How AdSense Will Change

September 7, 2005

Google changes always bring the inevitable chorus of curses and howls, but this used to mainly be in the area of SEO. People worked real hard to rank highly for a particular term — so hard, that they felt it was an entitlement, something they “owned”, instead of just the current state of Google’s opinion of their site.

It seems like a more recent phenomenon that people are howling about AdSense income in the same way as they used to about their Google ranking. Just as there were always winners and losers in the SEO game, there are going to be lots of winners and losers in the AdSense game. But what a lot of people seem to have not quite figured out yet is: the AdSense game and the SEO game are not the same game.

Increasing Market Efficiency

Just as I could never predict for you exactly what Google’s next ranking algorithm change would be, I can’t tell you exactly how AdSense is going to change. In both cases, however, I can describe the general trend of those changes.

Google wants to make money by delivering value. Now, you can (and many smart people profitably did) chase the Google algorithm and make money by causing machine-generated crud to rank highly — but it keeps getting harder. More recently, Google is making changes designed to deliver better value to advertisers, a slightly different set of customers than search engine visitors.

In economic terms, Google has been making, and will continue to make the advertising market more efficient. Advertisers with any budget from $5 to $50,000 can start a marketing campaign in 15 minutes with a credit card. They can see nearly real-time results from their advertising. They can enforce an increasing amount of control over where their ads run. A more “efficient” market means less money is wasted — in this case, less is wasted on websites that don’t produce good conversion rates (are you going to be in that camp?)

In the game of garnering free SE traffic, the two extremes are total algorithm chasing, and just building a website because you love it and hoping the traffic will come. Google has made significant strides towards tilting the balance of power away from the algorithm chasers and towards the “make content that people really find useful” crowd. And there’s an analagous changing happening to AdSense.

How AdSense Will Change

Google is giving publishers more control as well — but many publishers are failing to use that control to best advantage. In a way, the typical AdSense publisher seems to be caught up in the old algorithm-chasing, SEO mentality. We test this color versus that color of ad, ad position on the page, number of ad groups, and so on. All well and good — but as the recent chorus of howls shows, those sorts of tweaks are not going to be sufficient to keep you from being one of the losers as AdSense changes.

Just as Google’s ranking algorithm is always changing to try to deliver better value to the customer (the search engine visitor), AdSense is going to keep changing to try to deliver better value to its customer (the advertiser). If you think Google’s big team of smartie-pants is likely to succeed, then you have a new game to play: making your website content deliver better value to advertisers.

Google’s continual changes to AdSense are going to let you know whether you’re doing a good job of delivering value to advertisers compared to other websites. If you’re not, then Google wants your AdSense revenues to go down. You can either get mad about that, or use it as a wakeup call and start working on moving yourself into the category of AdSense winners.

Better Value for Advertisers

What makes your website more valuable to advertisers? Pretty simple: your ability to deliver to them people who are likely to buy whatever it is they are selling.

If GM is advertising a new car, and your website mostly attracts retired veterans who are living on monthly Social Security checks, then if you manage to make those GM ads appear and stay on your website, they probably aren’t going to pay you much. Google is increasingly automating the process of detecting which ads work for the advertiser, and paying less money to (or dropping the ads from) the publishers who can’t deliver the qualified customers.

What Can You Do?

The main step is just a different mentality. Those website visitors are not the only people you have to serve if you want to be a winner in the current and future AdSense changes. Those advertisers are customers too, and you need to balance the (sometimes conflicting) needs of the two.

Let me give some examples of this different mentality.

* Do you regularly peruse your AdSense ads to see who is advertising?
* Do you maintain a list of who is advertising, and keep track of who just appeared or disappeared?
* Have you politely contacted an advertiser who dropped off your website to see if they’re willing to share any reasons?
* Have you spent some time studying the websites of your advertisers and getting a feel for what they’re selling?
* Have you started tracking which advertisers are appearing on which of your pages and correlating that with profitability?
* Do you have a Christmas list, where you send some modest “thank you” gift (perhaps branded with your domain name) to the advertisers who have served you well during the year?
* Have you struck up an email conversation with the advertiser you suspect makes you the most money, thanking them for their business, letting them know you might be interested in direct advertising if they ever find that AdWords isn’t working out for them?
* Have you mined your best advertisers’ sites for possible new keywords when you are mapping out what new content to build?
* Have you studied your advertisers’ products to see if there are useful, relevant places in your current content where you have failed to mention that class of product (mentioning the exact product might be construed as inciting to click, and might bypass your AdSense click anyway)?
* Did you read that recent thread about filtering traffic, and realize (unlike most of the participants in that thread) that you need to look for poorly-performing pages that you should remove AdWords from altogether? Did you really understand the point that showing fewer ads can actually mean more money for you?
* When you build new content, do you have a decision process for whether or not AdSense should go on it (winner), or do you just jam AdSense onto every page (loser)?
* When you build content to cover a new topic area, do you consciously design a path that will take the more general traffic (on pages where you run no AdSense) and guide the best-qualified visitors to pages that have AdSense ads that fit their likely needs?
* Have you studied your advertisers’ products to see if there are product categories where more people would buy if they were just educated about the nature of the product category? (Perhaps by a fine, upstanding, independent source such as your website.)
* Have you looked long and hard at any shoddy products that are being advertised on your website and thought about whether the long-term cost in terms of looking like a “bad neighborhood” to other advertisers might outweigh the short-term profits?
* Do you have an email newsletter that advertisers can sign up for, where you alert them to upcoming new content, or other things they might be interested in?
* Do you have a weblog mining process that regularly produces customized aggregate data that could be a valuable perk for your regular advertisers? Example: it appears that 60% of the people who ended up at the “how to buy a widget” page where you currently advertise also read the “why widgets break” page — you might want your landing page to mention your guarantee for broken or damaged widgets!

Given that one of the great bugaboos of AdSense is the fact that Google can terminate your contract at anytime at their sole discretion, aren’t some of these things that you should be doing anyway to make sure you can line up direct advertising if you lose your AdSense account?

The game of serving advertisers is what is going to increasingly separate the winners from the losers in AdSense. The losers are going to get the advertisers who aren’t smart enough to figure out how to get the best ROI, and who are paying the least amount of money for clicks. The winners are going to become intimate partners with smart, good-paying advertisers (sometimes without their knowledge!), and are going to be in the camp of folks who notice their earnings and earnings per click going up.

Change is a constant in the online world. Don’t hunker down when change comes — get out in front of it by noticing which way the wind is blowing.