Many websites that rely on ads use Google Adsense as one, if not their only, source of revenue. If you use Adsense you might find the two part post on the official Adsense blog entitled “Diagnosing and Treating Revenue Fluctuations”. As the title suggests it is very useful for those who experience fluctuations in the Adsense revenues and wish to understand the reason behind these fluctuations.
Learning about your Adsense profits might not seem very important to you, especially if your site is doing well right now, but understanding how it all works will come in really handy during times when your Adsense revenue plunges. Note too that learning about the dynamics behind your Adsense revenue will not only add to your knowledge but has a practical application that will allow you to maximise you blog profits. If you want to be able to prevent (negative) fluctuations in your Adsense revenue I suggest you read the articles in their entirety. In the mean time here’s a summary of the main points tackled in the first post.
It is important to learn how effective cost-per-thousand impressions(ePCM), click-through-rate (CTR), average cost that advertisers pay per click (CPC), and page impressions affect your revenue. The derivation for the formula used for getting revenue based on these factors is outlined in the post. Below is the final formula (no need to go through with the derivation on this post) for total revenue:
Revenue = (Page Impressions (contextual) * CTR * average CPC) + (Page Impressions (placement-targeted) * eCPM (placement targeted) / 1000)
If you understand how all the factors affect your revenue then it is time to take a look at your Adsense report (see advance reports in your account) too observe which is affecting your revenue (making it fluctuate).
If it is the page impression that’s causing the fluctuations you should:
- See if AdSense is experiencing technical difficulties.
- Make sure that your site is indexed in Google and that it is being regularly crawled by Googlebot (use Webmaster Tools)
- Look into your ad campaign. If you have a promo (i.e. Contests) that just ended that will explain the drop in traffic. A sudden surge of traffic can be explained by the start of a new promo or your blog being linked to by a popular blogger.
If the CTR caused the fluctuation it could be because of:
- Recent changes in your web design/layout.
- Problems encountered by Googlebot while crawling your page.
- A change in ad server.
- Poor placement and presentation of ads (more applicable to slowly decline CTR and not a sudden decline)
If the CPC caused the fluctuation it could be because of:
- Seasonal reasons (start/end of holidays, start end/of school year, etc.)
- The start/end of an advertiser’s ad campaign
To sum it up: If you revenue declines make sure you take into account any changes you have made recently and find exactly which factor is affecting your revenue (for the worse). Though there are factors you cannot control that will result in a temporary decline in revenue (such as seasonal fluctuation) there are things you can change to maximise your revenue (such as ad placement and presentation) and thus minimise negative fluctuations. Furthermore this will also help you determine whether a site/blog promo that you started/ended really is making a difference on your bottom line.