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> Oddly enough, the reason these folks are failing is that Google's CPC (the money they get for an advertising "click") has gone down Year over Year for the last 13 quarters. What that means is that if your web site depended on advertising from Google (and most do), and your traffic remained constant, you have seen a 33% drop in gross revenue over that same period.

All it means is a 33% drop per click, not per thousand visitors, or gross revenue over a same period.

As Google gets better at matching ads to users, CPC would be expected to go down, since there would be more clicks, and each click would therefore be less valuable, but there would be more clicks overall.

As a micro-publisher, the first question that friends ask to satisfy their curiosity is "How much do you get paid per click", and I have to answer that total revenue is all that really matters, not revenue per click.

Shouldn't improving fraud detection increase click quality?

   > All it means is a 33% drop per click, not per 
   > thousand visitors, or gross revenue over a same period.

Actually it does. Allow me to explain.

In a purely statistical way, for any given web page getting 'n' views, and to keep our units consistent we will define pageviews/1000 as its traffic or T. Some fraction of those views will include an ad click. This is the 'Click through rate', and it can be calculated per thousand page view to get a 'CPM' or clicks per thousand. If you are an AdSense advertiser, Google will tell you what the CTR is for each page on your website that has AdSense ads on it. Each click gets some amount of money, this is the 'cost per click' or CPC. The product of those three, is Revenue per thousand or RPM, so

   RPM = T * CTR * CPC

If you multiply CPC by .66 (down by 33%) that multiplication goes right through to RPM. (or revenue). Regardless of how much traffic you are getting.

If Google got better at matching ads to users, then your click through rate (CTR) would go up because the ads would be more appropriate to what the viewer was looking for or interested in. It would not affect the cost per click which is what the advertiser is paying Google, you would just get more clicks per thousand.

Web site publishers really only have two things to try to optimize, click through rate and total traffic.

If you have heard the term 'click bait' it specifically refers to ways that a web site tries to increase its click through rate by making it more likely you will click on a link (or advertisement). This is the number a web site has under its control. It can also buy AdWords to put its content at the top of search results, or pay a company like OutBrain to put a link to its content at the bottom of an article, both of these are called buying traffic because you are paying someone (Google or the site running Outbrain 'ads') if someone clicks on that link and comes to your web site. If the amount of traffic increase * CTR * CPM (your marginal revenue gain) is greater than the amount you spent to get the traffic, then it is a good deal for you. However, for more and more people that number is negative, they just lose money faster because their ad revenue is going down and the amount they keep is further reduced by the cost of the traffic they bought.

And to your final question, yes fraud detection does improve click quality but that hasn't been reflected in advertisers willing to pay more to advertise as Google's sinking CPC number shows.

My adsense money went from $1000/yr to $100/yr and now I'll be lucky if I break $25. Nothing changed with my users. My only guess is that everyone is using adblock.

You're right about ad block. Ad block grew an insane amount (300%) in the past two years:

http://i.imgur.com/XIf0JRW.png

The graph shows it currently as being at 5%.

I really doubt any browser will start installing it by default, so I think adblock will be limited to: a) Really technical people (HNers) b) Friends of HNers that are bothered enough by the real web experience while on their friend's systems that they go ahead and install adblockers.

I don't see adblockers covering more than 10% of web users, and they're likely the least valuable 10% of web users (they may earn a lot, but they don't have burning holes in their pockets either).

Jumping in here as we produced that data. Global average is about 5%, but in US & UK it's about 15%. In much of Europe it's about 2X that. If you have a technical audience, 20% - 30% adblocking is now normal. If you are gamer-focused, 40% - 50% is normal.

The growth isn't driven by technical people any more; it's normal people who've grown up using web browsers and who don't think twice about installing an extension on Chrome. You're correct through that it is spreading through word of mouth. You can get more on the pagefair blog.

My brother - who is not a programmer, but skilled enough to run Linux - has just started using adblock a couple days ago. We are in that other part of Europe.

My point is that adblock usage doesn't seem to be nearly as prevalent as we assume - at work (where everybody has admin rights on their work machines) maybe 10% of the non technical users have it. The point that makes people install it seems to be youtube ads.

Depends on the niche. I run a tech site with 1.2 million daily page views, and yet Google reports 400,000 ad impressions a day. The other 66% are being blocked. This isn't hard to believe, since all my tech friends run ad blockers.

Traffic stayed the same and eCPM went down 97.5%?

I guess:

1) You write articles that are exclusively marketed toward an HN crowd (adblock-heavy).

2) Some advertiser(s) were heavily directly targeting users at your site and stopped

3) Your traffic stayed the same, but because of changing search results, so you got more low-value traffic while losing high-value traffic

I'm down 75% as well, but it's largely due to my abandoning my pages and competitors making specialized sites on my niches.

Do you see adblock as a bad thing?

I use it, but it wasn't until my money went away that I thought much about it. I definitely have less incentive to keep it going. I'd need to go through the hassle of getting more dedicated advertisers or sponsors now. So in that respect it's bad for websites in general.

At least you're honest about not giving a flying one until it was your bottom line that tanked.

I've seen YouTubers complaining about this too. One I follow (who has over 2m subscribers) says his views are up strongly in the past year (as in over 50% more) but his income has fallen by a third.

On a popular space webcast, TMRO, the host mentioned their YouTube revenue was a "rounding error" compared to their revenue through Patreon (https://www.patreon.com/tmro). They get $1000+ per episode.

When did YouTube start using these really annoying video ads? Because it seem at that point that my non-technical aquentiences started to install adblockers.

And it seems that youtube users use Patreon now.

I wonder if the transition of readers to mobile can make life hard for content companies monetised through ads? In a typical content site on a large screen, you have loads of opportunities to incorporate advertising. On a mobile screen, you have far less space.

Advertisement providers that work in mobile really need to get their shit together. Ads that redirect the app store are utterly unacceptable and ludicrously common. Audio ads seem less common, but are just as unacceptable. I browsed without an ad blocker on mobile for a year or two before I got so fed up with the malware bullshit that I switched to Firefox for Android with ABP installed. Advertisers have no one but themselves to blame for the prevalence of ad blocking software.

On the plus side, it is far more difficult to install an ad-blocker on a mobile device.

Most adblockers are not on the computers of the HN-type, but rather installed by HN-type people on their friends computers. (ie: I've probably installed them on 5-10 systems). However, I probably wouldn't bother installing it on friend's phones/tablets, since I use mine, not their's.

On the negative side, mobile ads should pay less, since I'm less likely to whip out my credit card and buy something big/profitable on it. At least that is me anyway.

Until there's a clear path to buy something, CPCs on mobile screens are going to be worth fractions of their Web counterparts.

Current e-commerce experience on the mobile is "fiddle with your phone while trying to type up your account information, shipping address and billing data", so conversion rates are understandable abysmal, leaving mobile ad space to people promoting app installs.

It would also be interesting how the adblock ratios are for both. My full machines have adblock running for most pages, on mobile I don't.

So here's a pesky theory that pops into my mind every time I hear a story like this. I really hope everyone will say it's crazy, though, because the consequences are pretty dire.

Advertising is good at selling some products, but advertisers are spectacular at selling advertising. So we've had almost a century-long bubble in bullshit.

The best way you outsell other advertisers, masters of bullshit themselves, all spinning how effective their ad is, is by selling metrics alongside your advertising. Metrics are the anti-bullshit. Well, almost...

You want something that looks like "actual sales caused." You want to tell a guy, "pay me $10 per ad, and I will generate 10 sales, each giving you $2 profit you wouldn't have otherwise made. We'll split the winnings."

You want to claim metrics for sales caused, but you don't really want those exact numbers, you kind of want something that looks hard that you can spin. Something loosely correlated with "actual sales caused" where your art of bullshitting can get slightly better returns than the exact numbers would get. Play to your strengths, right?

So magazines come along with subscription numbers, and that's great sauce. Then television comes along with the Nielsen family and, ok, actually Nielsen starts way back with radio in the 1920s, but same idea. Radio/television advertising reaches the most people and every company starts to pay a premium.

Advertisers have the whole industry sliced, diced, catalogued and formulated. Superbowl is the premium end, free weeklies are the bottom of the barrel. Everybody has a place, but everyone's using the same game to guess at eyeballs, to guess at actual sales caused.

Suddenly, though, there's this new game on the internet. Not a lot of eyeballs at first, so it starts in free weekly category. Suddenly though, Google (and maybe some other companies) can tell you how many ads are actually getting action rather than just eyeballs.

It's a metric like we've never seen before, it's the killer metric. Sure, you could get this from surveys, or test markets, but this is like measuring everyone who sees the ad. It's pretty cool.

But remember, metrics this accurate are dangerous, it shows when advertising doesn't work too.

And a lot of advertising is spin, a lot of it isn't all that great, because advertisers are better at selling ads than they are at selling your product.

I hope someone tells me this is all nonsense, though, because if it's true, then Internet advertising is both absorbing the advertising industry then destroying it.

That'd be sad. I mean, sure, it's showing us which of our emperors are already naked. But it might mean the constant death of random content sites like this.

Advertising is good at selling some products, but advertisers are spectacular at selling advertising. So we've had almost a century-long bubble in bullshit.

This should be inscribed in 50-foot tall letters of fire hanging in the air above Silicon Valley.

I agree. I think the demise of newspapers is largely from those buying advertising finally having hard and credible evidence that they were overpaying for a few centuries.

Advertising wasn't (and isn't) valueless, but the benefits were overextolled.

> I agree. I think the demise of newspapers is largely from those buying advertising finally having hard and credible evidence that they were overpaying for a few centuries.

There is something else at work here though. It could be that people were overpaying for advertising, but it doesn't cost a lot more for a print ad than it would cost to have the ad printed and mailed to the same number of people who subscribe to the newspaper. The newspaper makes money because they put your ad in the newspaper they were already going to print and deliver and then they get to stick your ad money in their pocket. It's a nice deal for them.

But the internet equivalent of direct mail is spam. Or mailing lists to be more charitable. In ether case there is no printing and delivery cost. And the advertiser will now also have their own website which anyone can go to and view their products at trivial expense to the advertiser.

So sellers of advertising are no longer providing printing and delivery services or access to finite broadcast airtime. The equivalents of those things are no longer scarce or expensive.

The only thing they're selling is the ability to put your ad in front of customers who otherwise might not see it. Which might still be valuable if they had some kind of exclusivity in providing that, but they don't. Eyeballs aren't scarce either. Everybody visits many websites every day. The advertiser can get their ad in front of the customer by putting it on any subset of those websites, which then have to compete with each other for the advertiser's money.

So the price of advertising goes down. Somewhat fortunately for the likes of Google, then the Jevons paradox kicks in and people realize that if advertising becomes cheaper then it's profitable to buy more of it. So companies aren't spending less money on advertising.

But there are still many times more people selling it. And if companies spend twice as much on advertising but there are twenty times as many websites offering ad space, at the end of the day they each end up with ~10% of what they used to.

There's a lot of interesing stuff in this comment. But it seems to conflate lead-gen with advertising. There are lots of reasons to advertise that don't relate to the sales funnel.

The second issue is alot of internet advertising is bullshit, including the metrics. Now, some things are good--actual-purchase links are decent data, but again that's really lead-gen not advertising.

If your lead already wants to buy your product, its too late for advertsing and you're really more into a different game. Nobody looks at an ad in the superbowl and the runs out and buy something 12 minutes later. The fact your narrative doesn't apply to that case is more a sign that something is missing in it, not that superbowl ads are mis-priced per se.

The metrics are often broken. Think about how you measure it...

Ideally, you want to pay the ad platform for sending you a user who will buy your product. So you say something like: "I'll pay you X for every user you send me who buys something".

Great, right?

Except now the ad can simply optimize for users who were GOING to buy your product anyway. So now you've spent money getting users who would have been there anyway.

What you really want is to pay for users "Who buy my product, but would NOT have bought it without the presence of the ad". And that's a much harder thing to measure.

"Ideally, you want to pay the ad platform for sending you a user who will buy your product."

Brand advertising is built around the concept of "When a person is making a buying decision, I want them to buy my product."

We know it works, because when you stop doing brand advertising for things like Toilet Paper, Detergent, Toothpaste, Deoderant, etc... sales go down. And when you start the advertising again, sales go up.

Don't people just sample the market to find out a brand that is to their tastes (performs as desired) and then keep buying it while the price is still of value?

There are a lot of theories, but, the one thing that has been consistent for at least the last 60 years, is that if you have a consumer Brand of something, say "Tide Detergent" - and you stop all your brand advertising in a certain region, sales go down in that region, and when you start advertising again, sales go back up.

Price, Value, Placement, and, obviously, competition are all conflating factors as well - but the underlying response to advertising has been pretty consistent.

I've always wondered what the marketing campaigns look like for the 100 different brandings of the same product at the grocery store. Do Toothpaste A and Toothpaste Z340 target completely different demographics, or are they going for the same eyeballs with their ads?

>Suddenly, though, there's this new game on the internet. Not a lot of eyeballs at first, so it starts in free weekly category. Suddenly though, Google (and maybe some other companies) can tell you how many ads are actually getting action rather than just eyeballs. >It's a metric like we've never seen before, it's the killer metric. Sure, you could get this from surveys, or test markets, but this is like measuring everyone who sees the ad. It's pretty cool. >But remember, metrics this accurate are dangerous, it shows when advertising doesn't work too.

I suspect that metric is nowhere as accurate as most people believe it to be. But I agree with the spirit of this message: a lot of the BS is getting exposed.

Interesting comment! Not entirely sure how relevant or accurate this is, but I thought I would point out that in Feb 2014, Om Malik from Gigaom wrote:

> In 2008, our company decided that we would not pray at the altar of pageviews and advertising metrics that do nothing but devalue our readers’ time and attention. Instead, we opted to take the road less traveled — subscription revenues.

https://gigaom.com/2014/02/20/now-that-gigaom-is-all-grown-u...

The post described their pivot into another line of business. (I'm not sure how much Gigaom relied on subscription revenue vs. advertising.)

That has long been understood. An old saying from the days of print and TV/radio ads: Half of all advertising is wasted, but nobody knows which half.

That seems optimistic.

I'm in the category where I don't need ads, I need timely and well categorized (machine sortable; accurate) results for product requests that I have when I discern a need.

I don't fell bad at all about running an adblocker because I would never have clicked on the ad to begin with (it also saves bandwidth and eyebleach); unobtrusive well placed and related text ads /might/ remind me of a need I had been meaning to fill.

http://intellectual-thoughts.com/Alan%20Moore%20Quote.htm

There is some confusion as to what magic actually is. I think this can be cleared up if you just look at the very earliest descriptions of magic. Magic in its earliest form is often referred to as “the art”. I believe this is completely literal. I believe that magic is art and that art, whether it be writing, music, sculpture, or any other form is literally magic. Art is, like magic, the science of manipulating symbols, words, or images, to achieve changes in consciousness. The very language about magic seems to be talking as much about writing or art as it is about supernatural events. A grimmoir for example, the book of spells is simply a fancy way of saying grammar. Indeed, to cast a spell, is simply to spell, to manipulate words, to change people's consciousness. And I believe that this is why an artist or writer is the closest thing in the contemporary world that you are likely to see to a Shaman.

I believe that all culture must have arisen from cult. Originally, all of the faucets of our culture, whether they be in the arts or sciences were the province of the Shaman. The fact that in present times, this magical power has degenerated to the level of cheap entertainment and manipulation, is, I think a tragedy. At the moment the people who are using Shamanism and magic to shape our culture are advertisers. Rather than try to wake people up, their Shamanism is used as an opiate to tranquilize people, to make people more manipulable. Their magic box of television, and by their magic words, their jingles can cause everyone in the country to be thinking the same words and have the same banal thoughts all at exactly the same moment.

In all of magic there is an incredibly large linguistic component. The Bardic tradition of magic would place a bard as being much higher and more fearsome than a magician. A magician might curse you. That might make your hands lay funny or you might have a child born with a club foot. If a Bard were to place not a curse upon you, but a satire, then that could destroy you. If it was a clever satire, it might not just destroy you in the eyes of your associates; it would destroy you in the eyes of your family. It would destroy you in your own eyes. And if it was a finely worded and clever satire that might survive and be remembered for decades, even centuries. Then years after you were dead people still might be reading it and laughing at you and your wretchedness and your absurdity. Writers and people who had command of words were respected and feared as people who manipulated magic. In latter times I think that artists and writers have allowed themselves to be sold down the river. They have accepted the prevailing belief that art and writing are merely forms of entertainment. They’re not seen as transformative forces that can change a human being; that can change a society. They are seen as simple entertainment; things with which we can fill 20 minutes, half an hour, while we’re waiting to die. It’s not the job of the artist to give the audience what the audience wants. If the audience knew what they needed, then they wouldn’t be the audience. They would be the artists. It is the job of artists to give the audience what they need.

-Alan Moore

What this tells me is that if you're running a website that uses Google advertising as your primary source of revenue, you should probably sell up now and get out while the getting is good. Ad-based sites simply cannot survive anymore.

Google AdSense stopped being a viable source of ad income for even large-traffic publishers more than 6 years ago.

To be clear: as-based sites can absolutely survive, but you need a sales team and good as-ops. The best CPMs are going to come from sales people getting deals done, not algorithms and text ads.

That market died in 2008.

That's obviously false. Whether you can survive on ads is strictly based on your cost of operations.

The Internet is overflowing with ad-based sites, and will continue to be. Some will die, the radical majority will not. Five years from now there will be more ad supported sites than there are today.

The alternative to Google is to run your own advertising. This is especially true for sites with the scale of Gigaom.

Well, you'd have to try to provide something that Google can't, like "native advertising". But any respectable organization would not run native.

Google is simply too good at matching viewers to advertising that is valuable to them (and therefore the publisher).

Running your own advertising is hard to be successful with, unless you can convince your advertiser to really overpay.

>Google is simply too good at matching viewers to advertising that is valuable to them (and therefore the publisher).

This is so wrong, I don't even know where to start. Google is very good at managing ad inventory and putting ads from said inventory in front of people. What they aren't good at (or even care about being good at) is getting the right inventory mix for the right site. That requires focused sales teams.

I'm not going to go down the native advertising rabbit hole because I don't have time ro have the conversation it needs to have, but I will say that whatever you think it is, it's both better and worse than that. And everyone who is successful in publishing does it to some extent, maybe just by a different name. And it's not new. It's been happening since the beginning of mass media. I can understand not liking advertorials or content that is unclear, but there are not plenty of people making native advertising that doesn't interfere with editorial missions.

>Running your own advertising is hard to be successful with, unless you can convince your advertiser to really overpay.

Again, this is not true. For a small publisher, running your ads is probably not worth the tech or sales investment. If you're the scale of a GigaOm, you need to take control of your ad game yourself. You can supplement sith ad networks, but the real money comes from doing it yourself. And with good ad ops, you can also provide a way better experience for the ad buyer.

Again, we're not talking about small one person publishers. We're talking t about sites that do millions of uniques and have full staff. If you're doing that and not maintaininf tour own sales staff, you're leaving money on the table, incompetent, or you have a product no one wants. Or all three.

Absolutely. I run a rather large (non-tech) site that doubled in traffic from Feb 2015 vs. Feb 2014 and AdSense revenues were actually down about 6% year over year.

Uniques and pageviews were way up, click-through rate was near constant, but CPC got clobbered. It's incredibly frustrating and I can only imagine we'll see a great thinning of the herd across verticals very soon.

> if your web site depended on advertising from Google

They are dependent on Google DoubleClick, but not on Google's CPC product.

I'd be surprised if AdWords/CPC made up 5% of GigaOm revenue (it would look more like: 50% conference business, 45% display ads, 5% other ads).

CPC is used as backfill on display - right now GigaOM have campaigns from Verizon, Tile and Asana running.

If you're doing this for a living the last thing you should be doing is relying on Google ads. The publications that make money at this have sales staffs (and much higher CPMs, and no CLC campaigns)

I assume that's driven by the consumption of content switching to mobile from desktop?

What makes you assume that? Just curious.