What does the AdSense revenue drop mean for publishers?

Talk of plummeting AdSense revenues have hardly been uncommon this year, but this week the tables seem to have been turned. Since the publication of Google’s latest quarterly financial report the plummeting graphs have stopped charting performance drops for individual publishers and are instead charting the drop of AdSense itself.

AdSense, the program that allows site owners to benefit from displaying Google Ads on their site, accounted for 29% of Google’s $43.7 billion revenue last year. The growth of revenues from AdSense have historically reflected the performance of Google’s advertising network as a whole, but that pattern has shifted this year. In fact AdSense has shown zero growth in the third financial quarter despite a 22% growth in AdWords as a whole.

This lack of growth has come as a shock to many, even leading to commentators like ZDNet asking whether this is the start of the end of AdSense.

So why the drops?

If you look at the facts leading up to these figures it is hard to see why some commentators are so surprised by them. AdSense publishers represent the whole quality spectrum of websites, from high profile quality sites like The New York Times and The Independent to thousands of lower quality sites. The sites at the lower end of that range have been the catalyst for much criticism of Google in the past, sparking complaints about how Google “bank rolls spammers”.

This criticism is particularly at odds with the tough anti-spam stance that Google has been taking, most notably since the release of the first Panda update by Google in 2011.

Google’s “Panda” updates dealt largely with low quality content on sites. The later “Penguin” updates tackled low quality link building methods. Together these, and countless minor changes to the Google algorithms, have been tightening the screws on low quality sites and causing them to lose much of the search traffic that fuelled them.

Both the use of AdSense on low quality sites and the impact Google’s “quality drive” have had on such sites have been well documented. In that light it is hard to see why anyone would be surprised by a lack of growth in AdSense this year.

What does an AdSense revenue drop mean for publishers?

Great news. In the short-term at least this creates opportunities for quality publishers to increase their AdSense revenue.

At the heart of the AdSense/Google Certified Ad Network eco-system is an auction driven by supply and demand. With, what appears to be, a considerable amount of ad inventory now removed from the system demand for the space that remains should increase and prices follow.

Longer term

The longer term picture is very dependent on how Advertisers see the network. AdSense as a product seems to be more focused on driving up the quality of the network than I have witnessed in my 10 years involvement with the program. Policies have been updated to reflect this more strongly and recommendations through channels such as the AdSense blog and Google+ pages emphasise the ”user first” mantra.

Chatter from smaller publishers would also seem to suggest that account level quality control is being tightened up. Find any forum or discussion group with an AdSense element and the conversation will be dominated by those either struggling to get accepted in to the program or having been expelled from it.

A quality drive would also seem to sit well with what is happening under Google’s DoubleClick brand. For those that don’t know, DoubleClick is the arm of Google that largely deals with Ad agencies and big brand advertising. The DoubleClick includes providing those advertisers with a route in to the AdSense network, which is a path that more are likely to follow if the quality of the network is seen to be of the highest level.

Dying back, or being pruned?

To me the lack of growth in AdSense this year looks more like pruning than the network dying. That may well have been prompted by some difficult questions, but my money is on seeing a return to growth before too long.

There would seem to be some momentum gathering in terms of growing the “fat middle” of the AdSense market – which is where publishers that we work with either are or are aiming to be. Publishers with page views in the tens of thousands per day are significant in number and between them have the weight to offset losses in the publisher long-tail and make brand advertisers happier as part of the deal.

There will likely be more search quality updates before too long, and more publishers will see traffic drops when that happens. However, each update should eventually strengthen the position for those with a similar focus on quality and user experience.