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SOME UPDATES ON THE GOOGLE APPROACH TO ADVERTIZERS

Barely a day passes without more news reports of our floundering global economy. The impacts of the flaky financial markets impact business online just as much as they do our offline counterparts.

We’ve seen this first-hand at Flippa: ad network earnings for sites sold on our marketplace fell significantly in 2012. But we found that not all networks’ revenue declined by the same amount.

Average revenues for sites using AdSense fell by around 40% more than those using other ad networks.

Together, AdSense, BuySellAds, Infolinks, Chitika, DoubleClick and OpenAds/OpenX averaged a fall in median monthly revenue of 13.1% 2012. But the median monthly revenue claimed by sellers using AdSense for that period fell, on average, by 18.6%.

The trend was backed up by this SEO Rountable survey, in which 63% of respondents claimed their AdSense revenue fell in 2012.

AdSense is the web’s most popular ad publishing network, with around 74% market share. So what’s going on?

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We decided to take a closer look at the reasons behind the decline—and try to work out whether AdSense still makes sense for publishers in 2013.
Algorithm updates: a likely culprit?

To make money from AdSense, a site owner needs two things: ads to fill their ad space, and traffic—people to show those ads to.

AdSense users have little trouble finding ads to fill their space, which is sold through Google’s AdWords network. But what about traffic?

When we looked at our data for all sites sold on Flippa last year, we found that monthly uniques were down by a whopping 38% on average.

And what do most of us rely on for site traffic? Google.

The SEOMoz Google Algorithm Change History shows that 2012 saw Google continue its campaign of continuous improvement to its algorithms, with large updates—or large numbers of updates—being made throughout the year.
Top-heavy

January’s Top-heavy update was directly focused on sites that showed too many ads above the fold. It was followed up in October with what pundits dubbed “Top-heavy 2”.

This update devalued pages that contained so many ads above the fold that it was difficult for users to discern the content—something Google positioned as a user satisfaction issue.

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Top-heavy really set the scene for the updates that were to follow throughout 2012. Google’s focus on providing users with quality results remained steadfast.
Penguin

The Penguin anti-webspam update in April targeted blackhat SEO techniques including keyword stuffing, unnatural links, and so on.

Google said in its announcement about the update, “this algorithm affects about 3.1% of queries in English … but the impact is higher in more heavily-spammed languages.”

But it seemed that many non-spam sites were affected by Penguin too.
SERP Crowding

August’s SERP Crowding update continued Google’s work to more clearly present search results based on users’ past search behaviour.

The update saw shorter SERPs, which previously appeared in around 4% of results, show up in 18% of the searches SEOMoz conducted.

This meant that less SERP space was available to competing sites.
Other updates

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Hundreds of smaller changes were also made to the algorithm through the year, focusing on links, site authority, search localization, a site’s DMCA takedown history, old and outdated content, and more.

Each update had the potential to reduce traffic to less competitive sites, and indeed, some individual reports of those impacts, like this one, appear linked to the algorithm changes.

As the updates rolled out, many in the online community noticed “ranking flux” as the search engine reshuffled sites within the rankings in the following days. Some sites that managed to retain their rankings overall may still have lost traffic during the flux periods.

While we can’t say how much of the 38% decline we saw in sites’ unique visitor stats was due to Google’s changing algorithms, we can theorize that the changes impacted site traffic—and therefore earnings potential—in 2012.

Of course, Google’s algorithm updates had the potential to affect every site that appeared in the search results, regardless of which ad network they used—if indeed they even served ads.

So can the decline in average AdSense revenues be put down to Google’s algorithm updates? Not entirely. Before we dig into the implications there, let’s look at the AdSense service itself.
AdSense: having an impact?

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If Google’s algorithm changes affected site traffic, what about the AdSense service itself? Ranking flux, for example, may have contributed to ad revenue flux for site owners throughout the year.

But there were other controversies. If webmasterworld and other forums are anything to go by, many users whose ad revenues were declining put the blame on what they felt were “irrelevant” interest-based ad placements.

Sporadic reporting issues with the AdSense service didn’t do much to shore up users’ faith in the service, either.
Ad rates in decline

AdSense is fed with ads placed through AdWords advertising network, which also showed poor performance in 2012.

Google was forced to drop its ad rates by 12% in early 2012, following an 8% drop in late 2011.

With advertisers paying less for space, publishers on AdSense would inevitably receive less for displaying those ads. Google itself reported reducing earnings for the period.

Without an analysis of the ad rates for the different networks at the time, it’s difficult to compare the impacts of ad market forces on the revenues of publishers in those networks.

What we can say is that the issue of declining ad rates was market-wide, affecting all networks to some degree.
Not all bad…

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Despite all this, some publishers increased their AdSense revenues in 2012—24%, according to the SEO Roundtable survey we mentioned earlier.

So what were they doing that the others weren’t?

According to netmeg, a member of the webmasterworld forums, AdSense success takes time, practice, and dedication.

“When I first started, I got really mistargeted ads too, and it took a slap year or more for Google (and me) to start learning what works on my sites. And I had to make some changes in the way I wrote for it. And I paid attention to who was using it and how they were using it. And I developed some strategies to find where else these people hung out and how to maybe bring them to the sites, get them to share it with their friends, etc.”

An interesting point this publisher makes is that she’s also an experienced AdWords advertiser. She said this experience had helped her get an understanding of how the system worked as a whole, which helped her better target her content and ads—and ultimately grow her AdSense revenues.
Is AdSense still worth it?

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From our research, it seems that the AdSense service is continuing to do what it’s supposed to—deliver relevant ads to publishers’ pages—and Google’s algorithm updates are doing what they’re meant to: improve the quality of search results.

And there are, of course, more targeted updates to come.

This means that more competitive sites are getting more traffic, and a larger slice of ad revenues. And less competitive sites get less traffic, fewer ad clicks, and less ad revenue. Regardless of the ad network they’re using.

So why is AdSense revenue so much lower than the industry average?

Perhaps because the service is used by so many more site owners—and, likely, more beginning site owners—than the others.

Making money by selling ad space is hard work, and it’s only getting harder. Experience matters. Yet AdSense may well have a larger proportion of less experienced publishers on its books. These sites will continue to struggle for traffic and ad revenues, whatever network they use.

But those who are willing to dedicate themselves to their users, who watch to see what works, and use that to inform the development of their sites, will find it easier to remain competitive—and make money with AdSense, as well as other revenue streams—in 2013.
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Henry Sapiecha



Back in 2005, I built a little e-commerce store that sold bird cages. My site ranked “okay” in Google and I was turning a decent profit, but certainly not enough to quit my day job over. I liked the bird cage market and knew it well, but to get to the next level I knew I needed a site that got more traffic than mine did.

I knew in time I could greatly improve my rankings and traffic volume. However, I’m not really the patient type, so I decided to look around and see if there were any “high ranking” websites for sale within the bird cage market. I found a site that ranked #2 in Google (much higher than my site ranked) for the phrase ‘bird cages’. I knew that with a site ranking that high, I would be KILLING IT! I bought the site for $1,800, spent a year and a half “fixing it up” (and making a lot of profit during that time), and then sold it on Flippa (still SitePoint Marketplace) for $173,000!

Fantasy Footwear

Why was the previous owner crazy enough to sell it for only $1,800? And how was I able to turn around and sell the same site for $173,000? Read on, and I’ll tell you.

When it comes to making money with an online store, profitability really comes down to 3 things:

  1. Traffic – obviously, you need to have visitors coming to your site.
  2. Profit Margin – there needs to be a decent-sized gap between what your customers pay you and what you pay your supplier
  3. Conversion rate – the number of visitors you “convert” into paying customers. Visitors are worthless to you unless they actually place an order.

If you take away any 1 of these 3 things, a site’s profitability AND VALUE goes way down.
Finding Sites with Traffic

So why was the previous owner of this bird cage site willing to let it go for so little? You guessed it, 1 of the 3 factors was missing. The site had high rankings and got a ton of traffic; that wasn’t the problem. And, being in the bird cage market, I knew the profit margins were good. The problem was that the site’s conversion rate was in the toilet. Even though the site had a ton of visitors, very few of them placed an order! Low SALES means low PROFITABILITY which means low VALUE. That’s why I was able to snatch it up for only $1,800.

That’s STEP 1 of this little website-flipping formula: find a website that ranks well and gets a lot of traffic but isn’t very profitable because of its LOW CONVERSION RATE.

Of the three factors, conversion rate is the easiest to fix. It takes a lot of work, time and patience to improve your rankings in Google. But you can easily double or triple (or more) your conversion rate overnight!

Take this bird cage website I bought, for example. No offense intended to the previous owner, but the site looked awful! It honestly looked like a 7th grader had made it for her website design class project. It just didn’t build visitors’ trust and confidence to persuade them to pull out their credit card. And then, even for the few customers who were ready to buy, they couldn’t even make payment online. They had to mail in their order! Very awkward!

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Focus on Conversions

That brings us to STEP 2 of the formula: make improvements to the website to boost your conversion rate. A higher CONVERSION RATE means more SALES which means more PROFIT which means more VALUE. That’s all I did! I made the site professional-looking. I made it easier for customers to find what they wanted. I re-wrote product descriptions. I did everything I could to build visitors’ trust in the site and the products I offered. And I allowed customers to pay by credit card on-site.

There are all kinds of different ways to boost a store’s conversion rate, but there are two big keys. First, put your store on a first-rate, cutting-edge, professional shopping cart platform. Using the right store software makes all the difference in the world. And second, always accept credit cards right on your website.

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Cash in Your Work

STEP 3 of my site-flipping formula is to sell the site on Flippa, which I can honestly say is the ONLY place I’d consider selling a website. After boosting my bird cage site’s conversion rate, profits soared (and I made a lot of money)! After showing consistent profits for several months (to establish an ongoing track record), I listed the site for sale on Flippa and ended up getting $173,000 for it.

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So to re-cap, here’s my 3-step formula:

  1. Find & buy a site that gets a lot of traffic but isn’t very profitable because of its low conversion rate.
  2. Make improvements to the website to boost its conversion rate, which in turn boosts its profitability and value.
  3. Once you’ve established a good track record of consistent profits, sell the site for a huge profit on Flippa.

Dave Hermansen is an ecommerce expert who has been involved in over 50 successful ecommerce stores. His success in ecommerce led to him being interviewed on Fox News and featured in an article about ‘website flipping’ in The New York Times. Dave’s free ecommerce training course at StoreCoach.com teaches people how to make serious money in ecommerce!

published by Henry Sapiecha