Interest based ads might backfire

Back in March, Google announced the release of Interest Based Advertising – but many of us (yours truly) was too caught up with the drama going on between China and Google over hacking, results filtering, and whether or not the U.S. government would get involved and take sides on internet freedom as a matter of trade and foreign policy. Ultimately of course, they seem to have gotten out of the market altogether, but it certainly made for a good show while it lasted.  Some analysts have been particularly critical of how this move might affect their revenues, but it could be other things that are slowing down the ad sales right now in the U.S. market.

If you read through the Adsense folders on webmaster forums, you might notice a recent surge in the number of complaints about declining income.  I say you might because there are always these kinds of posts, but they do seem to occasionally group up together in a way that indicates an actual trend as opposed to an individual who just got smart-priced.  Of course, I didn’t go looking for this trend myself until I had already noticed the drop in both clicks and click value.  Either the economy was in the middle of the next nose dive already or something was wrong with the ads!

The Work Hypothesis Against Interest Based Ads

We can call them “interest based advertisements” but let’s be real – the whole idea is to build an advertising match based on a user’s browsing history.  Unfortunately, a lot of people tend to browse the internet at work, and believe it or not a lot of the time they spend on the web is actually related to the job they’re doing.  The last full-time gig I had mostly involved pulling data about educational opportunities and centralizing it in to a single database – if I was still working that job then surely every Adsense ad I see would somehow be related to heading back to school and that’s just not something I’m the slightest bit interested in right now.

Now, just switch education to anything else that you might need to look up on the typical modern information-economy job, and suddenly everyone coming to my website is not only reminded or work, but they’re also only going to click on an ad if they are really really into their careers more than the content topic I’m presenting.

Niche Value Roulette

Now, if you’ve got a site about random or generally low-value topics, matching your ads to the surfer’s history might actually be a good thing.  For people running wall paper or free template sites, it can be hard to find related advertisers who are charging money for products similar to the ones you’re giving away.

On the other hand, high value niche topics might not be relevant to the “user’s interest” even though he or she is interested in the topic of the content at hand.  (Isn’t contextual advertising already a form of interest-based advertising anyway?!)

So is your topic above or below the median niche value?  A good way to find out is probably to deactivate the interest-based ads and see if your earnings per click go up or down.

Privacy Pays

Sure, in the 21st century, everything you do online is probably known by somebody and stored in some database somewhere.  That doesn’t mean we want to be reminded of that nor does it mean that I want my website to be the one doing the reminding.  The initial reaction might be “Neat!  They know what I want to buy,” but the longer one dwells on that thought the creepier it starts to get.  The last thing your visitor wants to do is wonder exactly how much you know about them, especially since Google is the only one who actually has the information.  Its like you get to be the public reminder of how our privacy is eroding, and you don’t even get full access to the data!

Conclusion:  Context = More Clicks of Higher Value

Now I don’t run Adsense ads on this site, but I do have one domain where it is a primary source of income – and a pretty significant one my overall budget.  From my results in early March compared to my results before then and after I opted out of interest-based ads, I can clearly see that both the click through rates and the earnings per click are up significantly.  Its only been like two full days, but I’d estimate the revenue ratio to be as high as 5:3 in favor of contextual advertising.

Of course, if you’ve got a low-cost niche, these results could be flipped up side down for your own website(s).  The best bet then, is to be aware of the potential advantages & disadvantages, then run your own test specific to your own variables!

If you come to the same conclusions I did, you can also opt-out of the interest based advertising program by: heading over to your Adsense account; clicking on the “My Account” tab; and editing your Interest-based Ads Preference.