Wednesday, January 31, 2007

Google released earnings today:

Since I've accused them in the past of being able to just take a larger cut of AdSense dollars as the middle man whenever they choose, it was interesting to see their breakdown in the earnings statement:

Google Network Revenues - Google's partner sites generated revenues, through AdSense programs, of $1.20 billion, or 37% of total revenues, in the fourth quarter of 2006. This is a 50% increase over network revenues of $799 million generated in the fourth quarter of 2005 and a 16% increase over third quarter 2006 revenues of $1.04 billion.

The majority of TAC expense is related to amounts ultimately paid to our AdSense partners, which totaled $916 million in the fourth quarter of 2006.


So Google really only takes about a 25% cut. That's far less then I expected. I assumed they were taking at least 100% of what they pay their AdSense partners, but they seem to pay quite fairly. So what would explain the eCPM (how much Google pays me) dropping so much if their total advertising revenue is rising?

The only thing I can think is that Google is a victim of it's own success. There must be a bigger increase in AdSense websites then there is in advertisers spending. I am going to try Yahoo's Overture (if they ever get around to approving me) and see if they pay more. It's a catch-22 for Google because it seems they can't really pay more, or charge more, so they almost need to encourage less sites to carry AdSense if they want sites to carry it in the first place....

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