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Is AdSense Lowering Payouts to Publishers
snippet from a stock analyst suggests so
elsewhen




msg:3951564
 3:07 pm on Jul 13, 2009 (gmt 0)

Jefferies on Monday raised its price target on Google Inc to $465 from $442, ahead of the release of the Internet company's second-quarter results. The firm cited the company's resilience in paid clicks and ability to lower traffic acquisition costs in its decision

stock analysts sometimes get access to key employees within a corporation, where they can get inside information. The quote above makes me think that Google might be keeping a larger percentage of ad revenue from their publishers.

Link to Yahoo News Item [uk.biz.yahoo.com]

[edited by: martinibuster at 4:37 pm (utc) on July 13, 2009]
[edit reason] Added link. [/edit]

 

Broadway




msg:3951576
 3:22 pm on Jul 13, 2009 (gmt 0)

This thread:

[webmasterworld.com...]

hasn't generated much discussion (it seems only three people have acknowledged receiving the notification) but it might confirm some of what your posting suggests.

elsewhen




msg:3951581
 3:28 pm on Jul 13, 2009 (gmt 0)

if i recall correctly, google has consistently said that the savings generated by smartpricing are completely passed onto the advertiser... in other words, that google itself does not make more profit from smartpriced publishers.

the quote above, however, seems to indicate that google is keeping a larger share of payouts from all or most publishers thereby increasing its own profits.

we should get some indication of this by reviewing the TAC (traffic acquisition costs) specified in the press release that will come out this thursday (16 july) at their quarterly earnings conference call.

coachm




msg:3951629
 4:26 pm on Jul 13, 2009 (gmt 0)

Expiration of some of the early swwetheart deals, it's been announced fairly long time ago.

wyweb




msg:3951638
 4:38 pm on Jul 13, 2009 (gmt 0)

if i recall correctly, google has consistently said that the savings generated by smartpricing are completely passed onto the advertiser...

That's my take also...

farmboy




msg:3951684
 5:25 pm on Jul 13, 2009 (gmt 0)

The firm cited the company's resilience in paid clicks and ability to lower traffic acquisition costs in its decision

The quote above makes me think that Google might be keeping a larger percentage of ad revenue from their publishers.

That's not the first thing that came to mind when I read the quote.

FarmBoy

elsewhen




msg:3951687
 5:35 pm on Jul 13, 2009 (gmt 0)

in each earnings conference press release, google defines "traffic acquisition costs" as:

TAC - Traffic Acquisition Costs, the portion of revenues shared with Google’s partners...

BigDave




msg:3951831
 9:40 pm on Jul 13, 2009 (gmt 0)

Of course google has the "ability" to reduce the payout, they always have. That is not the same as saying that they have reduced the payout percentage. It also doesn't mean that they have not reduced the percentage.

There are other ways that they can reduce TAC, without reducing the percentage that they pay out. If a site has an extremely low CTR, getting rid of it will reduce their ad serving costs in relation to their revenue generation. Like someone else mentioned, getting rid of the sweetheart deals where they pay all revenue to the site would also significantly reduce their TAC without negatively affecting average publishers.

koan




msg:3951889
 11:25 pm on Jul 13, 2009 (gmt 0)

getting rid of the sweetheart deals

I think the one with MySpace actually smart priced the whole content network a bit.

Slinger




msg:3951898
 11:41 pm on Jul 13, 2009 (gmt 0)

Sounds like Googles getting a bit GooGoo with their profits and hording them in for themselves.

Scurramunga




msg:3951924
 12:19 am on Jul 14, 2009 (gmt 0)

if i recall correctly, google has consistently said that the savings generated by smartpricing are completely passed onto the advertiser... in other words, that google itself does not make more profit from smartpriced publishers.

It is likely that Google doesn't keep any of the proceeds of Smartpricing and does pass on the full amount of the discount to the advertiser.

I believe however that Google increases it's profits indirectly via Smartpricing by attracting a large volume of low-ballers who would otherwise not use the Content Network.

Within the bigger picture, individual publishers suffer a reduction in income whilst Google attracts more low-ball advertisers across the greater network.

From the AdWords site:

...In fact, we've found that in many cases smart pricing enables our advertisers to achieve a lower cost-per-conversion on content as compared to search...

loner




msg:3952356
 4:50 pm on Jul 14, 2009 (gmt 0)

Google has figured out that all they have to do is continue reducing payouts and publishers will produce more to make up for it.

Advertisers are spoiled.

-

js2k9




msg:3952414
 5:50 pm on Jul 14, 2009 (gmt 0)

I think Google would NEVER try to increase profits by lowering webmaster payouts. NEVER. Remember, Google is a nice colorful charity run by selfless stockholders.

The fact that Google' s stock is up 60% during the world's worst depression since 1929 is only a coincidence. The fact that my earnings are down 60% since the same period is due to the crisis.

Nothing to see here. Keep moving.

koan




msg:3952451
 6:53 pm on Jul 14, 2009 (gmt 0)

In the end, whether Adsense lowers the payout or not to publishers, if Adsense is still the best money maker for your site, it is still the best program for you.

No one said it was going to be easy, especially in recessions.

LifeinAsia




msg:3952455
 7:03 pm on Jul 14, 2009 (gmt 0)

The fact that Google' s stock is up 60% during the world's worst depression

Where are you getting those numbers? GOOG is down from 535 1 year ago. I'm not sure which universe considers that a 60% gain...

martinibuster




msg:3952463
 7:16 pm on Jul 14, 2009 (gmt 0)

wyweb and coachm were closest to the reality. The lower TAC cited by the analyst was in relation to Google renogotiating it's MySpace deal.

Here is a full article with more TAC details [online.barrons.com], published on Barrons website.

A renegotiated MySpace deal should improve TAC [traffic-acquisition costs] in fiscal 2010. Google has ample leverage to renegotiate a profitable deal with [MySpace owner] News Corp (NWSa) prior to the deal expiration in June 2010 given the:
1) difficulty in monetizing MySpace traffic;

2) declining usage of the service; and

3) Google's increased reliance on O&O traffic to drive a higher portion of revenue (from about 63% in first-quarter 2007 to about 69% in first-quarter 2009) versus network.

This report has more detail from the company responsible for the quoted snippet in this discussion.

[edited by: martinibuster at 4:55 am (utc) on July 15, 2009]

shorebreak




msg:3952522
 8:26 pm on Jul 14, 2009 (gmt 0)

I've been following G's TAC structure ever since they started including that metric in their quarterly reports, and for the past 4 years it's generally come down 1% each quarter. In fact, it comes down with such consistency and regularity that, IMO, one or both of two things must be happening:

1) Google's reducing payouts to AdSense publishers, and not just the big ones like MySpace (those are fixed multiyear deals);

2) Google's ability to brand 'Ads by Google' is driving increased brand awareness such that, over time, visitors to y'all's sites move more and more of their viewing activity over to Google's own properties.

martinibuster




msg:3952524
 8:37 pm on Jul 14, 2009 (gmt 0)

On topic:
We're discussing an analyst's note that Google's TAC is predicted to fall and the discussion centered on figuring out what basis the analyst had for that comment. New information shows that what the analyst was referring to is a renegotiation of Google's deal with MySpace that will lower the TAC.

js2k9




msg:3952529
 8:41 pm on Jul 14, 2009 (gmt 0)

Where are you getting those numbers? GOOG is down from 535 1 year ago. I'm not sure which universe considers that a 60% gain...

52 Week Low: U$ 247.30
Today: U$ 424.69

That's a 71% gain, no? Am I on the wrong universe still?

LifeinAsia




msg:3952556
 9:38 pm on Jul 14, 2009 (gmt 0)

It sounds like you would have done better to dump AdSense and have bought GOOG at $247.30. Or better yet, bought at IPO price.

But okay, using the lowest price during the last 52 weeks to today- yes, that's a nice gain. (We could just as easily use the highest point during that period and lament at how much Google has "tanked" since then.)

Considering the overall markets during that time, it sounds to me like Google is smarter/better than 99% of the rest of the world.

martinibuster




msg:3952566
 9:57 pm on Jul 14, 2009 (gmt 0)

On topic:
We're discussing an analyst's note that Google's TAC is predicted to fall and the discussion centered on figuring out what basis the analyst had for that comment. New information shows that what the analyst was referring to is a renegotiation of Google's deal with MySpace that will lower the TAC.

js2k9




msg:3952592
 10:27 pm on Jul 14, 2009 (gmt 0)

Ah martinibuster, just noticed. I terribly apologize for going off topic here. Sorry.

micklearn




msg:3952696
 3:50 am on Jul 15, 2009 (gmt 0)

martinibuster, I have to ask, what is "O&O traffic"? The article title, "Everything Going Google's Way" and the fact that the story comes from Barron's, seems like a "buy the stock" signal they have created. We might read something very different from them a week or two from now. They (Barron's)seem to have their own agenda, especially since they have a very large following. Since none of us are working for Google...how could any of us know what discussions may have taken place between the two, three or more parties discussed in this thread? I'm not trying to aggravate you, martinibuster, I value and appreciate your comments/replies. If Google's earnings this quarter will be better than expected only due to a contract re-negotiation, shouldn't every AdSense or even Adwords users feel some worry about that on some level?

martinibuster




msg:3952733
 5:07 am on Jul 15, 2009 (gmt 0)

what is "O&O traffic"?

Here is what it says in the article:

Our proprietary analysis suggests paid clicks for domestic O&O [owned and operated by Google] sites grew at 20%-25% year-over-year in May/April.

They (Barron's)seem to have their own agenda...
Barron's is not behind the story, they are reporting on an analysis done by a company called Jeffries.

If Google's earnings this quarter will be better than expected only due to a contract re-negotiation, shouldn't every AdSense or even Adwords users feel some worry about that on some level?

That's an interesting question. I'm not sure what you mean by worrying, might want to make it explicit what it is to worry about. However the article makes it clear it's not only from the renegotiation. According to the analysis they don't get into what partner trends are, just Google's owned and operated sites. They note that Google is earning more from their own sites than previous, from 63% to 69%. The study also finds a bright spot in that pricing trends have not deteriorated, although they haven't improved either, except in a few verticals, particularly in the UK.

The other notable comment is they expect merchants to move away from affiliates and spend more on PPC because of states making moves to tax affiliate work. That's debatable but would be good for some publishers with the appropriate content if merchants decide to manage PPC directly on publisher sites rather than pay affiliate commissions.

IanCP




msg:3952902
 12:15 pm on Jul 15, 2009 (gmt 0)

I'm not sure what you mean by worrying, might want to make it explicit what it is to worry about

Why worry? The only certainty I know about this is no matter how Google may be able reduce TAC, neither I nor anyone else here, can do a damn thing about it if it's at our possible expense. If dissatisfied, seek alternatives.

dazzlindonna




msg:3953966
 10:29 pm on Jul 16, 2009 (gmt 0)

From today's stock report:

Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, decreased to $1.45 billion in the second quarter of 2009, compared to TAC of $1.47 billion in the second quarter of 2008. TAC as a percentage of advertising revenues was 27% in the second quarter of 2009, compared to 28% in the second quarter of 2008.

Lame_Wolf




msg:3954260
 10:07 am on Jul 17, 2009 (gmt 0)

From BBC site today : "Paid clicks - which include clicks related to ads served on Google sites and the sites of AdSense partners - were 15% higher year-on-year, but 2% less than in the first quarter."

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