Forum Moderators: martinibuster
Now we know.
What a wonderful insight on my last day in the web biz--Google was paying some publishers for their listing.
(BTW, this jives with the experience I has with a contextual linking ASP I tried to market to news publishers. Overall clicks, with very high relevance, was only 2.2 percent of traffic on news articles.)
from Bambi Francisco's Net Sense column today
...,Google revealed that 80 percent of the $961 million in sales it generated last year came from its site alone. The other 20 percent came from other Web sites that use Google's ads and send traffic Google's way.Google also said: "Typically, in situations where we pay a Google Network member more than the revenue we receive from our advertisers in connection with paid clicks on that Google Network member's web site, we recognize the difference as cost of revenues."
Google didn't disclose which of its distribution partners are getting
that "more than the revenue we receive" payment. But many analysts
speculated that some distribution partners were receiving 80 to 90
percent of the revenue generated from the traffic they sent to Google's
advertisers. Now we know it's more than 100 percent in some cases.
Conclusion: Even with Google's monster-huge volume of ad placement on other web sites via Adsense, it doesn't make them that much money. Adsense has mostly been a marketing campaign to build the Google brand.
If you're making money with Adsense, great. But, as you build around it keep in mind that the program is a small part of Google's enterprise. Of course, if you're depending on it, you're not alone.
Or, as Bambi says:
Now that Google admits to giving away some revenue and says it generates 80 percent of the sales on its own site, it doesn't seem Google needs to improve the economics between itself and its partners.One has to wonder why some search engines, therefore, trade at a premium when they rely so heavily on a company like Google, which clearly has a lot of leverage.
I encourage you to read her entire column.
...Google revealed that 80 percent of the $961 million in sales it generated last year came from its site alone. The other 20 percent came from other Web sites that use Google's ads and send traffic Google's way....
I don't think Bambi is taking into consideration the way that Google is accounting for revenue. Google is only taking into consideration the revenue that it doesn't have to share with publishers {large and small}. Adsense revenue that was contextual {not search as AOLsearch is} accounted for at least $200MM during the first Qtr. of 2004 {IMHO}. Taking into consideration that their cut is probably around 30% to 40% of that number, we are talking about a net revenue stream of about $60MM a Qtr. {or $240MM on an annualized basis}.
Not small potatoes in any sense.
I don't believe anyone ever guessed it could be over 100! :)
Far more likely (IMHO) that the split is around 60/70% for the small guys, and goes up depending on site traffic. I'm sure that some of the larger "preffered" members would make that, just to tie them into the program.
So - lets settle back and await the first "when will Google cut the revenue share" postings!
This implies to me that in some cases it's not a straight percentage split but rather has some fixed portion to it. Otherwise you could predict your margins.
This implies to me that in some cases it's not a straight percentage split but rather has some fixed portion to it. Otherwise you could predict your margins.
A guaranteed minimum and/or a CPM deal could result in Google's paying too much for a premium partner's traffic (at least in the short term).
Now that I think about it, they also run AdSense ads on banner networks. Whether they pay CPC or CPM, the cost is probably negotiated in advance.
[Too slow - EFV slipped in ahead of me with the same observation]
