Click-Through-Rate

Most of my Websites include ads from Google.

If you’re not familiar with how Google ads work, here’s a brief overview.  I put some special software code (html code) on my websites, which goes and gets ads from Google each time someone views that page.  The content of the ad (generally) relates to the content of that page.  Each time someone clicks on an ad, Google pays me a small amount of money.  The businesses whose ads appear, bid on how much they are willing to pay for each click — which essentially represents a prospect for them.

Overall, I don’t earn much money this way, but generally, it’s enough to cover my costs for the sites and to maintain and update them.

I’ve noticed an interesting trend with the Google ads.  Since May of this year, the percentage of people clicking on the ads, called the click-through-rate, has continually dropped, from 1% in May to .55% in November.  (As a point of reverence, from December of 2006 — when I first started displaying the ads — to June of 2008, the click-through-rate has stayed between .9 and 1.1%.)

What’s interesting is that over the same time frame, the amount that I am being paid for each click is going up.  The net result is that I am earning about the same amount of money each month.

I assume that the reason that the click-through-rate is going down is that people are tuning out the ads.  Perhaps it’s the economy or maybe it’s just ad overload.

However, at the same time that the click-through-rate is going down, advertisers are paying more for each click.  Their willingness to pay more for their ads, tells me that they still see value in them and that the Google ads are working.

So, people are clicking less and advertisers are paying more, but getting fewer prospects as a result.  It will be interesting to see how this all shakes out.

What do you think? Please leave a comment!