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.
Dispite 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 (link here) 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.
