I am still a fan of AdSense as a way of determining a baseline income potential for a site, but I don't see it as a long-term viable business model for most small publishers. Why?
Smart Pricing (or Maybe Dumb Publishing?)
I friend told me how much he made from AdSense a year ago, and in spite of increasing his network pageviews 200% since then his earnings this month are 10% lower than they were a year ago.
And Google still does a sloppy job policing their partner network. What happens if their editorial review costs increase. What does that do to the percent of ad income Google needs to keep to keep growing?
A Glut of Publishing:
It is getting easier and easier to publish online. The number of people writing is probably growing at a faster rate than the number (and income of) of people reading, which means you will have to be more compelling and put more effort into your content and marketing if you want to keep your pageviews up.
And Google has been placing more weight on authoritative domains, which is squeezing many small players out of ranking in the search results.
Newspaper & Magazine Archives: More Glut:
As business deals are worked out, and trusted archived content comes online, many business models based on AdSense spam will lose a large portion of their traffic to mainstream media companies that are not currently fully leveraging their archives.
If Google bought YouTube how long before they buy Olive Software or create a similar technology?
Frothy Ad Market:
I just saw a big, ugly, and obtrusive AOL ad on Amazon.com's home page. If people are buying general untargeted graphic ads on the largest retail site they must be overpaying for it.
A Lack of Competition:
Some of the executives of Yahoo!'s Publisher program recently announced they were quiting, and with Google's lead in the contextual ad space with virtually no competition, I have to take that as a bad sign for Yahoo!, and for independent publishers in general.
Google's General Arrogance:
Today many publishers noticed bright Google logos in their ad boxes inviting readers to sign up for AdSense.
Potential Text Ad Blindness:
People have learned to ignore banners and common ad locations. How long until people learn to ignore common AdSense formats, especially as the ads appear so prevalently on so many sites? What if people become more receptive to identifying ads (even in the content area)?
Not Worth It:
Add all those up and it gets a bit bleak looking to AdSense as anything more than a baseline estimate for effortless income or a backfill for unsold inventory.
What if instead of monetizing every page, niche publishers used most of their pages to keep attention and link equity flowing their way, and then just monetized targeted high value sections of their sites using well integrated affiliate offers and/or selling direct products?
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