AdSense has been suffering a pretty bad rap over the past year or so. There’s lots of speculation out there about whether the program’s trickle-down income justifies the drain on your website’s above-the-fold real estate. Many webmasters have dropped the program entirely in favor of other income-producing avenues. Some methods are above board and others… not so much.

AdWords, on the other hand, is shaping up to be the phoenix that’s risen from the ashes of G’s dismal leaked Q3 earnings report. The program has allowed Google to make out like a bandit, and this centerpiece of the company’s earnings is currently going stronger than ever.

So, what does this mean for you?

Well, simple. Now may be a good time to try out AdWords to market your product or service online. Conversely, if you’re a blogger or traditional webmaster, now has become a quite perilous time to use AdSense. Never fear, we’ll get into that issue later on as well.

Do take note before we get started: I’m tempering these suggestions with a hefty dose of cautionary advice at the end of this piece. We’ve reported quite a bit about the fickle nature of Google’s ad programs (both for publishers and advertisers) here on Site-Reference over the past few months, and even the best returns aren’t guaranteed to continue forever – for either party.

Why AdWords is Looking Good Lately

Remember the leaked earnings report that crashed Google’s stock and halted trading a few weeks ago? The news in the report was nothing short of dismal, and investors frantically sold their shares of the plummeting stock as fast as they could. The overall numbers fell short of analysts’ projections, so it was all doom and gloom for a good while there.

Then, after the smoke cleared and everyone took a massive collective step back, good news emerged. WordStream released a study using publically available stats and information from the report. The investigation revealed that AdWords is going stronger than ever – a vital stat that many grossly overlooked during the panic of the crisis. WordStream announced that Google reportedly earned over $100 million per day through its AdWords program during its third quarter. Moreover, Google served greater than 5.5 billion daily impressions in the SERPs and the Google Display Network served 25.6 billion daily impressions.

According to the founder of WordStream (and author of the original post about the study) Larry Kim, all this info makes a killer case for trying out AdWords. Here’s his take on the matter:

There you have it. The WordStream article based its conclusions upon the examination of 2,600 accounts running the company’s AdWords Grader audit tool during the third quarter. The study was thorough, too – it included every industry and country represented in the AdWords program.

As it stands right now, AdWords works – and it’s growing. It’s a wonderful time for smaller, new advertisers to get in on the action alongside the heavy hitters since overall CPC is down this year. Keep in mind, though, that there are certain industries that will still have a massive barrier to entry (spending-wise) due to cutthroat competition. Here are the biggest players, as reported by Search Engine Land:

Takeaways for AdSense Publishers

Let’s look at the flip side to the AdWords coin – AdSense. A lower CPC may be great news for AdWords advertisers, but for publishers, it means a dent in their bottom line. WordStream’s study discovered that the average CPC for Google’s display network came in at $0.35 at the end of Q3. This is a decline from previous quarters – down to the tune of a whopping 18.2%! Both networks declined since Q2, with search dropping 16.5% and display going down 18.2%. Apparently, Google glossed over this fact in its leaked report, stating that CPC was down 15% across the board.

It’s bad news for publishers simply because CPC directly affects their pay. This news is counterbalanced by the fact that there are more publishers. Simply put, the program is going strong, so the longevity is there. But the price drop for publishers participating in an ad program that already pays paltry percentages? That’s a real drag.

Cautions and Advice

On to the caution part. As noted at the beginning of this piece, we’ve reported on Site-Reference about the dangers of using AdSense as your sole source of website revenue. We’ve also touched on AdSense bans and other maladies that you may possibly encounter when you join the program by adding ad block codes to your site. Do your homework before you become an AdSense publisher, follow Google’s guidelines to the letter while active in the program, and make sure you use AdSense as just one part of a diversified website earning strategy.

You’re a little safer when it comes to AdWords, although there are still some warnings you should heed before you join. First, team up with someone who knows the program, understands bidding, and has the lowdown on other vital info before you blindly select keywords and place bids. It’s a highly technical endeavor, and if you’re not savvy, you may risk throwing money away in a hurry. In addition, sticking to a predetermined budget is vital for your overall ROI. Try AdWords for a short time first to determine whether the program justifies the expense before you commit to anything long-term.

What do you think about the lower CPC for the AdWords program? Do you think it’s a momentary blip as Google grows, or does this foreshadow bad news for the future of Big G? Let us know your thoughts in the comments below!