Since the turn of the year, I’ve seen a notable decline in the revenue of my Google Adsense websites (around 33%).
I’ve done a fair bit of analysis to investigate the reasons for this and have published the results of my research below.
Why is my Adsense revenue decreasing?
Decreases in Adsense revenue can be caused by several factors.
At first, I was afraid that it was a decline in my website traffic, but after checking this out I discovered that I am getting the same amount of traffic (and in some cases more than) I did last year when revenues were higher.
Further investigation revealed that it was the amount Google Adsense was paying me for each click that was the real culprit.
As you can see from the chart above, the yellow, blue and green lines are my ad impressions, click-through rate and number of clicks, respectively – all things that I have some control over. And these figures are, in general, on an upward trend or at least remaining stable.
Conversely, the purple and red lines are my CPC (Cost-Per-Click – how much, on average, I am paid per click) and average Revenue per 1000 impressions, respectively. Both these metrics have been on a rapid downward trend for over six months.
Overall, I’ve seen a CPC decline of around 30%, which of course has led to a loss of around a third of my revenue from these websites.
What is causing the fall in Adsense CPC?
Any attempt to pinpoint economic reasons for a fall in Adsense revenue will have an element of speculation because I do not have all the data that would be needed to make an informed decision.
However, I like to think I’m reasonably smart and have been in the SEO game for long enough to notice patterns over time and make a few educated guesses.
The first factor that I think is relevant is the global economic downturn, which includes (from the perspective of a UK citizen) the cost of living crisis, rising interest rates and the effects of the Ukraine War. With so much uncertainty in the world at the moment, many businesses are cutting advertising budgets, being shrewder with their marketing campaigns, and trying to hold on to more cash. Lower advertising budgets (and fewer advertisers) mean less competition to fill ad space.
As well as there being less demand for advertising space, I feel that there is now also an oversupply of Adsense websites. The launch of ChatGPT has made it easier for publishers to write content, which has resulted in a large number of new Made-for-Adsense websites. Now, I should add that I’m not an AI Content Creation Hater – I think it is a fantastic tool. But there is no denying that it has disrupted the content-publishing space and made content cheaper. As a result, there are now more Adsense websites (and advertising space) than there are advertisers to fill it, which has driven down Pay-Per-Click costs.
Over the mid- to longer-term, I predict that ChatGPT will have an even bigger impact on content websites. Rather than reading static webpages to find information, people are simply going to ask an AI chatbot instead.
This does not mean that publishers are no longer needed. There is still a need for expert advice on particular subjects, but the delivery will change from static to interactive. And the publishers that move to AI quickly and build highly efficient and accurate chatbots that are trained on their own expert information will continue to compete.
Finally, new privacy legislation means that it has become more difficult for advertisers to target their preferred audience, so they are not so willing to pay premium prices.
How to Overcome Decreases in Adsense CPC and RPM?
Of course, I can’t read the future and cannot predict what the best plan of action is moving forward. But I can tell you how I intend to approach these big changes in the Display Advertising market going forward.
Firstly, I am reducing the number of resources I am using for content creation.
Last year, I could forecast with a certain degree of certainty how much monthly income I could earn from a particular silo of content based on how much traffic it would be likely to receive and how much (on average) I earn from that volume of traffic from existing webpages. If the cost of creating the content was three times my monthly income prediction, I was reasonably assured that I would break even after three months and every subsequent month would be profitable.
With rapidly falling CPC rates, it has become a lot harder to forecast how much new content is likely to earn. In addition, at current CPC rates, it is no longer financially viable for me to create new content. I still feel that I can profit from content creation, but not to the levels that would make it worthwhile for me to bother.
Instead, I’m going to be pouring more of my resources into affiliate marketing and video content.
I have a couple of small YouTube channels and I’ve noticed small but significant increases in display advertising revenue from them (around 15-20%). So, I’m looking at spending more time developing video content – I’m not comfortable on camera, but I guess now is as good a time as any to force myself out of my comfort zone!
It used to be the case that for some product reviews, Adsense clicks would be more profitable than the affiliate commissions from the few people that went on to buy the product. With the decrease in CPC, affiliate commissions have now, in some cases, become a preferable monetisation strategy and so I will be removing display advertising from some webpages completely.
The outlook for my Adsense websites looks pretty bleak over the longer term but they are still earning fairly decent money and until they die their death, I want to try to maximise the revenue that they earn. So, I’m going to be looking into trying out some different display ad networks – maybe MediaVine or AdThrive (but not Ezoic, NEVER Ezoic – bad experience!). I have also considered selling these websites to get a lump sum to invest in my future projects (and I may still do so).
Summary
- Between January and June 2023, I lost about a third of my Adsense revenue
- Traffic remained the same
- The reason for the fall in revenue was a fall in CPC (cost-per-click)
- Reasons I attribute to the fall in CPC include the global economic downturn, slashed advertiser budgets, over-abundance of Adsense websites, privacy legislation and the rise of ChatGPT
- I will be overcoming this disruption in the market by shifting my focus from display advertising to Youtube video and affiliate marketing
- I will also be looking into alternative display advertising networks
- I may sell my Adsense websites