Google Says Lowering EPC, Until Competition Arrives

I see. Thats why those meso lawyers spend $50/click.

 

Companies which pour money into adwords do it mainly for one reason, to pay less tax and do it that way where they can gain more popularity, talking about the big ones, they don't expect a direct return of this investment.

Look at the Magazines and Newspaper ads. Quarter pages for tens of thousands of $$$ a day. That business has already partly switched to online medias and is still on the raise.
Example: When you open New York Times, - how many ads which are very costly can you find and how many pay attention to these ads? I think most of the readers just throw away the classified section without even having a look at it.
The advantages of online medias is that it's far cheaper and people look more at ads then in magazines or newspapers.

Another reason why online medias will be still growing is Video, TV. Once further developed online commercials will jump up like never before. This market is just at the beginning and as for now the tip of the iceberg.

For the small adwords customers.
The biggest advantage they will gain is when google and/or others will have developed the local search markets better. Google is working on it and I guess others too.

So there is for everyone a lot to gain. Also for publishers. We just have to make some adjustments from time to time in this upward moving market and opportunities.

 

Woho Arnie!!! thats great post!! so big advertisers will be happy for me to take money from them, thats good!! And they eaven earn on that, that i'l earn from advertising.

Does it mean that advertisers with 50k/100K budget (daily ) don't care about CN (converison) on google adwords?
So google don't care, advertisers don't care, i don't care haha, thats cool.


Anyone knows how much money google earns from big advertisers? and how much from small?

 

True Arnie but I would suggest to you that there are more users like me...expecting ROI. No money to burn here

 

No well-run company will ever spend money just to save in taxes (unless you're talking about a tax credit).

If the company's tax rate is 30%, they would be spending $1 to save 30 cents. Doesn't sound like good math to me.

They would have to be confident that their rise in popularity would offset the after-tax cost.

 

Yes it will! However, not on advertising. They will usually spend it on dividends (pay out dividends to shareholders), or some type of expansion. WHY? Because the longer it sits in the bank, the more it gets taxed.

 

Paying dividends doesn't reduce taxes. A company pays taxes on earned income - a dividend isn't an expense. If the company pays a dividend, it can result in double taxation because the shareholder is then responsible for taxes on the dividend.

 

Yes it does.. It reduces over all income taxes. If you pay out your profit in cash/bonus/dividends to share holders, shareholder assume the tax burden, ie., personal income tax. The corporation does not. The tax burden I am talking about for the corporation is having the cash sitting in the bank. If it sits there, it can be taxed over and over and over again. The best thing to do with it is to pay it out to share holders, or aquire something to avoid being taxed again.

 

mia, Jesse and Arnie are all correct. But I still think the majority AdWord advertisers are simply looking for some kind of ROI.

Getting back to the origators post 'Google lowering EPC because they can' is quite believable AND my earnings support this theory. My serps are up, my keyphrases pay decently all other indicators are otherwise AdSense optimized, EPC is down 50% since Jan 2005.

I think this is a result of Google doing it...because they can. I am still grateful and pleased with my results. That in mind, nothing compares, and they know it.

Until there is some genuine competition this is their prerogative.

 

All the adword advertisers are looking for a return on their investment. They may lose money while building brand awareness, or they may not get the ROI they were looking for, but they are not buying adwords to lose money. That's absurd.

 

Mia, you're wrong. A corporation pays taxes on its earnings. Whether it then pays out the profit in a dividend or holds on to it makes no difference to the corporation. Expenses reduce profit. Dividends are not an expense. A dividend is a payout on earings AFTER taxes. There are S-corps and LLC's which allow for a pass through, but it's still not an expense. I suggest you read up on corporate double taxation.

 

I think you are misunderstanding what I am talking about. I am not talking about earnings for a given year, I am talking about retained earnings that go unspent, and sit in the bank. They can be taxed, over and over and over again. However, if you pay those earnings out in the form of a dividend to share holders, you escape having those earnings taxed again, and again, and again. I'm in the US if that helps... Things may be different in your neck of the woods.

 

I think Surf Dude got it right. Originally when Overture/Goto was the only game in town, they were able to negotiate great "splits" with publishers like Yahoo. When Yahoo and the rest of the big boys realized that without their traffic, Overture was nothing, they squeezed OV on their splits and they went from making 50% to a lot less (per click).

traffic acquisition costs = how much they have to pay for traffic or how much they pay their partners/publishers to run an ad on a page

downward pressure on TAC as a percentage of advertising revenue = As more people sign up for adsense as a publisher, they will have excess inventory/supply (as AC pointed out) and this will drive prices that they pay property owners/publishers down

 

The bigger corporations -
If there is a constant flash of ads the conversion rate totals around 4% according to Unilever years ago.
Coca Cola, as everyone might know, stopped one time the ads because they thought they are well known already. Yes they saved billions first and lost more later to Pepsi and others.
I also said these kind of companies don't expect a direct return of investment, because their policy towards advertisement is different and must be if we compare it with small businesses where most are needing a direct ROI.
I also mentioned that they are after higher popularity which means also more sales then, but its not (going) to be directly.

Most of smaller businesses must concentrate on local markets in order to get a decent result for their ad campaigns and if they are to survive with their business.

Actually there are more things to say about this, especially some exceptions of standard rules in advertisement business, but I think its not the right time in the right place now.

Everyone must realistically figure out where they stand and act wiseley.
Advertisement is not only - seducing - to customers but also to advertisers (useing the wrong way).

 

Dividends are not deductible to a corporation in the U.S.

If cash sits in a bank account it will not be taxed over and over again unless you're talking about the interest earned from the cash. The principle will never be taxed again. A corporation is taxed based on its accrued earnings for its fiscal year. The IRS will not tax those earnings again if the corporation doesn't spend the money.

 

Mia: You better learn a little about C corporations before you come posting here. Almost all public companies are C entities which is the default corporation status. The owners of the company get stock, if it is a private corporation it is probably the founders, initial money backers, etc. If it is a pubic company it can be anyone: you, me, institutions, etc.

Now a company pays taxes on all net earnings (that is profit - expenses). Now if they pay dividends to the shareholders, that is taxed as personal income to those owning the stock as well (hence the popular double taxation which can be avoided via LLCs, S corporations, etc.). They pay dividends from profit; otherwise they'd go in debt which I suppose is possible but not practical, not sure. It is POST TAX earnings from which dividends are paid (once again, double taxation, see above). If the company keeps the money in the bank post tax, they aren't taxed each year except the initial year they earn that X amount of dollars. Now what they are taxed on year by year is interest, which is of course profit to the company.

What you are explaining is if I had a bank account with $1,000 in it and got taxed 23% each year it would eventually go to $0 as the years went to infinity.

Not to put you down, but do a little thinking before you post, what you are saying it obviously wrong otherwise the government would never be indebt in the situation they are always taxing people’s money even after the year they earn it (except like I said on interest earned).

Now I’m sure there are some fancy ways around some of this stuff, etc., but this the basics.

 

It is called income tax, so that means that only the income is taxed, correct?

If a corporation shows no income that equals zero tax most of the time.

Most owners of C corporations take all of the corporations income out in salary & benefits anyway, since the money is taken out of a closely held corporation in this manner in addition to major deductions many C corporations have zero tax liability.

We need to start a thread on this in General Chat or General Business if we want to discuss this very important corporate structure issue, someone please start it so we can fight about it.

 

Yes it will. I am not talking about interest.

I give up.. You all win. I must be wrong. I am no going to try and get that money back...

 

It's true that owners would like zero tax liability, so they try and give themselves as large a salary as possible (avoid double taxation where the corporation pays tax and distributes the earnings to the owner as a dividend, who then has to pay taxes on that), the IRS looks very closely at the reasonableness of salaries of corporations - especially privately held ones, so how much you pay yourself is definitely an issue for a CPA to be sure.

This is also true

 

JesseM please do start that thread and leave a link here, you look like you could lead it well, thanks