In February, TechCrunch published a post on how changes to the way AdSense determines a valid click led to lower CTRs (click-through rates) for publishers. This was not really a surprise; as I wrote back then, this was primarily a bid to ensure click quality on behalf of advertisers. And not only AdSense–there were rumblings on publisher boards earlier this year about Yahoo Publisher Network, a rival contextual ad network, showing the same dropping CTR problem.

But CTR is only part of the revenue equation. RPC (revenue per click) determines how much the average click is worth to a publisher. Interestingly, the data we’ve assembled shows that RPCs are rising among the most popular contextual ad networks. Looking at data drawn from a publisher base comprising over 4 billion monthly page views shows a steady climb—about 60% over a seven-month period—in RPC among publishers using the most popular contextual advertising networks in use today.

Why? There are two possible explanations. First, the contextual ad networks are giving a greater share of advertiser revenue to publishers, to counterbalance fears that tightening CTRs will lead to losses of revenue and prompt searches for alternate ad networks. Second, we might be seeing the effect of rising competition among online advertisers, as advertising spending continues to move online. Contextual advertising gives advertisers the option to pay only when a user expresses interest in an ad (by clicking), so it’s a natural pick for advertisers with performance goals in mind.

We have no idea if the rise in RPC makes up for—or exceeds—any losses through lower CTRs, and, regardless, the situation will be different for any particular publisher and their specific content and traffic patterns. Again, these are aggregate trends from a pool of publishers, and each publisher might see data that deviates from this trend. Each ad network calculates RPC in a different way for each publisher. But the trend for this sample of publishers is clear: when visitors click, expect more, not less.

This entry was posted on Wednesday, July 30th, 2008 at 11:01 am and is filed under YieldBuild Lab. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.