Tag Archives: adwords

Google Advertising Observation

As I mentioned recently, I’ve been running some simple tests surrounding Google Adsense colour palette performance. The results of that test reinforce what others have previously said about Google Adsense, which in short says that blended or complementary colours out perform other colour choices.

While perusing through the historical Adsense click stream data – something popped out at me. It seems that the average cost per 1000 clicks or eCPM is strongly in favour of the highest click through rate Adsense theme used on the site.

For the sake of illustration, the table below contains the Google Adsense results from October 2007. I have normalised the results to conceal my enormous profits for easy comparison:

ImpressionsClicksCTReCPMEarnings

Open Air, 250×250 999 180 1.8 2.98 2.98
Graphite, 250×250 1000 100 1 1 1

The above table shows that the two different Adsense colour schemes were displayed approximately the same number of times over the month. As pointed out in the Adsense theme performance article, the fully blended Open Air theme has the highest click through rate. To clear up any ambiguity, the two themes are being displayed in the same location on each page throughout the site.

All things being created equal, I would have expected that the eCPM of the Open Air theme to be approximately 1.8 times that of Graphite, based on the click through rate. When I first noticed this happening, I thought it must have been a random event; however when it continued to happen every single month it became clear it was by design.

Thinking about what is happening though makes a lot of sense for Google, as it maximises their profits. When a request comes into Google Adwords, the system looks at what site and web page it is being delivered to so it can attempt to return relevant advertising. At this point, it seems reasonable that they are also checking what ad format and theme settings are in use for this particular request and are returning the ads with the highest maximum cost per click based on statistics.

Are Google using the lower click through rate advertising combinations to deliver lower cost advertising because they have an obligation from their advertisers to show their ads? I think they are doing just that and that they favour delivering higher cost per click ads to higher click through rate streams as it maximises their profits.

Does anyone have any other thoughts on the matter? I’m more than happy to be proved completely wrong if it’ll help increase my understanding of how Google Adwords and Adsense work.