Adsense uses the advertisements from Google Adwords to display on your site. Because Google Adwords is a PPC scheme and the ad slots are determined by bidding prices. The higher ad bidder would win higher position in the search as well as content bidding.
That is from advertiser’s viewpoint. At publisher’s end higher bid means higher earning after a click is made on the ad.
The bid gap is the difference in price between Google ads.The top spot always would cost more and each lower position costing less and less.
Due to stiff competition the bid gap between top 4 ads would be very minimal. Once you get pass that the difference increases to a great extent.
There may be a bid of $7, $6.90, $6.80 and $6.75 for top four bids and may fall to 10 cents for fifth position.Competition is high for top 4 positions because advertisers are aware that most Google ads are in a slot where maximum number of ads published is 4.
See the staggering difference.
This bid gap can lead to lower earnings if you are displaying too many ads.
If you run maximum number of ads allowed by Google, then you would be displaying the ads with highest bids along with those who have very small price bid.
Because there would be more of low priced ads, there are chances that those would be clicked more than others.
You would find in Google reports that few clicks are generating 2 cents or 5 cents and so on.If eCPM is significantly lower than another unit in your channel reports, it is indicative of huge bid gap. If your clicks on your site are not resulting in value, it is time to act.
Another factor in low price bids is “Made For Adsense” sites. These sites publish low bid ads via Adwords and then use that traffic to lead to their own site which also contains Adsense ads with higher bids.
Basically, they leverage on other people’s content to push their own content less website.
In such situation reducing the number of ads displayed on your site can help.
You would get lesser click through because total number of ads would reduce but revenue per click would increase.
You would need to monitor the situation though to see if reducing the number of ads help you to increase the revenue.