Page eCPM Down: Is AdSense going broke?

A number of bigtime AdSense Publishers have shared to me that their Page eCPM has dramatically declined in the last 12 months. Whether this trend coincides with the US financial crisis or something else is yet unsure. One might even ask the question “Is Google AdSense going broke?”

I downloaded my AdSense data for the last 15 months and plotted the eCPM as shown below. Indeed, the trend is significantly visible.

There could be several reasons for this downward trend and let’s try to look at it from a wider perspective:

• Fewer Competition. Since AdSense is driven by the competition that’s coming from Google AdWords, it is possible that there are much fewer competing bidders in your niche. For example, the automotive industry and the travel industry are among the highest hit. You could see fewer car related ads or in the case of the travel industry, fewer airlines, hotels and travel agents advertise on AdWords. Fewer competitors will drive low bid rates which in turn result to lower cost per click on AdSense and eCPM.
• Ad Relevancy. With fewer competing advertisers, you get less relevant ads. Less relevant ads will result to lower CTR and eventually lower eCPM. Say you have 3 AdSense ad placements with a total of 10 ad slots. If only 4 of them are relevant to the page, you have 40% ad relevancy and that could drive CTR down. So, if you reduce your ad placements to 2 with a total of 6 ad slots, you have 67% ad relevancy that could help boost CTR.
• Changes in Site Traffic. If your site or blog has been steadily growing in the last year, it could affect your eCPM both ways but there’s a higher probability that it involves a drop in CTR. Higher pageviews doesn’t alway mean higher unique visitors.
• Change in Site Context or Niche. If you’re running a finance or automotive blog which generally are higher CPM industries then you switched content to entertainment or showbiz, then that traffic will surely get you lower CPMs.
• Competing 3rd-party Ads. If you have placed more ads on every page, it will dilute the effective CPM of all other ad units in that page. That doesn’t mean though that your Page CPM will go down; it might even go up. However, the share of AdSense for the Page eCPM will be lower. For example, 3 years ago all I had on this blog was mostly AdSense ad units so it had 90% share in Page eCPM. This year, AdSense only has about 30% share in Page eCPM since I have more direct ads competing for clicks on the same page. Even though my monthly AdSense revenue is down, my total ad revenue is still up.

Of course, there will be other factors to consider like Smart Pricing or maybe Google has changed the percentage share with AdSense Publishers without them knowing about it. Nobody would notice if that alleged 70% share that AdSense Publisher used to get is now down to 50% or maybe even less.