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Google Keeps on rolling
Google profit beats estimates
bwnbwn

WebmasterWorld Senior Member bwnbwn us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3894083 posted 9:20 pm on Apr 16, 2009 (gmt 0)

[money.cnn.com...]

Got to admit one thing they are running a tight ship.

 

engine

WebmasterWorld Administrator engine us a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month Best Post Of The Month



 
Msg#: 3894083 posted 5:23 am on Apr 17, 2009 (gmt 0)

first quarter-on-quarter sales decline [businessweek.com]
It's official now: Even Google can't escape the recession. With its first-quarter results on Apr. 16, the leader in Web search revealed its first quarter-on-quarter decline in sales, reflecting cutbacks in online ad spending. Thanks to cost cutting, Google (GOOG) handily beat profit expectations, but it offered no assurance that overall business conditions would turn around anytime soon.

Google's revenue, almost all of which comes from advertisements placed next to related search results, rose 6% from a year earlier but slipped 3% from the fourth quarter. Sales, after subtracting commissions to Web site partners, were $4.07 billion. That's about what analysts, who have been reducing their estimates in recent weeks, had expected.


JS_Harris

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Msg#: 3894083 posted 8:21 am on Apr 17, 2009 (gmt 0)

Quick math - 4.07 billion in sales AFTER commissions were paid from the 5.51 billion total means... Google keeps over 80% of money charged to advertisers with less than 20% reaching the content publishers.

That explains why dollar clicks result in penny adsense earnings. Am I missing something or does that sum it up?

Don't get me wrong I like Google but penny clicks... meh.

engine

WebmasterWorld Administrator engine us a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month Best Post Of The Month



 
Msg#: 3894083 posted 10:48 am on Apr 17, 2009 (gmt 0)

If you take parallels with the print publishing industry, and you're an ad agency, the standard agency discount for ads is usually 10 to 15%.

To me, those rough calculations indicated above seem in-line.

maximillianos

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Msg#: 3894083 posted 11:52 am on Apr 17, 2009 (gmt 0)

That explains why dollar clicks result in penny adsense earnings. Am I missing something or does that sum it up?

I think the numbers are a little misleading. Since Google receives a majority of its income from its own web properties, that large chunk cannot be factored into the calculation to determine what they pay out to publishers.

I believe based on the numbers from their report they are still paying out very generously to publishers. I think it was down like 2-3% from last year, which does not imply their payout percentage dropped, just that their publisher earnings dropped perhaps.

All in all they are still the best game in town for contextual ads... In my opinion.

Miamacs

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Msg#: 3894083 posted 12:01 pm on Apr 17, 2009 (gmt 0)

Google keeps over 80% of money charged to advertisers with less than 20% reaching the content publishers.

No comment.

( from Google )

...

When troubles kicked in, they could have just adjusted the secret rate more in favor of themselves.

Oh and I could use a "NO" here from Google.

Not denying this isn't a great idea.

bwnbwn

WebmasterWorld Senior Member bwnbwn us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3894083 posted 1:17 pm on Apr 17, 2009 (gmt 0)

I agree with maximillianos on the post by JS_Harris is misleading as Google search generates a huge amount of the total revenue
Google's revenue, almost all of which comes from advertisements placed next to related search results
doesn't mean "partner's" but all search based with ads posted in the results. The total dollar value is all lumped together and there is no way anyone can estimate the partner share verses Googles share on what is posted by Google.
nealrodriguez

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Msg#: 3894083 posted 2:06 pm on Apr 17, 2009 (gmt 0)

the best rate i have gotten from google is like a $1.20 cpm; now that has been from mostly social media traffic, so if i were to optimize harder on content sites that number may increase as clicks increase from se visitors. nonetheless, @ $10 to over $200 cpm that i have seen established content sites charge to direct advertisers, cutting the middle man is the best game in cyberspace.

shorebreak

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Msg#: 3894083 posted 5:18 pm on Apr 17, 2009 (gmt 0)

It's actually pretty easy to figure out the answer to the question being posed here. The % of G's revenues that were Google-owned (O&O is the fin'l term) and from distribution partners are as follows:

Q1 2009: 67% O&O, 30% partner
Q4 2008: 67% O&O, 30% partner
Q3 2008: 67% O&O, 30% partner
Q2 2008: 66% O&O, 31% partner
Q1 2008: 66% O&O, 33% partner
Q4 2007: 65% O&O, 34% partner

On the other hand, Google's Traffic Acquisition Costs (TAC) were:

Q1 2009: 27%
Q4 2008: 27%
Q3 2008: 28%
Q2 2008: 28%
Q1 2008: 29%
Q4 2007: 30%

So clearly the effective rev share that Google has been paying to its partners has been going down steadily, at least over the past 6 quarters. Moreover, Google is clearly getting Internet users to generate a higher % of their clicks on O&O properties than on distribution parters, perhaps partly due to the branding effect of 'Ads by Google' being plastered on all the distribution partners' sites.

A visually analogy might be a bigger star sucking up the matter & energy from a smaller star...

signor_john



 
Msg#: 3894083 posted 5:32 pm on Apr 17, 2009 (gmt 0)

Am I missing something or does that sum it up?

You're simply using the wrong numbers, and you're forgetting that most of Google's ad revenues are generated on its own pages, not on yours or mine. If you read the official 1Q earnings release [investor.google.com] carefully, you can see how much revenue AdSense brought in and how much of that revenue was paid out to AdSense partners.

If you take parallels with the print publishing industry, and you're an ad agency, the standard agency discount for ads is usually 10 to 15%.

That analogy doesn't work, because Google is more like a publisher's rep firm than an ad agency. It isn't buying ads for advertisers; it's selling ads to advertisers.

engine

WebmasterWorld Administrator engine us a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month Best Post Of The Month



 
Msg#: 3894083 posted 5:59 pm on Apr 17, 2009 (gmt 0)

That analogy doesn't work, because Google is more like a publisher's rep firm than an ad agency. It isn't buying ads for advertisers; it's selling ads to advertisers.

hehe, perhaps I didn't pick the best example, not explain myself. What I was trying to indicate was the 10 to 15% is not an unreasonable figure. If that is the figure, of course.

signor_john



 
Msg#: 3894083 posted 8:00 pm on Apr 17, 2009 (gmt 0)

What I was trying to indicate was the 10 to 15% is not an unreasonable figure. If that is the figure, of course.

Or one could say that the 55/45 split used by many ad networks isn't an unreasonable figure. It comes down to the eye of the beholder, the law of supply and demand, and what value the middleman is bringing to the party (e.g., aggregation of sites to make ad sales possible, the process of making those ad sales, operating an ad server, and handling financial chores such as billing the advertisers and paying the publishers).

JS_Harris

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3894083 posted 8:22 pm on Apr 17, 2009 (gmt 0)

Wasn't my intention to suggest Google is on the cheating path at all, with limited information about how much of a cut adsense publishers receive it's tough to have any idea what the numbers really mean. I obviously missed something, their own search property revenue.

loudspeaker

5+ Year Member



 
Msg#: 3894083 posted 9:04 pm on Apr 20, 2009 (gmt 0)

So clearly the effective rev share that Google has been paying to its partners has been going down steadily, at least over the past 6 quarters. Moreover, Google is clearly getting Internet users to generate a higher % of their clicks on O&O properties than on distribution parters, perhaps partly due to the branding effect of 'Ads by Google' being plastered on all the distribution partners' sites.

A visually analogy might be a bigger star sucking up the matter & energy from a smaller star...

Another way to look at it is this: as Google is taking an increasingly larger share of ad revenue, partner sites are gradually reducing their Google AdSense inventory. Therefore, the net effect is that Google has to produce more revenue by themselves. I wouldn't necessarily celebrate this...

signor_john



 
Msg#: 3894083 posted 5:39 pm on Apr 21, 2009 (gmt 0)

So clearly the effective rev share that Google has been paying to its partners has been going down steadily, at least over the past 6 quarters.

That's a deceptive (or at least a poorly phrased) statement, because there's no reason why Google would or should pay a revenue share of revenues from its own properties to partners.

I'd also question loudspeaker's comment that "Google has to produce more revenue by themselves. I wouldn't necessarily celebrate this." Since when is there anything negative about being successful with one's own products? If I were a product manager at Google and I reported a revenue increase during a time of recession, I'd expect a bonus, not criticism.

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