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... then what hope do we have?

At the end of last week we got the latest quarterly financial figures for Google and they weren't good. The earnings for Google are down and perhaps the most important part of the Google empire ... from a purely dollars and cents perspective ... was showing signs of decline too.

Of course I'm talking about Adsense and the problem that Google faces is that fewer people are clicking on those Google ads that have made the company so much money in the past. Despite the fact that Google is placing those ads in more and more places clicks are declining as people begin to ignore the ads.

A couple of months back I mentioned some eye-tracking studies that had been conducted on Google's search engine results pages and back then the studies showed that the people who took part in the studies were rarely looking at those ads and now we're seeing the findings of that survey being confirmed in Google's financials.

So what is Google going to do to encourage people to click on those ads more frequently? Adding more of them to more online real estate just doesn't seem to be the answer. When Google bought YouTube it immediately began to add Adsense advertising to that site but the return has not been what Google might have hoped for.

Instead of making more money from those ads it seems that Google is learning an important lesson ... people are becoming blind to those ads and soon their lack of effectiveness is going to really start hurting Google.

And while it's hurting Google it's also going to be hurting those Webmasters who do a lot of their marketing via Adsense/Adwords. As the number of clicks declines so to does the income levels of those guys who promote their sponsors through pay-per-click.

Of course there been some whisperings that Google might move to a cost-per-action model and they've even been running some beta testing with a number of webmasters. If you're not familiar with the term then let me explain. Cost-per-action is the model that the adult industry uses almost exclusively. An affiliate doesn't get paid when a surfer merely visits the sponsor's site; affiliates only get paid when the surfer actually signs up for a membership.

Now there are two problems in that model for Google. Obviously the same problem of banner blindness will have an impact on cost-per-action and the amount of money that Google makes under a cost-per-action model will be a lot less. Remember that in a cost-per-action model Google doesn't get paid for every surfer who goes to the advertiser's site, they only get paid if the surfer actually buys. Then you have to add to that the fact that commissions in mainstream are very low - 5% and below are quite common. So even when a surfer does buy from the site the commission that Google makes is going to be small ... and they may have to share that commission with the owner of the site where Google advertised. That means even less money for Google.

The second problem is that it's only in adult that the commissions are much bigger and where Google could make a lot more money per action. But does Google want to be seen as just another pusher of adult content? Probably not.

So Google could be facing a real dilemma; their advertising isn't working as well as it once did but what they see as the alternative to pay-per-click isn't going to be anymore profitable. And as I said before, that dilemma is passed on to adult webmasters who make their money from pay-per-click. When you think about it that dilemma becomes a disaster for many affiliates should Google move to cost-per-action.

Frankly though the way I see it Google won't ditch pay-per-click anytime soon. Even though the revenue that flows from that form of advertising may drop Google will stick with the model and will look at other ways of making it more productive. Of course they can always raise the amount an Adwords advertiser has to pay for each click.

But what about the rest of us? If people are becoming blind to the various forms of advertising that are out there how are we going to survive?

Well in lots of ways getting someone to buy something is all about persuasion. There are many ways to persuade someone that they should buy what you're selling and when you think about it banners and Adsense advertising are not all that persuasive.

So perhaps there is the clue to how we as marketers overcome the problem of banner blindness. I'm sure it's something that Google won't be able to come to grips with but it certainly could work for little people like you and I.