Home Depot Monetizing Website with Adsense | DomainInvesting.com

Home Depot Monetizing Website with Adsense

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Adsense on HomeDepot.com

I was looking through the Home Depot website today, and I saw something that I think is a bit strange, and I wanted to see what you think about it:  Google Adsense advertising blocks on HomeDepot.com.

I was shopping for a bathroom vanity at Home Depot, and I saw a link to PlazaGallery.com, which is a competing website/company. Why would Home Depot want to make a tiny fraction of the revenue for my click than they would if they would sell me a full vanity, sink and faucet?

I monetize some of my smaller website with Adsense, especially the sites that don’t have direct advertiser relationships and don’t offer products for sale. I like the flexibility of Adsense, and I appreciate the fact that I can make money on some of my sites without actually having to sell anything.

I’ve always been taught that it doesn’t make much sense to send potential customers to a competitor for a fraction of the revenue that you could make from a sale. For instance, if I was selling $100 sneakers with a 30% profit margin, it wouldn’t make sense to have Adsense where I could get paid $.50 for a click, while sending customers who want to buy from me right to my competitors who could make a lot more money and gain a new customer.

I understand that their site has millions of visits, and they probably have a significant revenue stream with Adsense monetization, but it strikes me as odd, when the Home Depot has such a huge selection of products.

What do you think?


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (35)

    greg

    Did you buy a vanity online? or did you just look and go to the store for purchase? so why not get paid to have people compare pricing, smart business in my opinion, those little guys will not have a better price, home depot’s not worried i’m sure.
    Newspaper sell ads for thousands even online and backfill unsold ad space online with adsense for pennies, that cracks me up for sure. New idea for business is to call those advertisors and see what they think about buying the premium space for so much when its available for pennies.

    January 30th, 2011 at 1:58 pm

      Elliot

      @ Greg

      I am at the point of comparison shopping, so if I saw something I like at the other shop, I may have gone there instead of HD. Also, with many of those shops, I can say, “Home Depot’s cost is $999, can you beat the price?” HD likely wouldn’t agree to beat a small mom and pop store pricing, but the small store could (my Dad’s for instance would).

      I agree that the ad reps should call those companies to do direct deals. However, HD could surely monetize that space internally.

      January 30th, 2011 at 2:07 pm

    Bryan

    I’ve seen a lot more of this lately with bigger companies. Sometimes it makes sense but in cases like this I just don’t get it. Home Depot spends so much of their advertising dollars from a branding aspect so allowing competitors to promote on their website via Adsense seems very counter productive.

    January 30th, 2011 at 2:16 pm

    Jim

    MADNESS!
    Racking my brains trying to think of any logical reason why or how this would make business sense! As you say, their traffic must be immense…but still!
    They might as well have signs instore saying ‘Hey, have you tried such and such two blocks down?’
    The only thing that I can come up with is that maybe they think that if a customer decides that they in fact don’t want to purchase a product and navigates away from the page in search of alternatives or a competitor, they can still make a few cents or a dollar or two out of them on the way? Unless you’re a web analyst for Home Depot, difficult to know.

    January 30th, 2011 at 2:18 pm

    Mark

    Hi Elliot:

    Interesting point.

    HD may have a special contract with Goog to pay a higher cpc. While it still doesn’t make sense to introduce potential customers to another retailer, the revenue stream from the website may be its own unit and have different business goals than the retail parent. kind of bizarre, yet, you never know with large companies.

    January 30th, 2011 at 2:29 pm

    Jeff

    Target does the same thing, and has been doing so for a couple of years now. I wondered the same thing the first time I saw it, given that they have a similarly extensive group of products, but it must make sense economically, esp now that Home Depot has followed suit. Interesting stuff, thanks for posting.

    January 30th, 2011 at 2:31 pm

    TeenDomainer

    Target.com is also doing this on their product pages, it really makes no sense.

    January 30th, 2011 at 2:35 pm

    Poor Uncle

    I thought a lot (if not most) of big company websites use google to monetize. Including Walmart, bestbuy, etc. That’s why Google is so big. It’s quite an efficient way to make money.

    January 30th, 2011 at 3:09 pm

    wanna develop?

    Many do this… Walmart.com Target.com Buy.com etc. Usually it isn’t in a very visible / prime spot and the Google ads are towards the end. They are not “adsense” but a custom premium feed.

    January 30th, 2011 at 3:18 pm

    Rich

    HD doesn’t sell that much vanities,its all junk ,were the commpetition sells better stuff at allmost the same price, and they know that.I did a lot of research because i’m about to open a store on line on vanities.My back round is realestate and construction.
    This days people are buying vanities on line,shipping its free and you get a better selection.This is in regards to bathrooms,sinks,showers,vanities,faucets.To me it makes sense.
    Elliot if you want good/cheap try masterfaucet.com Robert owner/friend will ship it for you.

    January 30th, 2011 at 3:19 pm

    Tia Wood

    “The only thing that I can come up with is that maybe they think that if a customer decides that they in fact don’t want to purchase a product and navigates away from the page in search of alternatives or a competitor, they can still make a few cents or a dollar or two out of them on the way? ”

    This is the only logical conclusion I can come up with myself but it is the equivalent of allowing competitors to set up booths outside your business. Unless there is some partnership in place – I really don’t see the benefit.

    January 30th, 2011 at 3:30 pm

    LindaM

    I’m sure the numbers add up, else they wouldn’t be doing it on a long term basis. Since people in the market for the things they sell are ‘comparison shoppers’ anyway, it probably makes little difference to the likelihood of HD getting the sale, or the competitor. In other words, I think HD are happy to take a definite buck from someone, and keep their prices competitive such that the real spending customer is as likely to click BACK (to hd) as not.
    I also think that they are *potentially* in breach of the Adsense tou, notice above the adblock ‘Most popular’. This could be seen to break the ‘no misleading labels/images above/next to adblocks’ rule. Naughty.

    January 30th, 2011 at 4:11 pm

    Joey Starkey

    I can’t see the sense in having adsense blocks on a site such as this.

    Surely all of their traffic is not organic….I would think that home depot would be doing quite a $$$ in adwords.

    I agree with Tia

    “This is the only logical conclusion I can come up with myself but it is the equivalent of allowing competitors to set up booths outside your business. Unless there is some partnership in place – I really don’t see the benefit.”

    January 30th, 2011 at 4:15 pm

    Adam

    Interesting article. Branding wise, I think it’s horrible idea to offer the competition an ad space on your wall, especially if you are “the home supplies Disney World” . Aren’t they one of the biggest bidders on adsense for that niche anyway? or at least one of them. they drive that PPC “stock” expensive. then they get a nice ROI on those “missed” or curious customers clicks. The chances of those customers to come back are big, I don’t think they worry about you going somewhere else. Their prices are the most aggressive, thanks to China and the cheap labor. At the end of the story those Ads might simply cost money to the competition, and kill small businesses… online at least. Since Walmart is doing the same thing, I’m afraid they are trying to put the small sharks out of business!

    January 30th, 2011 at 4:33 pm

    Matt

    HD is probably testing and seeing how much revenue they can make from those ads and seeing if across the board if it seems to effect their online or retail sales. Im sure that if they did see a significant loss in revenues they would have pulled the ads. To me it means they are making money on comparison shoppers which is smart.

    January 30th, 2011 at 4:34 pm

    LindaM

    @Adam thats probably pretty much it really. They get huge traffic typein,organic and paid – basically even if they never sold a faucet theyd still make money on the ad arbitrage, since clearly they will have a special deal with G for higher ppc on their pages. Plus as you say its a slow bleed death for the smaller competition, as they see more and more of their profits going to HD, via G, on adwords. The fact that they will also certainly sell *a whole bunch* of faucets on the way is a bonus.
    Maybe we;re seeing some of these companies go the way of GM – basically a finance, investments and pensions firm who also happen to make cars on the side.

    January 30th, 2011 at 4:42 pm

    Larry

    My vote says it makes no sense to do this and if they are doing it it is because whoever set this up overestimates the revenue potential or made some other mistake. Homedepot is a billion dollar company and the potential revenue from this doesn’t make sense at all. Click the link and you’re distracted and off somewhere else.

    In a retail store you would try to “trap” customers in the store and not make it easy for them to leave. Certainly not easy to leave and visit a competitor. Same thing in an ecom website.

    Elliott – it’s interesting that given your background, you immediately see this for what it is.

    The only variation on this that I can see (and it’s not here) is putting ads on your site for a competitor that you operate. I’ve seen that in retail as well. Multiple stores in the mall in a niche owned by the same parent locking up the categories.

    January 30th, 2011 at 4:50 pm

    Elliot

    @ Larry

    It might even make sense if they had a deal with another retailer that doesn’t sell the same things as HD. For instance, they could have ads for 1-800-Plumber or something like that in the plumbing section. Even that wouldn’t make a lot of sense since they do that too.

    From my perspective, they should have internal ads.

    Maybe they think they will get better search engine results if they have Adsense on some of their pages?

    January 30th, 2011 at 4:54 pm

    Bfitz

    I wonder if they have stats on how many visitors find what they want, then go to a store and buy. That is what we do. The conversion on big ticket items must be low, but their traffic must be off the charts.

    January 30th, 2011 at 5:00 pm

    Larry

    “Maybe they think they will get better search engine results if they have Adsense on some of their pages?”

    I considered that as well. And that could be a differential diagnosis maybe.

    (The thought process is actually a “cousin” of the “fool at the table” concept which I hate but it seems appropriate sometimes if you can’t figure out why something is being done.)

    I think it certainly pays to reverse engineer anything someone does if it doesn’t make sense though.

    I would try to get adage.com to do a story on it which would provide benefits to the blog as well as a potential answer (or spin) to the question from HD.

    January 30th, 2011 at 6:09 pm

    M. Menius

    I can’t see a compelling reason for Home Depot to display competitor ads. Unless they somehow received a cut of sales revenue from click throughs resulting in an online purchase at a competitor. Maybe this was a mere oversight on the part of the company.

    It seems highly illogical to show your site visitors the same or similar product available elsewhere. In fact, this was a cardinal rule in local newspapers across America, i.e. to specifically block any potential advertiser that could compete with the paper’s reach or revenue stream.

    January 30th, 2011 at 6:48 pm

    mike

    Weird to see this. I share Larry’s thoughts on this being a mistake by someone in their digital advertising department. HD is a multi-billion dollar company that makes money off of sales, I can’t see online advertising revenue (i.e. adsense) even making a drop in their multi-billion dollar bucket so as to justify giving business to potential competitors. But who knows.

    January 30th, 2011 at 8:30 pm

    Michael

    I didn’t read all the comments, but wanted to point out that Target does that as well on their site once you drill down to a category like Electronics. I don’t understand it either, unless they have really low conversion rates and low margins it wouldn’t make sense.

    January 30th, 2011 at 8:31 pm

    Sri

    @Everyone

    Just take a look at the source of the page that has the block of “Ads by Google”. Search for google and also look at the last few lines. You can see that this is not regular adsense, but some customized script. Home Depot probably has some deal on with Google.

    January 31st, 2011 at 9:27 am

    carlos wuest

    Hello Elliot, I think it is a mischief of those who administer the web.
    Greetings.

    January 31st, 2011 at 10:10 am

    David Clements

    I think HD is doing this to increase their competitor’s AdWords spend with a customer that is already in their own house. If I’m right, the other guy’s ad spend is up and their conversions are down. It’s probably pushing some of the smaller guys out altogether.

    HD would have looked at customer loyalty statistics, bounce rates, conversion rates, acquisition cost per customer, etc. before deciding do run with this sort of program. Ironically, the little guys probably think a mammoth like HD is being stupid here and they allow it instead of blocking HD from displaying their ads – which is what I think they should do.

    Surely, HD has also negotiated a special deal with Google and they make more than a few bucks off of this program as an added bonus, but these things wouldn’t have been decision-making factors, just a bonus – a Google subsidy to help crush competition.

    As if this isn’t enough to digest, in the appliance section I’ve seen ads for repair companies like Whirlpool and Maytag – something that HD doesn’t offer – so that would be just for the revenue, again, just a bonus.

    All in all, I think this is about wielding AdSense as a tool against the competition. With folks like HD, Walmart, and Target all doing it, this seems like a safe hypothesis.

    January 31st, 2011 at 11:59 am

      Elliot

      @ David

      I hadn’t thought about it, but it does make some sense… very interesting.

      January 31st, 2011 at 12:01 pm

    wanna develop?

    The people saying that it makes no sense, obviously have no clue about what is going on.

    First of all, if you click on the ads at homedepot.com they open in a new window. Second of all, it’s better to make some money than nothing… Thus the placement of ads in most cases is right towards the end of the page, when a visitor has exhausted all of his options.

    Even Amazon.com displays PPC ads on the bottom from outsiders, only not via Google but their own system.

    Anybody who does PPC marketing knows that homedepot.com, target.com, walmart.com and the rest deliver a huge amount of traffic and that traffic is gold $$$ :)

    January 31st, 2011 at 12:02 pm

    Stephen

    Very interesting article. I agree, at first blush it seems odd but there are a few “possible” reasons (aside from the reasons listed above). HD may be trying to determine why vanity sales are flat. Consequently, HD may be gathering feedback on when, or under what circumstances, a potential customer clicks a competitor’s ad . . . and HD wants to ascertain what ad gets clicked . . . and determine what HD products were being displayed (style, finish, color, price range, etc) when the competitor’s ad was clicked. . . . and what did the ad say to entice the customer . . . etc. When you think of it, HD may be performing a real world focus group-like test and making some $ in the process (but I doubt that earning adsense revenue is HD’s primary agenda). It would be interesting to see whether HD has ad blocks when selling other (popular) products . . .. or whether HD opts to cycle activating its ad block to determine how and why (and under what circumstances) customers are leaving the site (and whether they return). The market research would be invaluable (particularly with products where sales are under-performing)

    …then again, it could also be that HD failed to place an ad block or there was some technical issue that prevented the ad block from working…(unlikely).

    January 31st, 2011 at 1:55 pm

    Larry

    “Second of all, it’s better to make some money than nothing…”

    Not true because “some money” doesn’t take into account the negative impact of the advertising or other factors. (On the other hand loads of money cures plenty of problems.)

    Here’s an example. Let say I approach Elliott and I say “Elliott I want to pay you money in order to sponsor a post or posts.”

    I think this is a great idea and a way for the blog to make extra money in advertising. So a post would say something like “this post sponsored by XYZ”. And maybe the rate would vary with the amount of comments or topic etc.

    Elliott would have reasons why he may or may not be interested (conflicts with existing advertisers and or the amount of money I proposed etc.)

    But it would certainly bring him more money than not doing this.

    January 31st, 2011 at 2:06 pm

    wanna develop?

    Larry, your statement doesn’t make sense… lol

    These huge retailers do billions in dollars in sales offline, and slowly but surely more and more online… PPC is now part of that strategy with just about any business, be it an e-tailer, media or any other publisher. Little by little it all adds up. Duh :)

    January 31st, 2011 at 6:34 pm

    Landon White

    Typical,

    Some Clown with a fat ego and a nice smile and a
    i can do it attitude answers a newspaper Ad
    for a Internet Manager.

    Now hired, because of some almost not related dumb testing,
    they are told it is YOUR Dept …

    Not knowing what to do they Google it ,
    get sold on Adsense they ask for approval and are told,
    I dunno know its your Dept …

    Dumb Corporate Sheep … (the real world)

    January 31st, 2011 at 10:07 pm

      Susan

      That made me laugh. So true, that happens! (Clowns in charge) But I don’t think that is the case here. It’s 2014 and they’re still doing it – so it’s obviously working for them. I think there are a couple reasons for doing this. Driving up the cost per click for competitive keywords, making chump change on clicks because people are eventually leaving the site anyway, might as well get paid for them to leave but what I see, is these advertisers are paying to put keywords on these pages and Home Depot benefits from this in more ways than 1! Even if Home Depot doesn’t sell a particular featured item, the advertiser will put this word in his ad and now that words can be picked up by Google bots and the page content gets credit for keywords that otherwise it wouldn’t have.

      In reply to Landon White | May 19th, 2014 at 4:32 pm

    Stephen Douglas

    What’s ironic about this article is that Elliot’s clearly points out the absurdity of promoting some other site for pennies when you should focus on the “big profit” sale on your site, that went over everyone’s head here because the same theory appliies itself everyday to domainers listing their domains with some domain auction sites.

    If a company lists an online auction open to sellers for a commission, and that company owns 100k’s of their own domains they sell themselves, will the company push a potential buyer towards their alternative relevant domains for full profit on the sale, or simply keep the initial query by the buyer truly pointed to a domain owned by someone else for a 10 -15% commission?

    In other words, why would a domain auction site spend resources to market domains they don’t own for only 15% commission, when they can use most of their knowledge, business relationships, and budget to promote their OWN domains in order to achieve the full profit? There is an answer to that…

    February 1st, 2011 at 9:20 pm

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