Forum Moderators: martinibuster
If that's true, and I don't believe it is, then Google would be doing far more than making a somewhat unethical change to the terms under which we are working. They'd be committing pretty serious accounting fraud, of the kind that would interest the SEC. Why do I say that? Let me explain.
Ever since Google went public, they have had to report their income and expenses. From that information, a few people on these forums have been able to calculate the percentage of the AdSense income that they are paying to publishers. And it has stayed pretty constant.
But if in fact Google has reduced the payout percentage, they must be doing it for a reason--and the only plausible one I can see is to inflate reported revenue. Here's the scenario, using made-up numbers for ease of understanding. If Google reports total AdSense revenue of $500 million, and a payout of $400 million to AS publishers, keeping $100 million as their income, then the payout percentage was 80%. But what if their revenue wasn't really that high, but they still wanted to report $100 million in net income to make it LOOK LIKE they had $500 million in revenue? Say their revenue was $400 million and they need to report $100 million in net income--then they would have to pay out at only 75%. If their revenue was $300 million and they needed to report $100 million, then they pay out only 66%. And so on, with the point being to make it look like AdSense revenues are growing nicely when in fact they aren't.
This is the kind of accounting games that Enron played, done so that they could be seen as growing fast when in fact that wasn't the case. And if Google is doing this, and I don't believe they are, then they aren't "just" skimming from AS publishers. They are cooking the books in a fairly major way, and one that will catch up with them.
Personally, I wouldn't make such an accusation lightly, and I have yet to see any real grounds for making it. Declining earnings can be explained in many ways (and have been, on these boards) other than by claiming accounting fraud.
Thrilling indeed, but of course completely outrageous. It's always easier to blame others when your earnings are down.
the entire basis of your argument seems to hinge on:
"a few people on these forums have been able to calculate the percentage of the AdSense income that they are paying to publishers."
If that's true, and I don't believe it is, then Google would be doing far more than making a somewhat unethical change to the terms under which we are working. They'd be committing pretty serious accounting fraud, of the kind that would interest the SEC.
I tend to be skeptical of the "Google is cutting the payout" accusations, but Google wouldn't be doing anything fraudulent if it did adjust its compensation formula downward. After all, Google doesn't guarantee a percentage of ad revenues, nor does it guarantee never to change its compensation scheme.
If something was seriously wrong with Adsense (such as an across the board revene cut) this forum would be much more alive than it is, and you would see 500+ post threads.
The payout percentage that Google claims can be deduced from their reporting. If they said that total AdSense revenue was $500 million, and their income after payout was $100 million, then they paid out 80%.
Changing that percentage would not be fraud, of course--provided that they report their gross and net revenue accurately.
If they have changed their payout percentage to only 70%, say, then on $500 million in gross revenue they would actually report $150 million in net income.
But they didn't do that. The reported percentage seems to be about the same as it was in previous quarters. If those who claim it's ACTUALLY lower are right, then Google must be also over-reporting their income. And that's where the fraud comes in.
Why would any company do that? Because the stock market likes to see gradually increasing revenue. $400 million this quarter, $500 million the next, then $600 million, and so on. With a revenue model like Google's, if their gross income isn't going up, then they would have to siphon a higher percentage out to make it seem like they are actually hitting the higher numbers, because the actual net income is much harder to fake.
And that's my point. If Google is keeping a higher percentage, but not reporting a higher percentage, then their gross revenue numbers MUST also be reported wrong, and that would be fraud.
I hope that's clear now.
In other words, could Google be paying a larger % to some publishers than others?
Could that be part of the Smart Pricing system?
If those who claim it's ACTUALLY lower are right...
That's a pretty big "if." I'd be more inclined to believe Google's earnings statements (which can be checked by auditors) than the unsupported claims of anonymous AdSense publishers who aren't accountable to anyone.
Obviously this isn't the case for everyone, and I know how a down month or two can be discouraging. But I doubt that accounting fraud is taking place.
That's a pretty big "if." I'd be more inclined to believe Google's earnings statements (which can be checked by auditors) than the unsupported claims of anonymous AdSense publishers who aren't accountable to anyone.
I don't get this scepticism.
The data is out there, so everyone could check it out:
[yahoo.brand.edgar-online.com...]
This is of the particular interest:
"The Google Network - Revenues generated on Google’s partner sites, through AdSense programs, contributed $584 million, or 47% of total revenues, a 75% 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 $462 million. This compares to total payments to partners of $271 million in the first quarter of 2004. "
Lets do some math:
Adsense revenues from this year: $584 million
/1.75=333.7 million in the same period of 2004
Payment to publishers in 1stQ 2005: $462 million
1stQ 2004= $271 million
1stQ 2004 payment to publishers=81.2%
1stQ 2005 payment to publishers=79.1%
2% difference + some other savings reflect a corporate Google in good times, no matter how (in)significant it may look to some.
The bad times are still to come.
Now, what could you expect from system which is not accountable to any partner, which you can't control in any way (even by substantially increasing the traffic), whose earnings you can't predict, no matter how much money you invest in it?
How much Sense they actually created with their woodoo way over-super-optimized algo's?
They seem to be obsessed with it, even when there is no place for it in purely business relationship.
Adsense, originally invented for some info sites (?) whose owners got a chance to pocket some money from existing, otherwise mostly unusable traffic, turned into UPS club for many. People got a new G religion, have been building their futures onto it.
Be warned, be very warned.
