Google’s web advertising model is indeed a successful one. Last week, it released its quarterly earnings report for the forth quarter of 2009. Revenue for the company was $6.67 billion for the quarter ended December 31, 2009, an increase of 17% compared to the fourth quarter of 2008. The bulk of Google’s earnings comes from text advertisements placed on its search results, followed by publishers who embed their text/image Adsense advertisements on individual websites.
Apparently, the Mountain View-based search engine juggernaut is reducing its payouts to Adsense publishers, according to Amit from Digital Inspiration. Although Google has never revealed the exact percentage of earnings that it shares with Adsense publishers, but he has managed to calculate out the rough estimates for the year 2009. It turned out that Google paid out some 72% of Adsense revenues to bloggers under its Adsense program in the Q4, a slight drop from some 75% in the Q1. (The numbers are worked out using this formula — dividing TAC with the total Adsense revenues.)
The percentage may seem rather negligible, but in fact Google has pocketed US$8 million from the decrease in payouts! The folks at Google probably think that they have been too generous for the past few years and decide to reduce the share. If this downward trend continues for the next a couple of years, publishers might be receiving just one third share of Adsense revenues generated. This could cost dearly to those bloggers who rely heavily on Adsense as a source of income.
Meanwhile, the search engine has done pretty well for the forth quarter. “Google had a strong fourth quarter, with 17% year over year revenue growth,” said Eric Schmidt, CEO of Google. “Given that the global economy is still in the early days of recovery, this was an extraordinary end to the year. Our performance in 2009 underscored the strength of our management team, the resilience of our business model and the pace of innovation within our product and engineering teams, which continued unabated throughout the downturn. As we enter 2010, we remain hugely optimistic about the internet and are continuing to invest heavily in technological innovation for the benefit not only of our users and customers, but also the wider web.”
