Google Reveals AdSense Revenue Split, Tries to Market Corporate Goodwill

by Laurie Sullivan, May 24, 2010, 9:26 PM

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Google began beating the drums a little louder Monday in an effort to gush openness and transparency. The Mountain View, Calif. company decided to share the revenue split for AdSense for Content, and AdSense for Search.

The numbers -- heard loud and clear -- were no surprise to large publishers already privy to the information through negotiating contracts, which probably are a little more favorable than revealed here. Until now, others in the ad community have been shielded from the stats.

AdSense for Content, in which Google contextually targets ads to work on Web pages, is calculated at a 68% split to publishers. Google takes the remaining effective CPM (eCPM) charged to advertisers. AdSense for Search -- ads for on-site search engines that are triggered by matching keywords used in the search query -- are calculated at a 51% split to the publisher. Google takes the remainder of the cost-per-click (CPC) they charge advertisers.

"A good corporate citizen" -- that's what Matt Lawson, Marin Software director of marketing, says the search giant wants to convey. "Google wants to show they give away more of the revenue than they keep," he says. "They're probably saying: 'We're not doing evil.'"

But when I asked Lawson what publishers could do with the knowledge, he says, "not much." In the United States, Google has some competition with Microsoft Bing and Yahoo Search, but in other parts of the world such as Greece, the search engine owns more than 90% of the market share.

Aaron Goldman, Connectual managing partner, says critics have been coaxing Google to share the details, and it appears that the company "finally figured it had enough of a stranglehold on the market that it could share the numbers without risking competitors holding it against them."

Google even addresses this potential outcome in the post by saying other networks may give a higher split, but their effective CPM yield is not likely as high, which means the net revenue to the publisher is less. Since Google has millions of advertisers, Goldman says -- far more than any other network -- it can best match ads to content and garner higher yields for advertisers and publishers.

On the one hand, this announcement represents Google opening up in the spirit of transparency, and on the other hand "Google's being brash, saying to individual publishers: 'Go ahead, try and get a better deal from someone else. You need us more than we need you,'" Goldman says.

Regulators paying close attention to acquisitions like AdMob likely prompted Google to come clean with the numbers, too.

Bruce Clay, founder of Internet marketing company Bruce Clay, can't say for sure how the "Google mind works," but if Google makes publishers aware of what companies spend on their site, then they could likely charge more for the perceived value of other ads. "This makes the Google ad network look more competitive to attract more advertisers," he says. "Google could have simply had a head crash and temporarily lost its mind."

Google also gave advice to focus on yield rather than revenue split when possible, explaining that when considering different monetization options, it is advisable to focus on the total revenue generated from the site, rather than just revenue share, which can be misleading. For example, you would receive $68 with AdSense for content for $100 worth of advertising that appeared on the site.

If another ad network offers an 80% revenue share, but is only able to collect $50 from ads served on your site, you would earn $40. In this case, a higher revenue share would not compensate for lower revenue yield from another ad network.

Publishers and advertisers use the advertising network that delivers the best revenue, not the best ad split. Some networks may provide an 80% split, but not deliver as much revenue because they will not generate as much money from the clicks. Google has a lot of advertisers on their network, so they can generate a high cost per click.

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