Google keeps pulling in the money — for Google
By Gareth Powell
Google is full of itself — quite correctly — because it is making so much money. Google reported a sharp rise in both sales and profit in the fourth quarter. Google, the largest internet search engine, also continued to outpace rivals like Yahoo and Microsoft. Google is getting bigger faster.
Eric E Schmidt, Google’s chief executive, said, ‘Business continues to be very, very good here at Google.’
He said Google’s business, which earns most of its revenue when users click on ads that appear next to search results, was strong in terms of traffic and advertising growth both domestically and internationally. Google is also showing fewer ads on each search, but those ads are more relevant to users, are clicked on more frequently, and hence, generate a better return for both Google and for advertisers.
Indeed, they do. But they are not viewed by one part of the equation — the site owners. It is not just that Google has never said what percentage of the money goes to the sites. You would have to guess, and it would be a wild guess, but much less than half.
Eric Schmidt said that while text ads linked to search results continued to perform extremely well, Google’s diversification was essential to its future growth. And he dismissed criticism that the company has introduced too many products, including many that have not been hits with users, and risks losing focus.
He said, ‘We have concluded that we are expanding our mission, if anything, not fast enough.’
If everything in the garden is so rosy why are site owners so dissatisfied? Anyone who has run Google advertisements on a site with a reasonable number of visitors will probably, if asked, express extreme dissatisfaction with the financial returns from Google.
Of the eleven sites with which I am closely associated none, as in none whatsoever, make a return for Google Adsense which is worth the effort. Google writes to us and asks what it can do. We reply and then nothing happens.
For the last few years, the company’s work force has nearly doubled in size annually. But these new workers do not appear, generally, to be working with people who create sites.
My close friend was associated with a site which closed two months ago. It was totally built around the concept of Google Adsense. It died because it was seriously losing money.
At some point Google is going to get a very clear message from the web sites from which it, apparently, makes so much money. That these sites are making a small pittance, if there is such a thing, and are actively casting around to find other ways of advertising to bring in money. This, if it became a major trend, would not be good news for Google.
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February 4th, 2007
This article is ridiculous. For example:
“My close friend was associated with a site which closed two months ago. It was totally built around the concept of Google Adsense. It died because it was seriously losing money.”
This would be acknowledged by anyone in business as a very poor decision. Instead of building a site totally around the concept of Google AdSense, maybe your friend should have built their site totally around their product, which no doubt offered something original, right? Because that would be the smart way to run a business. Fill a need that isn’t being filled. As a matter of fact, maybe your friend could take a note from Google’s business model, filling a need more efficiently than any competitor.
Google’s AdSense is not an advertising plan. It is a tool that should be a part of a larger, diverse marketing plan that addresses many different avenues. Relying on AdSense as the entirety of an advertising plan or business model does not shift the failure of the business on Google, but rather the lack of planning and creativity of the business owner.
February 4th, 2007
There is much in what you say. The chap concerned has just had lunch with me in Bangkok where he is recovering from this minor business setback. Yes, I think it would be fair to say he built his business around a very poor decision. That does not, I think, address the major thrust of the article which is that it is very, very difficult to make money from revenue created by Adsense. Indeed, I do no know of a single example. Yes, you can blame it on the lack of planning and creativity of the business owner. But there are an awful lot of us
February 5th, 2007
http://tech.blorge.com/Structure:%20/2007/02/04/google-keeps-pulling-in-the-money-for-google/
I hope that your friend is able to overcome the setback due to his recent business experience.
I do not contest that it might be difficult to make money through AdSense. It is a huge program that many have taken a part of, ie the sheer number of websites utilizing this program means that competition to earn revenue is very high, even if barriers to entry are low.
However, my only point of debate is the placing of blame on Google. It is true that Google has made an extraordinary amount of money in a short amount of time by making *others’ content* easily accessible. However, there is evidence to suggest that Google is not inordinately hoarding profits for themselves.
From http://www.mydigitallife.info...
[http://www.mydigitallife.info/2006/10/21/google-adsense-giving-publishers-average-of-78-revenue-share/]
“New York Times has calculated and published the cut that a publisher gets from Google in AdSense program. The calculation was based on Google’s Q3 2005 financial report, and the magical figure is that publishers and partners get 78.5% cut of the ads revenue served from their sites. So for every dollar that Google collects from advertisers, 78.5 cents are later paid to Google AdSense publishers and partners.”
The New York Times article that is referenced above is located here [http://www.nytimes.com/2006/01/16/technology/16ecom.html]
If this is true, then a possibly successful strategy for your friend would be to find a way to significantly increase his click through rate. I would believe that his negative experience, though unfortunate, is part of the minority.
July 23rd, 2007
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