Google Adwords offers no more quick win to small-time advertisers. The pioneers of online marketing have already moved on from Adwords, while the masses and big brands are getting onboard. In Adwords, the keywords are much more expensive and there’s a lot more competition all around.

This trend was well presented by Andy Brice on his blog post The declining profitability of Google Adwords. Andy says:

Less, more expensive clicks = less profit. I can either pay more and more per click to maintain the same number of sales. Or I can continue to pay the same per click and get less and less clicks. Either way, my profit goes down.

The positive flipside is that AdSense publishers get better bang for the buck. The inventory for ads is finite. When the average click price goes up, it means that publishers start getting fair price for their ad inventory.

I think this is very good news.

Publishers can monetize their remnant inventory efficiently, and do not cannibalize their direct sales by allowing AdSense. Hey, maybe there’s even a chance for a profitable media business… The quality of ads is getting better because of the increased competition among advertisers. The website visitors are going to enjoy better targeted, well-crafted ads and landing pages than before.

A quick look at Google’s financials seems to support this observation. The network revenues increased by 20% in 2012. Out of this $12.5 billion about 70% goes out to the publishers (the cost item is Traffic Acquisition Cost, TAC).

Website owners got $1.47 billion more in 2012 than the year before!