
On the other extreme, just one ad will have a very high probability of direct relevance, and therefore a high click-through rate.
It is conceivable that you could get more revenue from one highly relevant ad than a page full of ads.
More is not always better.
Between these two extremes is an optimal level.
We have run a statistical analysis of all of our AdSense client sites, taking these factors into consideration, and we have found that the optimum at this time is ____ (e.g. three) ads, divided between ___ (e.g. two) locations on the page.
This is a generalization and will be different from page to page, depending on how common or rare the subject matter of the page is, and how much our AdWords vendors pay to deliver content to that subject matter.
By targeting this optimum, you will increase your probability of generating more revenue, and of having visitors who are pleased with your ad content.
Periodically, we will be reporting to you what the general optimums are so you can modify your presentation accordingly, and thus maximize your ad relevance and hence, your revenue.
We are also working on a feature to add to your AdSense control panel that will recommend to you a specific optimum for your account, channel by channel, based on the factors mentioned above.
A future release will automatically increase or decrease the number of ad spots on a page like a governor on a car, to optimize the revenue that comes from relevant ads.
END OF RECOMMENDED LETTER FROM GOOGLE TO ITS ADSENSE CLIENTS.
That said, Google provides a fantastic way to monetize a website while increasing the interest level of the site. It is a win, win, win, win thing they have going. The vendor gets highly targeted advertising. The visitor gets highly relevant and interesting ads for which they are grateful. The webmaster gets revenue. Google gets a piece of the action too.
By implementing the above recommendation, that win, win, win, win will increase on all four counts. The vendor’s advertising will be more targeted, the site visitor will be more interested in the ad content (and click more), the website will generate more revenue, as will Google.
Sterling D. Allan has been a professional web publisher since Feb. 1999. His present focus is in building http://pureeenergysystems.com and http://peswiki.com and http://freeenergy.greaterthings.com/news.
