What percentage of Ad revenue does Google Adsense
program pay to its Publishers? This is one of the most troubling and unanswered
questions for webmasters. Google does not disclose how much percentage they
pay to the publishers and it is perhaps one of the well guardered secrets.
Here we try to bring out what we know and what we learned from peers about
Googles payting policies and hope to shed light on some of the very
interesting areas.
Despite the secrecy behind this
payment percentage issue, Adsense by far exceeds the over all payout
performance compared to many other advertising options on most content sites.
To keep the publishers (website owners) happy with Adsense is important for
Google to keep Adsense as the primary advertisement source for Publishers and
to the overall success of the program. So it seems that Google does payout a
significant portion of the Ad revenue through Adsense program back to the
publishers.
According to Googles SEC filing and an article about Digital Point
published in Newyork Times we have reason to believe that Google pays some
where between 70 to 80% of the Ad Revenue to publishers.
Why Google maintains Secrecy ?
The possible reasons for Google's secrecy on payments can be:
- It's a program safety policy. I mean, if you think about it, if
Google were to openly announce the share, then the competitors can offer
higher percentages to Publishers and this could result in pricing wars.
- The complexity of the process thay follow to personalise and
customize for each case is hard to explain. Besides, its not static and
fixed and same for all sites. And they can modify it whenever, however
they think is appropriate without having to explain and ground their
action.
- Knowing who makes what would be a bone of contention for publishers.
Parameters for Calculating AdSense Payout
Basically, what we do know for sure is that Google receives the money
from the advertisers any time an impression is registered or a visitor clicks
on an AdSense advertisment. Then the revenue is shared with the publishers.
It works like this:
- the cost of the click is established by the “smart pricing” system —
this is the price advertisers pay;
- an undisclosed percentage is applied to this amount, that results
into the shares for the publisher and for Google™.
Smart Pricing
Lets examine what this Smart Pricing is and how publishers who provide
solid and focussed content can make use of it to their advantage:
- Bidding: Pricing starts from the
supply and demand ratio, settled in advertisers' bidding. (So far, not
much we, as publishers, can do, except maybe for making your best
keyword pick.) The price thus established is usually the highest
possible, for there follow other factors that influence the CPC.
- Potential Coversion Rate : The result is then
modified according to the click's conversion potential. That is, it is
not enough to just click on an ad, its value is given by the analysis of
the actions following the click — registration, newsletter sign-up for
example — in a word, its likeliness to turn into business results.
- Relevence of the Ad: Further, the price of a
click is influenced also by content relevance, the type of site on which
the ad appears. Keywords and theme that triggered the ad are also
analyzed. The more content-relevant the ad, the higher the price for the
click.
It is logical that not all publishers be rewarded the same, but taking
into account their potential as ROI holders. But we've already seen this as a
factor analyzed through the “smart pricing” system.
Now, the shares of payment (between AdSense and publishers) are not
calculated all alike, for not all publishers are “equal”; it is known, for
example, that big web publishers get to negotiate the rates with Google. Why?
Authoritative, big publishers represent the pledge of high ROI, what
makes them “most wanted” by advertisers. Thus, they will represent for Google
also an important revenue source. Undoubtedly, they get to be stimulated to
participate and stay in the program by means of a preferential treatment.
That would lead to the deduction that smaller publishers are granted lesser
shares.
Google states this explicitely in their Initial Public Offering
Registration Statement (as filed with the Securities and Exchange Commission
on April 29, 2004):
Typically, in situations where we pay a Google
Network member more than the revenue we receive from our advertisers in
connection with paid clicks on that Google Network member’s web site, we
recognize the difference as cost of revenues. Due to intense competition for
Google Network members and our limited ability to accurately forecast the
number of paid clicks that will result, we expect that we will enter into
AdSense agreements from time to time under which we will make payments to the
Google Network member exceeding the revenue we recognize from the agreement.
Cost of revenues also includes amortization of expenses related to purchased
and licensed technologies.
But it is not necessary to be an “authority” publisher, or a very big one
to convert well your site into money. Smaller sites can have excellent
potential in this regard. In an analysis to determine the sites'
“monetization” rate, we may speak of an “extended” smart pricing applied by
Google.
There are some criteria which are unofficially but almost certainly taken
into account, which we chose to expose here for you to see also our
perspective on the way Google AdSense™ pays:
- High traffic and impressions — High traffic is not strictly
connected to the CPC. Targeted traffic is more valuable as it is likely
to convert more. Thus, sites generating quality traffic (resulting in
high CTR) will earn more. CTR seems to be taken into account by AdSense™
when choosing the sites for directing higher paying ads.
- Site size and age.
- High Page Rank (with all the parameters it involves — valuable
content, relevancy of the inbound links, keyword relevancy).
After all, sites that would meet all of the above criteria are very
likely to produce more, the higher their potential to raise a profit, the
bigger Google's interest to keep them into AdSense.
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