Ok, I'm talking about this from the perspective of small business. I'm certain that the Big-G is still raking in the bucks.
Is this a hunch based on an anecdote? I like to think not. Our company owns ten high traffic sites which use or have used both Adwords and Adsense since 2003. In addition, rest assured that we talk regularly with other online partners about this subject.
The growing consensus is that Adwords is losing its efectiveness. All other things being equal, the click-through rate is down dramatically. On the plus side, we've also noticed a corresponding decline in bidding price. Maybe everyone is starting to back off?
As for Adsense, the drop in performance has been greater than that of its sister program Adwords. Earnings-per-click are literally at about 5-10% of what they were at the end of 2004. I hear this time and time again on various forums and in personal conversations. The click-through rate has also declined to below 1%. This fall we began dropping Adsense in favor of other publishing programs as it's no longer worth running its ads.
Moreover, of late many of our long time competitors have simply stopped using Adwords. After a year or more of going head-to-head with us in bidding for keywords, they have simply pulled the plug on their ppc advertising. From this fact it's even easier to assume that both Big-G programs are losing their effectiveness.
What's the take away here for the entrepreneur?
Don't rely on the Big-G to bring you sales. Up until recently many online entrepreneurs would rely on Adwords to bring in sales initially. But that no longer works. What's worse is the fact that the rumor mill on the various webmaster forums has it that the Big-G won't even index a new site for its first year of operations in order to force it to use Adwords to attract traffic.
I believe this rumor to be true, although the Big-G denies it, because new websites show up on Yahoo and the other search engines within 30 days of being submitted. With Google, it takes a very long time. Usually about a year.
I'd like to hear about your experiences if you run sites using these programs.