I have read at many places, publishers saying that placing more ad units (like 3 on a page) tends to reduce the CPC of the ads.
Is that so ?
In fact increasing ad unites from 2-3 increased the CTR as well as earnings for one my site. This suggestion was sent by Google Adsense mailer to me.
I do believe increase ad space may decrease the relevant ads but definitely increase the CTR due to higher exposure of ads, increasing probability of clicks whose earnings on average will be more than clicks on very relevant ads showing on reduced ad space.
I believe the logic behind this statement is that because it's a bidding model the more ads you have the less they have to pay to appear on your page (IE if you only have 1 ad, then that slot is filled by the highest bidder, if you have 10 ads then the slots are filled by the 10 highest bidders, clicks on #10 could cost 0.10 whereas clicks on #1 could cost 3.00) therefore by limiting ads to only the 1 or 2 top bidders you will generally get a higher earning per click. This logic does not take into account total earnings however, because if you get no clicks on the ad then it doesn't matter how high your epc is, you'll still be broke.
I doubt this, where did you read this and what proof did these publishers show? I run 3+ ads on a sites home page very specific content most clicks are a few cents but occasionally it can be as high as $3. That all depends on who's ads are appearing on the visit. If it's a re-targeted ad etc. All things out of my control. I really don't believe what people are claiming with theories like this.