Don’t Optimize Google Adsense eCPM

by jim on December 31st, 2009

On numerous occasions, when I’ve talked to other bloggers about monetization, the topic of optimizing Google Adsense almost always comes up. For many new bloggers, Adsense is a quick, low maintenance, and non-intimidating way to monetize a blog. Blog readers are comfortable with Adsense because they see it everywhere and likely don’t find that it jars their experience.

Adsense Metrics

In talking about Adsense, there are really only a few metrics to look at – impressions, clicks, clickthrough rate (clicks divided by impressions), eCPM (effective CPM, or earnings be 1,000 impressions), and revenue. So with any metric, we are always trying to improve them through testing, right?

Unfortunately, too many times bloggers focus on the wrong metric to improve. They recognize that revenue is a product of the other metrics and impressions is a product of how many ad placements you run. So after that you
really are left with clicks, CTR, and eCPM. CTR and clicks are intertwined, so working with CTR alone will get you the results you want.

Why is eCPM is a red herring?

If you think about the math aspect of it, eCPM comes after revenue, which we’ve already determined is itself controlled by other factors. Revenue is a product of the clicks times the value of each click, which is never revealed on an individual click by click basis (though you can figure this out if you track multiple channels). eCPM is then calculated by dividing revenue by the number of 1000s of impressions.

What this means is that it’s clicks, and consequently CTR, that you should be focusing on. When optimizing, you should focus on how to improve each individual block’s CTR (or deciding it’s so low that you prefer to remove it to improve the user experience). You can increase eCPM by simply removing under-performing (low CTR) Adsense blocks, but that could cut into your earnings and has you focus on the wrong metric.

Adsense eCPM does have value, it tells you how much that placement is worth to you as a publisher. If a company wants to buy the placement for a month, you have a good idea of how much that spot is generating each month.

Just don’t focus your optimization efforts with that metric in mind.

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