by Howard Hoffman

In a previous column I discussed the decline in revenue from parking pages. In this installment, we will look at some of the reasons that Revenue Per Click (RPC) has declined.

At DOMAINfest Global in January, Google representative Hal Bailey blamed the decline in RPC on Google-supplied parking pages on the decline in the world economy. Certainly, there is some truth to that, at least over the last 12 months or so. As companies see their business contract, they reduce their advertising, including their online advertising. As companies go out of business all together, they cease all advertising. Fewer advertisers competing for clicks means that they will be paying less for those clicks. On the other hand, my results indicate that RPC started to decline well before the current recession even started.

Google and Yahoo have both figured out ways to keep a larger share of the revenue. As an early advertiser on Yahoo PPC (back in 2000 when it was an independent company called GoTo.com), I am rather familiar with the purchasing side of Pay Per Click. Last year, Yahoo revamped their advertiser interface and offered me a one-on-one session with one of their support staff. In the old days, if I wanted to bid on a term, say "Las Vegas Hotel", I would bid a specific number, say $1.00. Today, it is possible for a Yahoo advertiser to bid one amount for "Search" pages and a different amount for "Content" pages. As an advertiser, I recently was encouraged to bid lower for the content pages. So, I might only bid $.50 for the term "Las Vegas Hotel" on content pages. On search pages, Yahoo (and Google) collects 100% of the revenue, since they own the page. On content pages, Yahoo has to share the revenue with the parking provider and the domain owner, typically keeping on the order of 35% of the revenue (the actual percentage is kept confidential from the general public, including domain owners).