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Phil Tanny
Joined:
22 Aug 2003
Posts:
1324
Location:
Gainesville Florida USA
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Posted: Fri Aug 22, 2003 10:12 pm
Post subject: The Future Of AdSense Income?
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Much has been written here and elsewhere regarding the impressive revenues publishers are earning from AdSense.
For the sake of an interesting debate perhaps we could ask whether these higher than average payouts will continue. Although my crystal ball is no better than anyone else's, to start the thread I'll propose that AdSense payouts will fall over time.
Some reasons this might happen:
1) Why should Google, industry dominator that it is, pay more than any other ad network? What would be their motivation to do this once the roll out launch is complete and all publishers are fully aware of AdSense?
2) The world of email teaches us that anything that can be abused will be, to the greatest extent technically possible. Will Google be able to effectively (and profitably) manage millions of publisher sites, or will they be overwhelmed by junk content and complaints from advertisers? Google's growing management overhead will likely be funded out of lower payouts to publishers.
3) Google has not revealed the formula by which they compensate publishers. One explanation might be that this makes it very easy for them to gradually dilute the payments over time. Once millions of publishers are signed up, many will stay, no matter what the payout.
4) The convenience of AdSense is a remarkable benefit to publishers. Large numbers of publishers will stick with AdSense even if the payout drops substantially simply because it's so easy to join and stay. Thus, the convenience of AdSense contributes to downward pressure on the market price.
One thesis is that publishers who are planning sites around AdSense income should look ahead and envision lower payouts than we see today during the launch phase. Would such a site still be worth it to you if AdSense income was comparable to the income that is generated by other ad networks?
Will welcome a ruthless tire kicking of these theories! 
Phil |
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Harith Al-Jibury
Joined:
11 Jul 2003
Posts:
37
Location:
Denmark
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Posted: Fri Aug 22, 2003 11:31 pm
Post subject:
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Hi Phil
Very interesting brainstorming!!!
IMHO, the most important and deciding factor in the AdSense equation is the advertisers.
If advertisers see that they are getting satisfactory conversions out of AdSense, at least as good as the traditional AdWords, they shall continue paying the current rates. Accordingly publishers revenues wouldn't be affected that much, even if Google start deducting bigger portion to cover administration costs in connection with growing numbers of publishers and to limit and fight abuse of the system.
On the other hand, publishers revenues will fall if advertisers start leaving AdSense because of lack of satisfactory conversions generated out of their investments.
Its therefore of great importance that Google pay attention to the quality of publishers sites accepted in AdSense in addition to taking measures to prevent and fight possible abuse of the system.
I don't think that Google shall be left alone to dominate the Contextual Advertising market. I imagine new big players will emerge to compete on attracting both advertisers and publishers. Then its up to the good old free market mechanism and dynamics to decide the outcome of such "battle".
All the best,
Harith
http://www.danex-exm.dk |
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Dan
Guest
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Posted: Sat Aug 23, 2003 12:37 am
Post subject: Re: The Future Of AdSense Income?
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| Phil Tanny wrote: | Much has been written here and elsewhere regarding the impressive revenues publishers are earning from AdSense.
For the sake of an interesting debate perhaps we could ask whether these higher than average payouts will continue. Although my crystal ball is no better than anyone else's, to start the thread I'll propose that AdSense payouts will fall over time.
Some reasons this might happen:
1) Why should Google, industry dominator that it is, pay more than any other ad network? What would be their motivation to do this once the roll out launch is complete and all publishers are fully aware of AdSense?
------
<Sigh> I really need to stop visiting these forums so much. They are too addicting, and I end up squandering some of my precious time to get needed work done.
But, I couldn't resist...so I will indulge this post for a bit.
As you know, publishers do not know the exact breakdown of the revenue share, but by doing some sleuthing, we can get a pretty good idea. Google is being VERY generous. In my own personal experience, they are giving me probably more than they are making on each click, and maybe even a lot more.
This is a brilliant move on their part because they WANT to get the publishers hooked permanently. This motivation is tied in with likely scenerio, which I'll address below because you raised it.
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2) The world of email teaches us that anything that can be abused will be, to the greatest extent technically possible. Will Google be able to effectively (and profitably) manage millions of publisher sites, or will they be overwhelmed by junk content and complaints from advertisers? Google's growing management overhead will likely be funded out of lower payouts to publishers.
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This is the trickiest part of all of this for Google. They are, of course, trying to extract as much revenue as they can (while keeping it high enough so their publishers never want to leave the program) and ALSO ensure their advertisers don't see a marked drop in their ROI. If they can balance this and make it work, Google will become even more of a juggernaut.
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3) Google has not revealed the formula by which they compensate publishers. One explanation might be that this makes it very easy for them to gradually dilute the payments over time. Once millions of publishers are signed up, many will stay, no matter what the payout.
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This is where I totally disagree with you, simply because you are not factoring in the inherent nature of competition in business. Google's "monopoly" on the Adsense model is only transient, and they are no doubt fully aware of this. In other words, there WILL be copycats to Adsense in the future, such as Yahoo/Overture. There is too much at stake here to let Google monetize such a pronounced sphere of the Internet unchallenged. Google knows this. Accordingly they know that it is anything but true that "many will stay, no matter what the payout."
This also explains why, in my opinion, Google made a brilliant move by offering publishers such a significant chunk of the revenue share. Because they want to get us addicted, and create a strong disincentive to even THINK ABOUT switching when a competitor comes out with a similar program and tries to steal market share.
Now, this about this: what if Google does what you say they do and starts severely dropping the revenue share. Overture (or someone else) smells an opportunity and swoops in, and announces they will share revenue 50/50. Publishers flock to Overture and Google Adsense gets crushed.
Don't think it can happen? You better believe it can. By cutting back on what they share with publishers, Google will only invite intensified competition.
Google DOES have an advantage, however: the first mover advantage. If they keep their revenue share payments high, as I said, many publishers will have a strong disincentive to even want to try out the competition whenever it should arise.
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4) The convenience of AdSense is a remarkable benefit to publishers. Large numbers of publishers will stick with AdSense even if the payout drops substantially simply because it's so easy to join and stay. Thus, the convenience of AdSense contributes to downward pressure on the market price.
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See above. Your analysis would be correct assuming there will never be any competition, but that is a fatal assumption and wholly unrealistic.
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One thesis is that publishers who are planning sites around AdSense income should look ahead and envision lower payouts than we see today during the launch phase. Would such a site still be worth it to you if AdSense income was comparable to the income that is generated by other ad networks?
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This may be true. And the most salient reason would be simply because the novelty may begin to wear off and click thru rates decline somewhat from their initial levels.
However, Google can do their best to offset this natural tendency (and they are) by continually coming out with different designs and color schemes for the Adsense ads.
This is a smart company. They didn't get where they are today by twiddling their thumbs and whistling dixie.
-Dan
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Will welcome a ruthless tire kicking of these theories!
Phil |
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Dan
Guest
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Posted: Sat Aug 23, 2003 12:39 am
Post subject: Whoops
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I messed up. Never used that quote function before.
My responses are within your text.
I ended up quoting the entire thing: your message and my responses by accident.
-Dan |
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Dan
Guest
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Posted: Sat Aug 23, 2003 12:58 am
Post subject: Another consideration
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By the way, here's another way to think about Google Adsense.
Use a hypothetical:
Let's say that there was a Federal Law passed that gave Google a monopoly on Adsense. That is, it was a criminial offense for any other companies to come out with a revenue model that split earnings between small website publishers and the company.
Now, given this law, do you think Google would have given publishers such a high percentage of the revenue share?
Of course not!
And why not? Because 1) there would be no competition, now or forever and 2) they know that many publishers of small websites have had a hitherto difficult time monetizing their site's traffic. Therefore, they know that many of these webmasters would eagerly run Adsense on their sites even with a small payout. Because small is better than nothing, afterall.
You think Google is just giving us publishers a huge chunk of the revenue out of the kindness of their heart? 
No, my friend, it's because they are smart...very smart.
It is going to be VERY interesting watching all of these behemoths battle it out over the coming years.
It will be our job as entrepreneurs and webmasters to stay on top of the trends and ride the waves.
-Dan |
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AllanGardyne
Site Admin
Joined:
02 Jul 2003
Posts:
6326
Location:
by the beach, Australia
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Posted: Sun Aug 24, 2003 1:22 am
Post subject: Re: Whoops
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| Dan wrote: | | I messed up. Never used that quote function before. |
Been there, done that.
Registered members of the forum are able to click on an "Edit" button and fix their mistakes 
_________________
Allan Gardyne
AssociatePrograms.com - You're here. Explore it! |
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Dan1
Guest
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Posted: Sun Aug 24, 2003 4:03 pm
Post subject: Thanks
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Thanks for the suggestion, Allan.
Didn't know that I had to register to be allowed to edit my posts.
Ah, the perks of membership...
Anyway, I just registered my name, but I'm encountering a problem.
When I log in and try to post, I get a message that says "Sorry, but this username has already been taken."
Obviously I'm the ony who just took it, but it seems to think someone else is trying to post under the name "Dan," even though it's just little ole me.
(Hence, that's why I put "Dan1" for the Username of this post, so it would go through).
-Dan |
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Guest
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Posted: Sun Aug 24, 2003 4:47 pm
Post subject: Re: Thanks
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| Dan1 wrote: |
(Hence, that's why I put "Dan1" for the Username of this post, so it would go through).
-Dan |
Hi Dan
But it seems that you haven?t logged in when posting the latest message under name "Dan1".
If I?m not mistaken, when you log in as Dan1, your posts will show also the day you joined under your name/nickname at lefthand table. Something like:
Dan1
Joined: 24 August 2003
Posts: 1
Location: USA (if you are usa resident)
All the best,
Harith
http://www.danex-exm.dk |
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Harith Al-Jibury
Joined:
11 Jul 2003
Posts:
37
Location:
Denmark
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Posted: Sun Aug 24, 2003 4:54 pm
Post subject: Re: Thanks
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| Dan1 wrote: |
(Hence, that's why I put "Dan1" for the Username of this post, so it would go through).
-Dan |
Hi Dan
But it seems that you haven?t logged in when posting the latest message under name "Dan1".
If I?m not mistaken, when you log in as Dan1, your posts will show also the day you joined under your name/nickname at lefthand table. Something like:
Dan1
Joined: 24 August 2003
Posts: 1
Location: USA (if you are usa resident)
All the best,
Harith
http://www.danex-exm.dk
==========================
and now I?m logged in. take a look at the lefthand table to se my details.
All the best,
Harith |
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Dan1
Guest
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Posted: Sun Aug 24, 2003 5:55 pm
Post subject: Testing
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Hi Harith,
I understand what you're saying.
I don't have a problem logging in as "Dan"
My problem is, once I log in (and it shows me as logged in), and try to post, it says "That Username is already taken."
So, to post I have to use a name different than "Dan"--such as "Dan1".
There's gotta be something I'm just not understanding. I have no problem logging in. It even says at the bottom that Registered user "Dan" is logged in.
-Dan |
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asdfaswfe
Guest
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Posted: Mon Sep 15, 2003 10:04 am
Post subject: awefawef
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| awefawef |
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