Google giving less to publisher?

Google keeping a bigger slice of the pie

[Zygoot]

I just read this article at Bloomberg, regarding the quarterly profits of Google:

Higher prices for advertising linked to search results helped Google generate increased profits. The company also kept a bigger slice of revenue from ads it distributes to other Internet sites.

Excluding fees Google pays to sites that display its ads, revenue from these affiliate sites almost tripled in the fourth quarter from a year ago, according to Goldman's Noto.

So the rumour that Google is keeping a bigger slice of the pie seems to be true? Or is Bloomberg making a wrong assumption..

Source: [quote.bloomberg.com...]

[internetguy]

Maybe so but this article,

[story.news.yahoo.com...]

implies that Google paid out $376.5 million to Adsense publishers.

[gmac17]

expect the trend to continue.

at some point (I'm not sure when) they will have to try a bit harder to make their numbers, and will probably squeeze publishers more and more.

[alika]

It was the same for banner ads, where they initially paid as much as 75-80%, then dropped to about 50% when the initial euphoria over banners died down. I don't see why this same scenario won't happen with Adsense, especially when text ad blindness starts to kick in. A little pessimistic, but only drives home the point that it is hard to put all eggs in one basket.

[walkman]

Google pays 35%, from what I see. $1 bil in revenue, paid $350 or so million give or take a few

[europeforvisitors]

This is already being discussed at:

[webmasterworld.com...]

Please note that, according to the Bloomberg article, "Google passes on part of the revenue it receives from advertisers to these sites when users click on the ads. In the latest quarter, the company paid 77 percent of this revenue to those sites, compared with 79 percent in the third quarter and 85 percent in the fourth quarter last year." That's a far cry from 35%.

Also, as has been pointed out in the thread that I referenced above, Google is probably paying a lower share to "premium partners" who were given favorable sign-up terms (such as CPM guarantees) when the content network was launched on high-volume news and portal sites in the pre-AdSense days.

Since there's no way of knowing what percentage of its ad revenues Google is paying to any individual site, publishers should focus on effective CPM and total revenues. Those are the numbers that answer the question, "Is AdSense worth having on my site?"

[edited by: europeforvisitors at 4:14 pm (utc) on Feb. 2, 2005]

[RichD]

These are the figures from the investors report ( [investor.google.com...] ): -

The Google Network - Revenues generated on Google’s partner sites, through AdSense programs, contributed $490 million, or 48% of total revenues, a 92% increase over the Network revenues generated in the same quarter last year.

TAC - Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $378 million or 77% of Google Network revenues. This compares to total payments to partners of $216 million in the fourth quarter of 2003, or 85% of Google Network revenues.

So, while it is quite clear that the revenues for The Google Network are soley from adsense, its not clear if Traffic Acquisition Costs include anything other than Adsense. Also you have to assume partners like AOL and ASK will be on a different rate to normal publishers and they will produce large enough volumes to swing the share a few %.

But 77% is still high. Google are basically saying its 3 times harder to get users to a website and click on an ad (your part of the work) than run a content recognition system, billing system, management system, crawlers, etc (their part of the work).

As far as I know the PPC search result feeds don't get near that level for even large affiliates. With those PPCs bringing out content targeted ads, I wonder if they will increase their revenue shares to compete with Google and whether these increases will filter to search feed users.

[Zygoot]

I also read today that 51 percent of Google's revenue during Q4 2004 came from advertising on its own websites.

[walkman]

"I also read today that 51 percent of Google's revenue during Q4 2004 came from advertising on its own websites. "

oops. I forgot to account for that so the 35% is way outa whack. it's more like 75%.

[gmac17]

but remember that adsense is not the same as some of the 3rd parties they have running their search results.

They keep a higher portion of adsense clicks than they do of partnerships with other search engines etc.

[maximillianos]

I would have to agree that G's cut of our Adsense revenues is more likely to be around 25%. (ie - we get 75%). Makes sense if you look at the competition. Many who publish share percentages are in the 55-75% range. I would think G would want to stay on the high end of the market to keep the program growing and stay competitive.

Also, if you relate it to their Answers program (answers.google.com). They pay their researchers 75% of the bid price there. So 75% is a reasonable guess I think.

[maximillianos]

Another thought... I think if we ever see a change in the researcher payout of the Google Answer's program, which is normally published information, that will be a good sign that our Adsense payout percentage is going to change as well...

[howiejs]

I don't think Google Answers has anything to do with Adsense payouts

They don't promote Answers
AND you can't even sign up to be a new provider (at least last time I saw it)

[SlimKim]

these kinds of threads usually gather estimates of what % Adsense pays publishers

and why not, it's all harmless speculation, no one who really knows is gonna say,

but here's my take on it

Smart pricing does not lower advertisers cost below the minimum nickel, but some publishers report seeing 1 cent clicks

so that would seem to indicate a 20% payout for most publishers ... premium publishers likely get an addiitonal 10 to 30 % depending on their level of activity

but this is all speculation too

the big guns ain't gonna say what they are being paid, they'd be crazy to risk angering the powers that be and bite the hand that feeds it

i guess its pointless, but we always kick around numbers wondering ... i guess its a waste of time ... i guess i'm gonna quit it

[level80]

premium publishers likely get an addiitonal 10 to 30 % depending on their level of activity

Yes but it's deserved because of lower costs for google. Example:- 100 publishers earning $100 a month:-

Postage on cheque: $50 - 100 cheques printing - $80 etc
Technical support and query answering for 100 different accounts - $$$s

However if it's just one publisher earning $10000 a month it saves them a lot on overheads. Also the extra flexibilities on those accounts could lead to higher turnover for Google too.

[techiemon]

I've lost almost 75% of my profit from adsense, I wasn't making all that much to begin with, but now it's so far down I am looking for alternatives to adsense, any suggestions?

[roycerus]

The problem is NO COMPETITION... once yahoo or MSN or some other major player comes out in the market to provide such advertising options [And I am sure someone will.. as it's a highly profitable sector] it will become more competetive and publishers will get higher returns.
But I wonder if such a thing will be useful as the advertisers may get scattered and competition for bidding on keywords may fall. What do you guys think?

[buckworks]

Smart pricing does not lower advertisers cost below the minimum nickel, but some publishers report seeing 1 cent clicks

Please check the accuracy of this. As an advertiser I sometimes see clicks that cost less than 5˘.

[europeforvisitors]

The problem is NO COMPETITION... once yahoo or MSN or some other major player comes out in the market to provide such advertising options [And I am sure someone will.. as it's a highly profitable sector] it will become more competetive and publishers will get higher returns.

1) AdSense has any number of competitors.

2) Google's overall payout to publishers last quarter was something like 77%, a number that's considerably higher than the 40% to 50% paid by traditional ad networks.

3) Don't assume that increased competition will help publishers whose AdSense income has plummeted, because:

- The auction market and smart pricing are the biggest factors in determining what a publisher gets. If you have a site or topic that performs poorly in terms of bids and conversions for advertisers, you're going to make less money than a site or topic that performs well--even if you're getting a bigger percentage of the gross. (To put it another way, it's better to get fifty-cent clicks at a 50% payout than nickel clicks at a 75% payout.)

- AdSense competitors are likely to be interested in sites or sectors that are profitable, not in those that aren't doing well in AdSense. Google took a populist, let-anyone-join approach partly for philosophical reasons but mostly to gain a dominant market share. Competitors will be smart enough to realize that trying to wrest significant market share from Google is less productive than cherry-picking: Their goal will be to skim off the cream, leaving Google with the less profitable topics and sites.

[conor]

I would have thought that 75% can't be sustainable in the long run.

[europeforvisitors]

I would have thought that 75% can't be sustainable in the long run.

That's hard to say. In any case, the 75% would be an overall figure. Google's compensation formula almost certainly isn't a straight percentage split, because there are good reasons why it shouldn't be (including the fact that a straight percentage split would make cherrypicking easier for future competitors).