Clickety Clack: By passing on a partnership to distribute contextual ads on MySpace, Google is signaling that MySpace can't be monetized very well with performance based contextual ads.  From the POV of a product manager for AdSense, it sounds like MySpace traffic would get him high volume, low CTR traffic, which would only piss off advertisers and drive AdSense eCPMs down significantly.

http://ecpm.typepad.com/clickety_clack/2006/04/google_and_yaho.html

Randy: Another so-call online ad blog, doesn't even understand the ROI (return on investment) of CPC (cost-per-click) ads. A low CTR (click-thru-rate) is irrelevant to advertisers. The quality of traffic for advertisers is determined by conversion rates and conversion costs, that's the number of sales relative to click-thrus and CPC. Where's CTR? It's on a second tier of consideration for advertisers. So then why does this piss off advertisers?  A giant leap of ignorance!

CTR is important for Google. Why? Google is a media buyer and media buyers are concerned with dollar throughput. Total dollar throughput is a factor of CTR and other variables likes CPC and total impressions. Advertisers don't care about CTR, media buyers (Google) do. The premise remains true, MySpace traffic is low quality advertising, but advertisers don't care about CTRs, they care about conversion rates.

MHO. Google sees MySpace as a competitor for eyeballs. Giving MySpace access to AdSense could turn that unprofitable competitor into a profitable one. I suspect the truth is a mix of Google worried that MySpace will dillute the ad supply for its existing AdSense users and Google worried that MySpace will make Fox an online competitor.