When it comes to AdSense interest based advertising or IBA a lot of myths
and speculations are made in regards to its effect on your revenue.
Publishers argued that showing Ads based on the previously visited websites
of a user Ads would not perform as good as content targeted Ads.

What is interest-based advertising?
Quote Originally Posted by AdSense Help
Interest-based advertising enables advertisers to reach users based on their inferred interests and demographics (e.g. 'sports enthusiasts'). It also allows advertisers to show ads based on a user's previous interactions with them, such as visits to advertiser websites. To complement interest-based advertising, the Ads Preferences Manager lets users view and edit their interest and demographic categories.
Interest-based advertising should help monetize your website more efficiently, increase value for advertisers, and provide a better experience for users.
To clarify this here is an example:
I once was looking for a birthday present for my 2 year old niece and
after that I was followed by Toy Ads wherever I went for over 2 weeks.
This is interest based advertising.

Can I opt out of interest-based advertising for my site?
Quote Originally Posted by AdSense Help
You can opt out of showing ads that are based on user interest and demographic categories (for example, 'sports enthusiasts' or 'inferred age:18-34'). In turn, Google will not use visitation information from your sites to help create interest and demographic categories. However, you cannot opt out of showing ads to users based on their previous interactions with the advertiser, such as visits to an advertiser's website.

To opt out of ads based on user interest and demographic categories:
  1. Sign in to your AdSense account.
  2. Visit your My Account tab.
  3. Go to the Account Settings page.
  4. In the Interest-based Ads Preference section, click edit.
  5. Select the button marked Do not show ads based on user interest categories and save your changes.

Please keep in mind that by opting out, you'll decrease the number of ads competing to appear on your website, which may decrease your potential earnings.
This means that your visitors still see interest based advertising based
on their previous browsing history. If a visitor visited a website from an
AdWords advertiser he will see so called re-targeted ads on your site from
this advertiser regardless of your IBA settings.

So how does interest based advertising effect my revenue?

This question was based on speculation until today. Since today you can now see in your
AdSense reports how interest based advertising performs on your website.
Previously these were included in contextual earnings.

Now if you want to see how much you're earning from IBA, here's how:
  1. Under Performance tab, click on the 'Accounts by entire day' drop down
  2. Click 'Targeting types' under this drop down
  3. In the column drop down select 'Ad requests' instead of "page views'

You should see data broken out by contextual, IBA, and placement.

My stats for January from the new report are very promising:

CPC prices for IBA are 164% higher then for contextual ads
RPM are 338% higher for IBA then for contextual ads


For those of you who aren't opted in, I'd highly recommend reconsidering opting-in and tracking the results.