April 17, 2012 in Uncategorized
Google gave scores of Internet Marketers a reason to believe that Friday the 13th is indeed unlucky.
A popular form of Internet Marketing involves establishing a niche website for a particular product or market segment. Then by participating in Google’s AdSense program which places Pay per Click (PPC) ads on the site the website owner receives a commission based upon the number of times these ads are clicked. This form of income generation is sometimes referred to as passive income. Once a site is well established and receiving an ample number of visitors, only a small level of maintenance is required by the website owner in order to have their site generating a reoccurring stream of income.
A key factor in determining whether a website owner is to be successful in this venture relies upon where their site gets listed in the Search Engine Results Pages (SERP). Being at or near the top of these results ensures that the site will have the necessary number of visitors to cover expenses and generate profits. Not only does the website owner benefit from this arrangement but Google does as well by receiving a percentage of the fee it charges the advertiser for this service.
What happened to this seemingly Win Win situation
Eric G. owner of My 4-Hour Work Week and many others like him awoke last Friday to learn that their Google AdSense accounts had been disabled. Each receiving an Email like this one:
Not all of these actions took place last Friday. Some occurred earlier in the week while others span back as far as a few months.
Some of these actions have resulted in a substantial loss of revenue for the owners of these sites, amounts that may exceed $10k per month. Not only were the high earning accounts disabled but smaller ones as well. Sites that may have only been generating a $100 or less per month.
There is little recourse for those affected
For those that relied on this income for their livelihood there seems to be little they can do to remedy the situation with Google. Just trying to find out the cause for the action may prove to be fruitless, for in Google’s own words “Because we have a need to protect our proprietary detection system, we’re unable to provide our publishers with any information about their account activity, including any web pages, users, or third-party services that might have been involved.”
While Google does have an appeals process those that have tried have reported no success.
Are the Internet Marketers themselves to blame?
It is possible that site owners have brought this upon themselves by violating one more of Googles policies. However without providing the specifics of the infractions how is one to know. Two practices that could lead to having your account disabled are;
- Invalid click activity: Where a site owner generates clicks to the ads on their site by clicking the ads themselves or having someone else do it for them.
- Purchasing traffic to their site: Where the site owner may contract with a third party for the sole purpose of increasing traffic to their site.
It is the site owners claim that they “have never violated any of Google’s policies and why would they. It would be foolish to jeopardize an on-going income stream.” They also claim to take special care as to not be in violation.
One thing that stands out as peculiar is that many of these sites have been in existence and doing business with Google for many years. Did they all choose just recently to become violators?
Will a peek into Google’s 2011 Annual Report hold a clue?
- Excerpts taken from SEC Form 10-k page 28, full report can be found Here
- Font color changed for emphasis (mine)
- Sites with AdSense accounts are Google Network Members
(Google) We believe the factors that influence the success of our advertising programs include the following:
• The number and prominence of ads displayed on our websites and our Google Network Members’ websites.
• The number of visits to, and the content of, our Google Network Members’ websites and certain of our websites and the relevance and quality of the ads we display next to this content.
• The advertisers’ return on investment from advertising campaigns on our websites or our Google Network Members’ websites compared to other forms of advertising.
• The amount we ultimately pay our Google Network Members, distribution partners, and our content providers for traffic, access points, and content, compared to the amount of revenues we generate.
Trends in Our Business
Advertising transactions continue to shift from offline to online as the digital economy evolves. This has contributed to the rapid growth of our business since inception, resulting in substantially increased revenues, and we expect that our business will continue to grow. However, our revenue growth rate has generally declined over time, and it could do so in the future as a result of a number of factors, including increasing competition…
The main focus of our advertising programs is to provide relevant and useful advertising to our users… we expect to continue to take steps to improve the relevance of the ads displayed on our websites and our Google Network Members’ websites. These steps include not displaying ads that generate low click-through rates or that send users to irrelevant or otherwise low quality websites and terminating our relationships with those Google Network Members whose websites do not meet our quality requirements… These steps could negatively affect the growth rate of our revenues.
One could glean from this that not only does Google understand the importance of their Network Members websites but that the reduction in the number of these sites could affect their bottom line.
One last excerpt from the report reinforces Google’s awareness of the importance of their AdSense accounts: “The increase in our revenues from 2010 to 2011 resulted primarily from an increase in advertising revenues generated by Google websites and Google Network Members’ websites.” This still leaves us to wonder why so many accounts were disabled.
What affect will this have on the stock price
During my research for this article I ran across several theories for why Google may have chosen to disable these accounts. One of which suggested that Google was trying to eliminate the competition it faced among its own network of Google Members. The theory being that by removing those sites with Adsense accounts more people would click the ads that Google had placed on the search results page and thereby allowing Google to keep 100% of the revenue by not having to split the fee with Network Members. I am almost certain that this is not the case and if it were, I am sure Google has better ways to accomplish this.
It is worth noting that although these Internet Marketers have had their Adsense accounts disabled, they still retained their advantageous position in Google’s search engine rankings. Being at the top of a search page result can be a valuable commodity.
Which leads me to question the wisdom of Google’s decision to cut ties with these Adsense clients. Those who have had their accounts disabled are now free to enter into contracts with other Pay Per Click companies that are in direct competition with Google while at the same time being listed at the top of Google’s very own pages.
To find out what affect this move will have on the price of their shares, I guess we will just have to wait for the next few earnings reports.
About the Author
Berg Canon is an entrepreneur, business owner and Day Trader who writes and teaches on protecting your financial security with simple, easy to follow trading solutions. Developer of Image Recognition Signaling and Velocity Shift Strategy, he has taken the complicated task of chart reading and turned it into child’s play. To see how Pictures become Profits visit How to Day Trade
Tags: earnings report, google, google adsense, internet marketers, niche website, passive income, stock price