When I read this story, I wasn’t very impressed. It is very nice that Shawn Hogan got a mention, the owner of Digital Point, a forum which I frequent daily, but the paragraph that has everyone talking just didn’t do much for me.
Google.com and the company’s foreign search sites contribute more to Google’s bottom line than AdSense, because for every dollar the company brings in through AdSense and other places that distribute its ads, it pays roughly 78.5 cents back to sites like Digital Point that display the ads.
You can see the full article here.
I am quite sure Google will do everything it can to keep these types of figures quiet. While people reference the SEC filings and the fact that Google’s earnings are public, I believe these numbers aren’t as easy to “read” as we think. My opinion on this matter is that I think this finding is inaccurate, having no hard facts to back it up. I think we will all continue to wonder what Google truly does pay us publishers, and I will personally wonder all the way to the bank.
I do not believe it is accurate either! In a traditional income statement there are many expenses that can be deducted such as employee’s wages and overhead. While Google must have all the numbers included, there is nothing against it including other figures in its vague descriptions.
For example ‘Traffic Acquisition costs’ is a very vague term that includes many different things such as costs of the Google Network members (your adsense publisher earnings), expenses related to operation of data centers (including depreciation, labor, energy, and bandwidth costs). Traffic Acquisition Cost also includes credit card and other transaction fees related to processing customer transactions as well as amortization of expense related to purchased and licensed technology.
While the ‘traffic acquisition costs’ may have been between 78-81% of their revenues this does not mean they give 80% revenue share!!! Remember, they are including many other numbers in that figure like operating expenses!!! Google isn’t stupid, but the guy that wrote the article must be. He should really read the financial statement a little closer before giving Google such good PR for free, especially when it is completely false.
Oh, don’t trust me? Go read page 24 of Google’s quarterly report from June 2004. The traffic acquisition costs are right in line (between 78-81%) a figure pretty close to the writers.
Or go to a newer quarterly report, Sept 30, 2005. Then go read the footnotes on page 10: http://investor.google.com/pdf/20050930_10-Q.pdf (go to page 10) read the paragraph: “In addition, cost of revenues consists of the expenses associated with the operation of our data centers, including depreciation,
labor, energy and bandwidth costs. Cost of revenues also includes credit card and other transaction fees relating to processing
customer transactions, expenses related to the amortization of purchased and licensed technologies as well as expenses related to
acquiring content on our web sites.” In plain terms, it means that in addition to adsense publishers earnings being put into that figure, there are also a lot of other Big numbers that are being put in there too.
Besides, the idiot who wrote the article (sorry, but to just write down numbers from an income statement without reading the notes is sort of idiotic when your publishing something on a prominent website, at least do your homework!)
Well all he did was take the traffic acquisition costs and divide it by the amount that google network websites (adsense sites) earned and it comes to.. *Gasp* 78.x% … Even though that number includes a million other little costs with running a complete DATA CENTRE! ARGH. Sorry I’m just a little ticked…
Oh, BTW, you can check out the thread I started at SitePoint about this article (click here).
Thanks for your comments!