Technology

What does the “supply gap effect” mean in AdSense?

AdSense uses Google AdWords ads to display on your site. Google AdWords is a PPC scheme and ad slots are determined by bid prices. The highest ad bidder would earn a higher position in search. this also applies to content offers.

This is seen from the advertiser’s point of view. For the publisher, a higher bid means a higher profit after the ad is clicked.

The bid gap is the difference in price between Google ads. The first position would always cost more and each lower position would cost less.

Due to stiff competition, the supply gap between the top 4 ads would be minimal. Once you get past that, the difference increases greatly.

There may be a bid of $7, $6.90, $6.80 and $6.75 for the top four bids and it may drop to 10 cents for the fifth position. ads posted is 4.

See the amazing difference.

This gap in supply can lead to lower revenue if you show too many ads.

If you run the maximum number of ads allowed by Google, then you would be showing the ads with the highest bids along with those with a very low bid price.

Because there would be more low-priced ads, there are chances that they will be clicked more than others.

You must have seen in your Google AdSense reports that few clicks earn 2 cents or 5 cents and so on. If the eCPM is significantly lower than another unit in your channel reports, it is indicative of a large supply gap.

If clicks to your site aren’t generating revenue, it’s time to take action.

Another factor in low price offers is “Made for AdSense” sites. These sites run low-bid ads through AdWords and then use that traffic to drive to their own site that also contains higher-bid AdSense ads.

They take advantage of other people’s content to power their own website with no content.

In such a situation, reducing the number of ads displayed on your site can help.

You’d get fewer clicks because the total number of ads would go down but your earnings per click would go up.

However, you’ll need to monitor the situation to see if reducing the number of ads helps you increase revenue.

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