Adsense earnings down?

Recently it has been reported that publishers are earning less from Google Adsense since the month of November 2007.

“More than conversion rate goes into determining the price of an ad: the advertiser’s bid, the quality of the ad, the other ads competing for the space, the start or end of an ad campaign, and other advertiser fluctuations.”

Google described the ”Smart Pricing ” as:

“Google’s smart pricing feature automatically adjusts the cost of a keyword-targeted content click based on its effectiveness compared to a search click. So if our data shows that a click from a content page is less likely to turn into actionable business results — such as online sales, registrations, phone calls, or newsletter signups — we reduce the price you pay for that click.”

It means to say that if your site has quality contents, you are more likely to get higher quality, costlier and high conversion rate ads.

Another possible reason has got to do with advertiser budgets which have declined due to the economic uncertainty. It looks like if there is going to be a recession, Adsense profit would be badly affected too. Could this be the reason for the drop in paid click revenue for Google in the month of January as reported by comScore?

Joel Comm has his own explanation as to why Adsense earnings dropped in since the month of November 2007. He said that it is because Google has reduced the clickable area of the Adsense ads in order to cut down on accidental clicks. They did this around mid-November. So this is quite possible why the earnings has dropped. But then someone noticed that his click rate dropped by about 10% but his earnings dropped by 50%. The reduction in click rate does not correspond to the reduction in revenue. I believe the reduction in earnings is due to the few possible reasons listed above and not just one particular reason alone.

Below is the video courtesy of AskJoelComm.com in which he explained his theory and also give some words of encouragement.

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