Archive for October, 2008

I’ll go out on a limb here and say: AdSense is a Failure.

Now before you go freaking out, let me be clear: I know it’s a multi-billion dollar business. I know it’s the anchor for all things Google. But it’s still a failure. After all, anyone who can call Microsoft/Oracle/IBM/Apple failures (and people do everyday) shouldn’t hold any illusions that “multi-billion dollar” equals “success” (or that it means “not a failure”). After all, the Zune was a billion dollar product,  and it’s arguably a failure (as was the PSP until this year).

To get into why AdSense is a failure, we need to go back to the original premise (and in many ways still the premise) of AdSense.

AdSense was designed to:

1. Provide the highest level of contextually relevant ads based on what a post is about
2. Provide value to the reader by getting rid of those “junky” ads (like spank the monkey, which is still on of my favourite ideas, even after 8 years)
3. Provide value to the advertiser by only showing ads on relevant content
4. Provide value to the advertiser by only showing ads on relevant sites
5. Driving up click through rates (CTRs) through the theory that better context = more engaged visitor interest = more clicks
6. Driving up effective CPMs thanks to higher clicks
7. Providing a “safe” ad for publishers that don’t include nudity, pornography, etc
8. Provide a “safe” ad for advertisers that didn’t SHOW on “bad” sites
9. Be transparent, so people had more data (in a more easy to use interface) than  ever before
10. Be more responsive than other ad networks (ie: serve the publishers)

Some of these are obviously different sides of the same coin and they could arguably be boiled down to: better for advertisers, better for publishers, better for google.

The problem is, none of these things happened the way they were supposed to. AdSense doesn’t actually succeed on a single one of these points – or if it does it’s for a single site, single industry, whatever. Not only is AdSense evil (for being one of the few networks that regularly violates its OWN Terms of Service without a care in the world), but it actually does the inverse of what it’s always claimed to do.

Btw, if you think any of these are over the top, listen to Google execs on the last earnings call and all the things they’re changing to bring themselves more in line with this (hint: it’ll have no impact).

Before I get into the list, let me state: I know that by posting this list I’ll get 1000 responses about why each thing is wrong for one person’s site or how it’s earning them more money or whatever. While in some ways I care (because folk earning is a Good Thing), in other ways I don’t. Why? Because if they did what they actually promised, you’d be earning even more. And advertisers would have more value. So why don’t they? Because Google wouldn’t make as much money. And while we might fool ourselves that they were once the “do no evil” company, they are now (understandably) the “lose no money” company.

Here’s the fundamental issue. If AdSense worked the way it was supposed to, advertisers would have vastly more relevance, would see much higher CPMS (and much betterpost-click activity) and cost per click would go through the roof.

Instead, AdSense is a race to the bottom for advertisers, publishers… Everyone but Google.

So let’s get to the list:

Context relevance

Stories abound about how useless AdSense targetting can be for posts. Some of these are just poor architecture (see here) others are more innocuous. But no matter what, every blogger has seen useless AdSense ads. And let me put it this way: for every useless ad you’re seeing, at least 100 visitors are seeing useless ads as well. Mention “toilet” once. Mention “cancer” once. Mention “dating” once and Google will serve up ads related to stuff that are totally random (I’m looking forward to see the ads for this post!) based on the article.

Afte all, this is called “contextual” advertising. If the “context” of an article isn’t dating, the context of a blog isn’t dating and dating has never been an actual topic before, how in the world should the add ever be dating? To flip it around: if a blog is in ever blog directory under Business, every post is about business and the post in question is about business then how do you end up with ads about mortgages? It happens. Every day. To millions of people. Those ads are actually less useful than the spank the monkey ads. At least spank the monkey ads were fun. Most of the ads that show up randomly are from spammers at best and scammers at worst.

No More Junk

The second goal with AdSense was that by having non-visual ads, you wouldn’t get the jarring experience.

But, really is this more or less jarring than a monkey flying around the screen? Especially given pornographic advertising is actually against Google’s Terms of Service? I’m sorry, but anyone who tries to convince me that Google can’t figure out an AdWords ad is about or linking to a pornographic domain would have an easier time getting Madonna onto Al Jazeera.

Of course, the irony is that there are gobs of equally spammy ads on AdSense for sites just like Money Tree, Smack the Monkey, etc, so it didn’t get rid of them. Google’s motto: “if it pays…. we’ll allow it til someone complains”.

Relevant Ads on Relevant Sites

Is this relevant? C’mon, like Google can’t scan beyond the URL?

How about ads showing up on blatantly porn sites (link is safe, links on page are not)

How about NAZI sites?

Bad ads on good sites, good ads on bad sites, bad ads on bad sites… but nowhere near enough good ads on good sites. Nevermind all the domaining going on that Google “says” they got rid of (I still see it daily).

All of these things not only pollute publisher sites, they drive down CTR for advertisers, it has them paying out ads that are completely NON contextual and drives down revenue for everyone… everyone but Google, of course.

Higher CTRs

Now, obviously, click through rates (CTRs) vary depending on site, category, content, visitor, % of SEO visits, etc. As Darren rightly points out, there are simply too many variables to do a useful “average”. However banner ad clients tend to see CTRs between .1% and 1%, with an average (based on actual data, a bunch of reports, and anecdotal evidence) of somewhere in the .25-.5% range.

So how about AdSense? Well AdSense takes the (see #9) approach of banning publishers from talking about CTR. So, I won’t talk about CTR on b5 sites, or even sites I have anything to do with. I’ll simply talk industry aggregate numbers based purely on anecdotal evidence. Evidence that says getting a 1% CTR on AdSense is pretty good for most sites (the smaller you are, the higher your CTR can  be, so if you’re doing less than 100K pageviews/month don’t tell me your CTR is higher, kthnxbai!). Anything in the .1% range woudl be low.

See a pattern? Yeah, me either since it’s actual data vs people hiding from Google smacking them down. Y’know, like #10 says they shouldn’t.

But, realistically, if folk were making more than 1%, you’d hear about it. But they aren’t, on average, outside of a few verticals or smaller sites. Unless they’re, y’know, basically making the ads as non-ad-like as possible thus fooling visitors.

So while we don’t know what AdSense’s CTR is on average, we do know it isn’t that much higher than the norm.

Higher CPMs

Now, this one’s actually harder. In theory better CTRs should mean better CPMs on AdSense (since you get paid per click, not per impression). And for some industries, it can be a much, much higher CPM than they’d see elsewhere. However, on average, all remnant (which is what AdSense is) CPMs are going down (see PubMatic’s Ad Price Index, which includes AdSense). And even if Pubmatic’s index didn’t include AdSense, if AdSense was the best out there, nobody would use services like PubMatic or Rubicon.

For the average site, AdSense delivers CPMs that are on par with banner ads.

Providing a “safe” ad for publishers that don’t include nudity, pornography, etc

Transparency / Publisher Relations

When Google started, it was on the principle that other ad networks were bad. Everything they’ve done since has been based on that. At some point, though, Google realized that the reason why customer service, data, etc, was bad at other ad networks was bad is that as the company running those relations it’s bad and expensive! So, instead of, y’know, solving the issue (since they have the $) they simply decided to ignore it.

These days, getting ahold of someone at AdSense (if you aren’t a major publisher) is effectively impossible.

Getting data out of AdSense is effectively imposible.

Even silly things like comparing CTRs is against TOS.

And then there are, of course, the thousands of stories of people who haven’t done anything wrong but have run  amock of Google’s algorithm and had their accounts cancelled. An algorithm that cancels their account largely without recourse (cause, good luck getting those emails answered with anything more than a form response!).

Conclusion

Is AdSense a big business? Definitely (which is part of the problem). Do some people earn good money with it? Definitely (but they’re only satisfied until their revenues start to drop… which they always do). Can it be fixed? Of course! Will Google fix it? Nuh uh.

Why?

The more impressions (spam sites are good for impressions), the more clicks (even accidental clicks), the more money Google makes.

By having less impressions, that’ll mean less clicks, and even a higher overall CPM as quality goes up won’t offset the hundreds of millions of dollars Google makes just off domaining.

AdSense didn’t live up to any of its actual promises, nor even its current ones, for all but a handful of people. And saying it works for 1% of people is kind of like saying the fundamentals of the economy are strong.