Google is Reducing Share of AdSense Publishers

First graph in post is crazy misleading. It dropped three percent, not three times like it looks on it.

Not to be the disagreeable one, but couldn’t “Traffic Acquisition Costs” also include the cost of the time Google Employees worked with advertisers, which would throw off the calculations?

Also your first chart slightly dramatizes the difference by not starting at “0″. This always makes chart differences appear much more drastic.

(Again, I’m not trying to be the disagreeing one, as that is rarely the role I take.)

@Rarst – The base value in the graph is 71% .. it would have been a little difficult to visual the drop in shared had I started with 0%

@Nathan – The Quartely reports on Google now clearly mention the amount that they pay to publishers. From the report:

“The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.47 billion in the fourth quarter of 2009. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $250 million in the fourth quarter of 2009. “

As long as the percentage paid to publishers stays above 70% I will remain an Adsense user.

I agree with you Amit.

Actually these are the dual-sward like times for publishers. First, Google is reducing the shares to publishers and secondly, the number of publishers are increasing with much more speed than the number of advertisers, which is making eCPM or CPC dropping with time.

Also, for Indian publishers, the INR is appreciating from last 3/4 month and creating more troubles.

I completely removed Adsense 1/4 year ago. The payout rate was decreasing too much and I’m not doing advertising for a company that doesn’t pay me. Funny is that Google doesn’t even say how much money I earn with a click or sale. That’s so smart. They tell you after 30 days LMAO.

I switched to another publisher network. Now I can link whatever I want (depending on the post) and get money for every sale. Depending on the products it’s 5% up to 25%.

My own comparison:

25,000 Unique Visitors and around 100 clicks each month

Google Adsense: $2.45
Pay-per-sale: 200 up to $450.

THAT is a difference, isn’t it?

No way I go back to Adsense.

If what Lex is writing is true than think it from one other point of view:

There are coming more publishers. More publishers (most of them being (very) small) means more Adsense money for Google.
However… if the quality of these publishers is not very high they will earn less than other publishers.

Besides… even IF it is true that Google only pays 71% of adsense income then it is still a HUGE amount of profit.
Also: Adsense is now also using third party networks. It may mean you get less per click percentagewise but you may get more for a click because there are more advertisers bidding.

So: do not worry about the income… just make yourself a excellent website and start earning!

It might also means the end of the deal with myspace or with another big publisher. If Google had speacific deals with portal like myspace with a minimum garanteed CPM, acquisition cost might be greater than 100% if you stop that deal the global publisher part lower.
It’s not so easy to come at a conclusion valid for most web publisher I think.

I am not convinced. Remember that Google also gets a lot of traffic from its own services – gmail, google search etc. The declining % has a very simple explanation: Google is simply earning a great share of revenue from in-house websites and hence is having to pay a reduced % (of tot revenue) to publishers.

Going by he same logic it appears that Google actually shares more than 75% with the publishers – it would probably be around 80%.

I believe you left out key verticals in which Google has grown outside web and how it has affected the negative growth.

Another aspect is that premium AdSense publishers can negotiate their share. I doubt that premium publishers have allowed reducing their share. So, I think the share reduction was actually deeper for non-premium publishers.

Amit:
Love your analysis and that it’s useful. Also I tweeted it as a great example how to dig nuggets of gold from secondary market sources.

As to Rarst’s critique of our data visualization for the dual axis graph. You encountered a challenge of using dual axis graphs cited by at least one data visualization source I’ve read – using different scales confuses the relationship between the 2 variables.(I can’t remember the name to reference here for you.) And you’re comparing dollars on one axis to % on the other. One way to address the confusion is to make one axis clearly a multiple of the other. E.g. your $ axis goes from 0 to $1800. Make your % axis go from 0 to 45%, which is 1/40th of the 0-1800 scale and still captures your % that max’s out at 30%.

@Bruce

Nope, I meant very first graph in post – with large 3d bars. It uses 71-75% scale (small fraction of 0-100%) which makes differences between quarters seem very large on it.