The Truth About Adsense Fluctuations

There's been a lot of talk recently about AdSense revenues declining. Publishers are seeing drops in revenues and they're coming up with many different plausible and implausible scenarios to explain the drop. Some are postulating about Smart Pricing, Search Clicks Improvement, Ad Blockers and other things that don't really get down to the root of the problem, and that is; simple economics.

Maybe we all need to stop depending on the Wal-Mart of advertisers (aka Google Adsense). Did anyone really think that the economies of scale were going to work in their favor as small publishers? As Google grows and the number of blogs and publishers increase, basic economic theory dictates that the demand for those kinds of advertising spaces will do down, thusly the price will go down as well. You don't even need to understand all of the driving factors to know that the end result will always be lower prices for publishers.

If you think your blog or website is really that valuable, why not just sell ad space on it yourself? You know your demographic the best (better than some Google adsense bot I hope) and you should be able to command a much higher CPM or CPC rate on your blog than Google adsense would get you. It doesn't take much to create a rate card and a list of 100 advertisers to approach. There are certainly enough free or open source ad serving programs to allow you to administer your own advertiser program (e.g. MaxMedia). We do, and it works splendidly. In our experience advertisers are also willing to pay a lot more for ad space when they know the blog or website owner and understand the value proposition of advertising on that site a lot better.

Part of the problem with AdSense (as I see it) is that it's far too easy. And because of that it has been exploited ad nauseum by MFA sites, arbitrage sites and other sites that offer no value or unique content to end users. There isn't enough quality control from an advertiser standpoint. So, unless you are a premium AdSense publisher, I don't beleive your web property will ever make quality revenues from Google AdSense, and I suspect the problems that small and mid size publishers are seeing will only get worse. As the system grows, more and more people will continue to try and exploit it and as the base of AdSense publishers grows, the value of the market will become highly diluted. As far as I am concerned, parts of the industry are already supersaturated, and I don't beleive Google separates the wheat from the chaff well enough for advertisers to get the best value from their ad dollars.