Optimizing AdSense Revenue and AdWords Squatters

March 12, 2007 – 11:26 pm

Last week Search Engine Roundtable reported on a thread over at WebMasterWorld discussing AdWords Squatters. The thread and discussion is particularly interesting to me as it relates to my daily task list at Healthline.

Since I started managing Healthline’s web marketing last April, the company has generated the bulk of its daily revenue (off the the destination site) from AdSense. It was the first time that I had worked in a company that drove it’s revenue not from product sales or lead gen. but from the resell of advertising. Coming from an ecommerce background, the first two questions I had (questions that I began to test from day one) were how do we get the most (quantity) ads per page and the most (quality/relevance) ads per page. When building (and testing) a product path in the retail world, presenting consumers with options (information and control over what type of product they are purchasing) as well as relevant options (whether relevance is defined by their search or by their on-site behavior) is of utmost importance if you want to increase conversion, margins and profit.

Why would I think that conversion (clicks in Healthline’s case) and revenue for a content based company should be any different?

After months of testing, I had determined that AdWords Squatters was causing a loss of AdSense revenue over time. I point out “over time” because some the ads (which I lovely call “Ad Blockers”) will, occasionally, produce a temporary bump in revenue. However, the ads grow stale quickly and are, typically, not at all relevant to the subject our users are reading. Sure… there is a distant relevance; “rehab” hospitals are related to “lupus” because both are “health” subjects - but let’s get real.

When I first started pulling these Ad Blocker (Ad Squatters) from Healthline.com I didn’t see any dramatic or immediate change in our AdSense revenue. This might be due to fact that a) it takes 24-48 hours to remove these ads and b) where one Ad Squatter is removed, another one pops up. In fact, killing these things is still part of my daily task list - it’s like playing Whack-a-Mole and we are currently at 250+ sites and growing. So, the change wasn’t overnight but over a 6 week trend I tracked the changes of our revenue. At the end of 6 week test what I found was:

CTR Tripled: While I am not able (contractually) to give our AdSense CTR numbers, I can say that we went from low single digit CTR’s to near double digits. Why? Unfortunately, due to the AdSense black box I can’t 100% say that the increase was due to removing these AdWords Ad Blockers but I can say that the trend followed actions. I think that by offering users with more options that directly relate to health subject they are reading or searching about, users were more likely to click off on an AdSense ad - thus make us more money.

eCPM Increased by Two Points: Again, I can’t talk specific numbers but we did move (increase) two points. My theory on this one is that when we had more relevant advertisers, users were more likely to find needed information. Because the information they landed on was desired information (or products) they were less likely to “bounce” and more likely to “convert” on the advertisers site. Under this assumption, two other assumptions would fall (and help with an eCPM increase): 1) Healthline would take a larger cut of CPC revenue because advertisers wouldn’t be discounted through “smart pricing” and 2) Advertisers would be more willing to bid each other up because the traffic is quality and converting more.

If this information/observation isn’t good enough then I will add that nearly every quarter I “re-test” the assumption by removing all of the AdWords Squatters from our AdSense Competitive Ad Filter. However, each quarter (so far) I have been met with the same result - drop in CTR, drop in eCPM and a drop in AdSense Revenue when I re-institute the AdWords Squatters.

This is my experience and I have data to prove it but like any testing that involves a black box (so anything involving a google aglo), I would encourage each company to retest. My experience and data have proven that AdWords Squatters are NOT a positive influence on AdSense Revenue and instead multiple, relevant options (like in the ecommerce world) DO increase clicks, margins and revenue.