Is AdSense smart about which ad types to use for each ad unit? For example, I have an ad unit that performs really well with Images but not Flash, and vice versa with another one. I know that Google says that they will always try to put the highest performing unit (i.e. only an image if you could make more money off of it than a text ad), but what if text ads have such a higher CTR that images drive down your overall CTR and therefore your CPC and eCPM?

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As 's question implies, AdSense chooses which creative to show based on estimated revenue per impression, not on raw CTR alone. For each impression the ad server estimates how much each eligible creative is likely to earn (expected CTR × expected CPC/CPM, plus relevance signals) and serves the one with the highest expected return. That means image or rich-media ads can be shown even when their CTR is lower if their higher bid makes the per‑impression value larger.

Key formulas (to keep decisions clear):

expected_revenue_per_impression = expected_CTR * expected_CPC
eCPM = expected_revenue_per_impression * 1000

Example:
text ad: CTR = 2% (0.02), CPC = $0.10
expected_revenue = 0.02 * 0.10 = $0.002 -> eCPM = $2.00

image ad: CTR = 0.5% (0.005), CPC = $1.00
expected_revenue = 0.005 * 1.00 = $0.005 -> eCPM = $5.00

Practical testing approach: create two ad units (one restricted to text-only, one allowing image/rich-media), tag each with a custom channel, and run an A/B test (server-side or simple client-side randomization) so each unit gets comparable traffic. Use AdSense reports to compare eCPM/RPM and total revenue rather than CTR alone. Aim for several thousand impressions per variant (or a few weeks of normal traffic) before drawing conclusions. Note that ’s suggestion about pausing low-performing groups applies to AdWords campaigns; AdSense publishers should use A/B testing and AdSense’s allow/block controls or ad review tools instead.

Other factors to watch: ad size and placement (certain sizes attract richer creatives), page layout and visual harmony (styling can affect CTR), and device differences (Flash historically had poor mobile support). Optimize for revenue per impression and user experience, not CTR in isolation.

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It supposed to.
Something similar happened with one of my campaigns I was monitoring and that is when you may consider temporarily pausing the low performing group on low peak days (day swhich dont have much CTR) and test it this way and see if it impacted the overall performance.

I'm talking about AdSense, not AdWords.

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