AdSense bid gap

AdSense bid gap is a situation in which ads on a page yield significantly varying return for a publisher. Bid gap can be encountered in any auction-type marketing or advertising system, but most people ask about bid gap related to AdSense; therefore, we will place most emphasis in our explanation on the AdSense bid gap effect.

The theory of bid gap relates to one important question:

Is it better to have one or two AdSense ad units on a web page, or should you utilize as many as possible?

The answer is not so straightforward. Usually it is best to run the maximum number of AdSense ads on your web page. The more ads you show, the higher the chance they will catch your visitor’s eye. However, in some situations, having less ads can provide more ad revenue. This is caused by the AdSense bid gap.

What is AdSense bid gap?

Before we start explaining the effect of AdSense bid gap, let's briefly explain how the internet marketing pricing mechanism works. Google AdSense takes the advertisements generated in Google AdWords and displays them on your site (see here for more details about the relationship between these two: Difference between AdSense and AdWords).

Bid gap from advertiser’s viewpoint...

Assume there is an ad block available on a web site -- who determines how much advertisers have to pay to the web site owner and whose ad gets displayed on the site? Advertisers bid. Joe bids $5, Jimmy bids $4, and Paul bids $2. Joe's ad will get displayed on your site, and Jimmy's with Paul's ads will not be shown because they did not bid enough. You can see that the higher ad bidder wins higher position in the content bidding. The difference between Joe's and Paul's bid is the bid gap. That is from the advertiser’s viewpoint.

Bid gap from publisher’s viewpoint...

How much you as a publisher get from Google when someone clicks an ad on your web site also depends on how advertisers compete when bidding prices. At publisher’s end, higher bid means higher earnings after a click is made on an ad. It is hard to determine an AdSense bid gap from a publisher's perspective, but it is possible. Perhaps you have noticed that some clicks on your AdSense reports generated only $0.03 or $0.05 per click while some other clicks generated $1 or $1.50. The difference between these high EPC (Earnings-Per-Click) positions and the lower EPC positions is considered the AdSense bid gap.

To conclude, we can say that the bid gap is:

What is the hypothesis behind AdSense bid gap?

Bid gap implies one important hypothesis. Some people say that it is better to have fewer AdSense ads on a page than to utilize all allowable ads (3 banners + 3 link ads + 2 search). Does the effect of AdSense bid gap really influence your earnings? Unfortunately, it really cannot be said as it is not black or white. Your AdSense earnings depend on many factors, most notably on your CTR (Click-Through-Rate), content, site popularity, and especially on the placement of your ad spots. You can only assess the effect of bid gap through experimenting. I know, this is not the answer you were looking for, but Google AdSense really is all about experimenting and tweaking.

Implications of AdSense bid gap

We explained the bid gap a few paragraphs earlier using a simple example of advertisers competing for one ad block on a page. Now suppose you have several (for example 8) different AdSense blocks on a page. Some of these AdSense ad blocks may give you a high Earnings-Per-Click payout while most of them only make you $0.10, $0.05, or less per click.

The theory of bid gap involves two conflicting strategies:

     B) The more AdSense you have on a web page, the higher the chance the visitor clicks on a lower-paying ad and thus you earn less in total compared to what you would have earned had the visitor clicked some high-paying ad.

If you take advantage of the maximum number of ads allowed by Google, then you are displaying the ads with the highest bids along with those who have very small price bid. If you show many of low-priced ads, you are running chances that those are clicked more than the high-paying ads. Chances are that a reader clicks one of the lower-paying ads because there are more of them.

Although there is not general rule as to which theory, whether A) or B) prevails, experts usually advise to start out with only a few AdSense ad blocks and add additional ones incrementally. Addition of each AdSense ad block should be followed by analyzing your earnings and looking for the possible AdSense bid gap.

How to find AdSense bid gap?

Determining whether AdSense bid gap applies to you is not easy and takes some analyzing, experimenting, and patience. Log into your AdSense account and analyze your channels tied to your AdSense ad blocks. See if your Earnings-Per-Click (EPC) within a channel fluctuates a lot. See if your Earnings-Per-Click (EPC) fluctuates between channels.

If you are a victim of the bid gap, you will find in Google reports clicks that generate between 2 and 10 cents. If your AdSense Earnings-Per-Click (or eCPM in your AdSense account) is significantly lower in one channel than in another unit with a similar click rate in your channel reports, it is indicative of huge bid gap. If some clicks on your web site are not resulting in value, you need to do something about it.

After analyzing the effects of bid gap, try adding just a couple of well placed AdSense ads as a test for a few days followed by a landing page with more ads and compare the differences in payouts and conversion ratios.

Or, experiment the other way around. If you started out with many AdSense ad blocks, try removing some. You will get lower Click-Through-Rate (CTR) because the total number of ads on your web page reduced, but you might see that the earnings per click will increase. When there is a high bid gap between one set of ads to another, it is best to reduce the number of ads.

How much difference in my earnings can bid gap make?

You might be surprised; AdSense bid gap really does matter. We have seen one web site which started generating 15% more earnings after being optimized for AdSense bid gap. Bid gap really does affect you if your goal is to make money with AdSense (See our guide to How to make money with AdSense).

Most Google ad sizes display a maximum number of four or five ads. Since AdWords advertisers know some sites only run one Google ad, competition for the first four or five spots of the first banner can be quite high. Due to stiff competition the bid gap between top 4 or 5 AdWords ads is usually very minimal. But once you get past the 4th or 5th position, the difference increases to a great extent. You might have a bid of $9.90, $9.70, $9.40 and $9.25 for top four bids, and then the bid for the fifth position may fall to 10 cents. Quite a staggering difference, right?

Competition for the top 4 or 5 positions is high because advertisers are aware that most Google ads are placed in slots where the maximum number of ads published is 4 or 5.

Bid gap and other factors leading to low earnings

Bid gap is one of the reasons why your web site might be generating less revenue than you expect, but the bid gap cannot be blamed for everything. There are many reasons for low efficiency of ads. One of the reasons might be that your ads are not targeted well. For example, you web site is about autos and your ads are about web hosting. If that is the case, one quick fix might be the use of the google_ad_section_start tag. See this article: Google Ad Section.

Another reason in addition to the bid gap can be that your web page may not even be indexed? See here for How to find out the last time Google crawled and indexed a website. In this case, a technique called pagerank sculpting is something you might want to look into.

Articles related to AdSense bid gap

If AdSense bid gap interests you, and you want to find out more about other related secrets, check out the following articles:

How to find cheap AdWords?
Comprehensive guide to make money with AdSense (36 tips & tricks)
How to increase Google crawl rate
How to add URL to Google
How to create a Google sitemap

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