When it first debuted more than two years ago, Google’s AdSense contextual search advertising program seemed like a blessing for magazine publishers, particularly for struggling b-to-b publishers scratching for every dollar amidst the worst recession their industry had ever experienced. With virtually no effort on their part, publishers enrolled in the program could earn revenue by generating online traffic that would click on ad banners hosted at the site. While no one expected it to be a huge revenue source, every little bit counts, particularly when there is no overhead.
Today, however, many publishers who were initially pleased with AdSense have seen their revenue from the program steadily decline. And with Google refusing to sign written contracts or provide back end information on performance, they don’t know why.
BZ Media started working with AdSense in March 2004 and the “initial appeal was easy money,” according to president Ted Bahr. “And for a while, it was easy. We were averaging close to $1,000 a month in revenue for virtually no work and it was all bottom line profit.”
However, that’s changed. “Since February 2005, we’ve seen revenues drop by more than half and it’s difficult to ascertain why that is,” Bahr adds. While he realizes it’s difficult to complain about a service that requires no effort on the part of the publisher, Bahr says it’s frustrating to have such little feedback from Google. “If someone clicks on a publisher’s ad, that generates revenue for Google,” he adds. “The percentage that goes to the publishers is not known;it is well known that Google keeps that a huge secret.”
For Bahr, that type of arrangement is a little too arbitrary. “From Google’s perspective, if they’re not going to hit their quarterly numbers, they can just crank the AdSense percentage down from 32 percent to 31 percent and make $80 million overnight,” he says. “We’re at the mercy of Google. These are still low maintenance dollars flowing into the company but it’s certainly not as exciting as it once was.”
Other publishers point to several factors draining AdSense returns, including a saturation of AdSense across legitimate publisher sites which is diluting the pay-off, and an explosion in the number of “made-for-AdSense” sites which offer little original content but further siphon off dollars. Chat rooms are popping up across the Internet with publishers complaining about AdSense performance. “I see many crummy, pointless, link-filled, rip-off-other-people’s-work sites prominently displaying AdSense ads month after month,” says one publisher. “That can’t be helping either side of the story.”
“I actually got serious about AdSense in mid-November 2004,” says another publisher. “My revenue from it rose nicely until about the third week of February, but has since stalled out and now is declining. And this is after adding more pages continually.”
Post Newsweek Tech Media has weighed its options with Google, Yahoo’s Overture and b-to-b contextual advertising company IndustryBrains and today spends “four times more” with Overture and IndustryBrains. “One of the reasons we don’t use AdSense is they won’t come clean with me;they won’t even give me a contract,” says Alec Dann, senior vice president of Internet publishing. “We went to them and said, ﾑWe’d love to do business with you, what’s the deal?’ and it was like, ﾑWe don’t put anything in writing.’ Come on. It’s almost like they’re afraid that if they were doing different level deals with different companies and if they put anything in writing it would get passed around the horn. But that’s always true. Not everybody feels comfortable about sharing info;Washingtonpost.com won’t tell me about their deal with Google and they’re part of my company. Google’s caution is probably a little overboard.”
Post Newsweek Tech Media has also had difficulty keeping keywords active with Google. “My keyword for homeland security was number one during one week and banned the next week because of ﾑrelevance,'” says Dann. “If you are selling product, people look for it in consistent ways. If you’re selling news, it’s entirely different.”
Dann also thinks size matters for Google. “We understand the concept behind Google’s relevance-based rankings but don’t think they really understand how the algorithm really affects all their customers,” he adds. “We’re too small for them to pay any attention to;if we were a hotel chain it might be different. I know business publishers who spend over $3 million per year on search. We’re too niche.”
Google is making a concerted effort to weed out “made-for-AdSense sites” from legitimate publishers, according to Marc Leibowitz, director of strategic partnerships at Google. “We invest heavily in mechanisms that distinguish bonafide publishers from non-bonafide publishers,” he says. “It’s like a game of cops and robbers. As soon as you have a certain set of techniques to police this distinction, the bad guys figure it out all over again.”
As a rule, Google pays out 50 cents of every dollar to partners;and can range up to the full dollar, depending on the size of the relationship, according to Leibowitz. “It would be against our own interests to cannibalize that relationship.”
Google is also implementing a number of changes including a program launched in June called Site Targeting that exposes brand advertising dollars to publishers. Publishers with Site Targeting can set minimum CPMs for their site, “making sure advertisers will pay at least as much through Google as they would though their own direct sales force,” says Leibowitz. “Our objective is to complement existing sales forces.”
Through the first six months of 2005, Google Network Web sites, which include AdSense, generated $1.21 billion, up from $679.9 million for the same period in 2004, according to the company’s most recent 10Q report.
Still publishers need to keep AdSense in context. “I think the most important business practice is to look beyond AdSense,” writes one publisher. “Create content that is original, useful, and will ultimately attract advertisers directly to your site. Sure, it will take time, but at least AdSense pays the hosting bills until that day comes.”
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