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May 31, 2007

Google Questions AdSense Publishers Business Models

Jennifer Slegg recently reported that Google is sending out emails to Adsense publishers that they claim to have an “unsuitable business model”. Amid much speculation about the types of account activity that were being targeted, it was later clarified on Webmaster Radio that Jennifer was referring to both MFA sites that drive organic traffic as well as sites that drive raffic through PPC to landing pages that have Adsense published on them.

The email, which is being sent to Adsense publishers, gives them a window in which to wrap up their operations. Google has also clarified that they will be paid their outstanding balance in full. It is also the case that they don’t seem to be differentiating on the scale of the publisher, with an example being someone who reported that they received the email despite having Adsense earnings which are in excess of $70,000 per month.

Google’s motivation, certainly in terms of MFA sites monetizing organic traffic, would appear to be understandable. Although Google, as well as publishers, ultimately earn revenue from this, their long term business model centers around the user experience. For some time there has been doubt about Google’s true intentions where this is concerned – especially when some feel as though they could have taken a stronger stance. In reality, Google created a monetization method for spamming the organic SERPs. Regardless of whether that traffic converts for advertisers, auto-generated content and scraper sites ultimately have the sole purpose of acting as a gateway between the user and the advertiser – and therefore their business model cannot be compared to that of a legitimate media channel in the eyes of Google.

The differentiation between traffic that converts, and traffic that does not convert does not appear to be Google’s concern in the publishers they are targeting. Google’s solution to differentiating non-converting and converting traffic appears to have been handled by smart pricing, in which publishers earn less per click when their traffic is less likely to covert for advertisers.

On the other hand, perceived conversion may be as good a reason as any for Google’s new, stronger stance. Advertisers have had reservations about Adsense for some time, feeling that the clicks from the content network provided no return. Through Google taking a stronger stance against the quality of the content network, they could shift more marketing dollars back into that medium. Whether or not, the content network is in fact a powerful marketing medium is a mute point – the perception of the content network makes brand advertisers squeamish and direct marketers feeling as though the traffic is coming from accidental clicks and untargeted traffic.

For those reasons, among others, the demise of MFA sites has been seen as imminent for some time. Despite that, many savvy marketers have reported that they see strong conversions from the Adsense content network. Many of which are driving traffic to affiliate sites; meaning that Google, the Adsense Publisher, the Affiliate and the Merchant all take their slice of the pie without anyone losing out. In fact, this has even driven some publishers to consider vertical integration; effectively cutting out the affiliate commission and signing up to be an affiliate themselves. When performance based marketers are happy to stay around in the content network, you can be in no doubt that it is delivering for their bottom line.

The point that Google is taking a stance against PPC media buys being directed to Adsense pages by publishers is a different subject area altogether. There are strong arguments on both sides of the fence; however it is hard to understand how advertisers are being negatively affected by this.

From the point of view of the user however, it is slightly different story. Effectively a user has to experience one more loop in their search for the content they are after. They may initially land on a page about cars, be directed to an Adsense page with Adsense ads, and then have to click on the link to finally arrive at their end destination. In some cases, the journey to their end destination could involve even more page views when Adsense arbitragers are bidding on keywords in the content network, as well as in the SERPs. Despite that, enough users are following the intended path to make it a viable business model. When users feel duped, as a small percentage inevitably do, they would surely hit the back button. In that respect, the market could have been left to resolve the issues as they relate to paid search.

Whether or not Google feels this creates a negative experience for users is one thing, however for advertisers it is a different story. In the end, conversions speak for themselves. On one hand an Adsense publisher does not have to worry about how targeted their traffic is when their job is to deliver clicks, rather than sales. On the other hand, their efficiency and ability to deliver more volume ultimately makes them a valuable asset. A publisher that is driving Yahoo, MSN and third-tier traffic to an Adsense landing page is creating more volume for advertisers, and ultimately increasing Google inventory. Untargeted traffic is less likely to click the ad, while poorly converting traffic will ultimately lead to smart pricing. Although their goal may be to get clicks, publishers are still being offered an incentive to show due diligence to their advertisers.

As well as increasing volume through bringing inventory from other channels, publishers can also increase volume within Google itself through catching the long-tail on behalf of other advertisers. While an accounting firm, new to PPC, might only bid on 20 keywords, a publisher with thousands of keywords could create new channels for that advertiser on the content network while MFA sites will provide volume through organic SERPs.

Paid search was already going through a paradigm shift away from a pure, market-driven model. While this news cements that further, it also means that MFA publishers are going to have to find alternative means by which to monetize their traffic that they garner from organic search. Perhaps performance based marketing is the answer.

Author:  Manish Mathukiya Writes for iNetZeal – a Link building and SEO Service Company that offering Quality link building service with hundreds of satisfied clients.