Since launching a new report to show you how much you’re earning from Google-certified third party ad networks, we’ve received questions from publishers around how to make sense of the numbers they’re seeing. Some have let us know that they’re now blocking lower-performing ad networks based on revenue per thousand impressions (RPMs), a practice which can actually have a negative impact on overall revenue. Today, we’d like to take a moment to address your questions and provide more guidance around understanding your reports and blocking specific ad networks.

Let’s first talk about analyzing RPM figures. If you’ve ever tested color combinations for your ad units using channels, you’re probably used to comparing the RPMs of each channel to determine which one is most effective. Then, once you find the most effective combination, you remove all the other options and only use the optimal one. This works for channels, but it’s important to keep in mind that with Google-certified ad networks, the same approach doesn’t apply.

It’s true that in both situations, RPM represents the estimated earnings you'd accrue for every thousand impressions you receive. However, when you test layout options with channels and remove the ones that don’t perform well, this action doesn’t directly impact the dynamics of the ad auction. Picking a blue background over green won’t automatically remove certain ads from being eligible to appear in that ad space -- it just helps certain ad spaces perform better. With Google-certified ad networks, RPMs are dependent on the available ad inventory. Blocking an ad network will remove eligible ads from the auction, and so we strongly recommend against blocking ad networks solely based on RPM. Let’s look at an example:

Network A
10,000 $1
Network B 14 $3
Network C 1000 $0.50

Network B has the highest RPM and appears to be outperforming the other networks. It’s important to note though that this metric is based on only 14 impressions and might not reflect the same revenue for the next 1000 or 10,000 impressions. The value of impressions can vary widely, so the RPM for a small number of impressions can be misleading.

Network C has the lowest RPM. However, blocking Network C because of this might have a negative impact on revenue. This is because our system will always maximize the value of every impression in an auction -- if an ad from Network C appeared on your pages, it was because any other eligible ads that could have appeared would have generated less revenue for you. By Blocking Network C, another network with a lower-paying bid might win the ad auction instead.

In general, blocking reduces the number of ads participating in the ad auction, which can then have a negative impact on your potential revenue. Please keep in mind that blocking “low paying ads” is a myth, as any ad that appears on your page has won the auction for that space and will earn you the most possible.

At the same time, we also understand that you sometimes need to prevent ads from appearing due to the content of the ad or advertiser. You have several options in your account, which are suitable for different scenarios.

With your feedback in mind, we’re constantly working on offering you more control over the ads appearing on your sites, so watch this space for further announcements! However, don’t forget to carefully consider which ads you’re blocking to ensure that you reach your full revenue potential.

Posted by Arlene Lee -- Inside AdSense Team
Source: Inside AdSense Blog