A Google search for Google Financial Report yields G's 10K form - http://www.sec.gov/Archives/edgar/data/1288776/000119312505065298/d10k.htm On page 29, I quote two sentences - "In addition, traffic acquisition costs as a percentage of advertising revenues will experience downward pressure in the future to the extent we enter into proportionately more AdSense arrangements with members to whom we generally have lower revenue share obligations. However, this trend may be offset in the future to the extent competition for arrangements with web sites that are existing and potential Google Network members increases, which would likely result in less favorable revenue share arrangements." Sentence one translation - "We will be paying lower EPC in the future, because we can". Sentence two translation - "When we get competition, we won't be able to do this". Does anyone disagree with my "translation"?
There's not even any big words in there and its impossible to read..but Im guessing you got it right.
And in an SEC filing, that makes perfect sense. They don't release those documents for us, they release them for share holders. It's basically saying that their revenues will be higher in the future unless there is high competition from outside sources (Yahoo and MSN). Once the pressure is put on, in order to keep advertisers and publishers happy, Google will increase their payout to publishers. The increased payout to publishers will, in turn, decrease Google's overall revenue share.
In addition, traffic acquisition costs as a percentage of advertising revenues will experience downward pressure in the future to the extent we enter into proportionately more AdSense arrangements with members to whom we generally have lower revenue share obligations. -------------------------------------------------------------------------- In other words, the more publishers they sign up means more supply, when they have more supply they can pay less to everyone for those clicks. In a short supply situation you have to pay more. (If there are only 5 hot sites and everyone is bidding up that space the publisher would get a lot more money, so as they sign up more publishers the advertisers bid less because they have more space everywhere and those "5 hot sites" are not so hot anymore). More publishers = less CPM for everyone.
I can confirm (in my case) this is happening. It started in January 2005. My EPC dropped by 50% and has never returned. I would not call myself a major league AdSense publisher however my earnings are always 4 digits a month. I certainly agree with your translation. I, too, have read these sentences and can't really determine exactly what is being said. You have summed it up correctly according to my situation...can't wait for Yahoo
You can bet that when the competition is real that only the best websites with the most traffic will get higher percentages and they will be contacted and given special deals by the ad network providers. We all should demand that Google and the others drop the exclusive advertising relationship also so that we can test other ads and programs.
I think they are saying that as revenue shrinks from larger more traditional advertisers, ie., advertisers with hefty budgets, they will take on more of the lower budget advertisers, and at a reduced rate, ie., lower obligation. Anyway, that is my take.
All advertising is based on "Cost per thousand", that is why the Super Bowl gets Millions of Dollars per minute. Why? Because they have more viewers than any other program on TV. So giant websites with real time statistics and demographic profiles on their visitors will be able to make special deals with Google and the other providers. Average Joe webmaster will get the shaft and that is just the way it is in business.
To please shareholders, google needs more revenue to justify its high PE. By paying less to adsense pubs, google is able to acomplish this. However, I havn't had too much probems with CPC decline.
It's gravy-speak. Indecipherable to all but spammers, telemarketers, and irritating business majors with sharp tongues.
Sentence one translation - AdSense payout costs as a percentage of AdWords revenues will decrease as the percentage of low payout AdSense accounts grow. I take it to mean "general" AdSense accounts versus accounts from large sites like Amazon.com & Ask.com which I'm assuming have negotiated special rates/contracts. Sentence two translation - When we get competition, we're going to have to increase AdSense payouts to maintain and grow the AdSense network. Mostly, except the verbiage does not claim that they are lowering AdSense payouts to any individual members.
That's just temporary. A couple of bigtime competitors would be healthy and will take place in the near future. The Ad market online is just in the beginning and it will take about five years before it grows to the size where it can be. Google alone, no matter how big this company is or may grow, can't serve it all, thats for sure.
Bernard, I agree with your translation there. I think most of the growth AdSense gets will be from smaller "mom and pop" Web sites. These Web sites get smaller payouts than say, AOL gets.
That's the way it works... If they need your site, they'll give you a bigger percentage. There has been plenty of speculation that more important sites get higher revenue from the same clicks. I'm sure there just expounding on the idea.
Google needs a competitor now or else it faces the same lawsuit as microsoft did. Remember MS had to pay to set up a competitor. Overture is running out, Yahoo and others didn't start yet, all the small ones are not considered to be a competitor.
Would you say that sites ranking higher in the serps for a particular keyword would be classified as important? Based on their algo, of course.
Google needs a competitor now or else it faces the same lawsuit as microsoft did. Remember MS had to pay to set up a competitor. Overture is running out, Yahoo and others didn't start yet, all the small ones are not considered to be competitors.