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Google’s partner sites generated revenues, through AdSense programs, of $1.45 billion, or 34% of total revenues, in the third quarter of 2007.
The majority of TAC expense is related to amounts ultimately paid to our AdSense partners, which totaled $1.12 billion in the third quarter of 2007.
which translates to a payout ratio of about 77% to the publishers.
Since Adwords advertisers are able to block poorly converting or non-converting publisher domains, why is smart pricing of publishers even needed?
Not all advertisers want to spend time analyzing traffic from individual publishers. They just want to pay a price that's in line with the value they receive.
In any case, smart pricing isn't just about pleasing existing advertisers; it's intended to make the content network more attractive and less risky for prospective advertisers.
If it's any consolation, publishers who are unhappy with smart pricing will soon be able to complain about an even bigger threat to their peace of mind: site-targeted contextual ads, which will allow advertisers to skim the cream off the network instead of just relying on smart pricing or playing whack-a-mole with undesirable domains.