A Billion AdSense Dollars
Google's results for the second quarter of 2006 certainly make interesting reading. Not only is advertising the major source (one could say the only significant source) of revenue for Google (99% of its revenue), but the AdSense programs generated 41% of that revenue. AdSense revenue was $997 million dollars — just shy of a billion dollars!
Unfortunately, Google doesn't break down the numbers any further, so we don't know which AdSense programs are generating the most money for Google: AdSense for content, or AdSense for domains, AdSense for search (it's probably not big), or the custom/premium AdSense programs for large publishers.
Just as interesting is the “traffic acquisition costs” number, which is the money shared with Google's partners. At $723 million, this is almost 3/4 of AdSense revenues. I bet some of the larger partners get hefty percentages — 80% or 90% — of the AdSense revenue their sites generate.
What's even more interesting is that the profit from AdSense — $997 - $723 = $274 million — more than covers the “other costs of revenues” item, which includes data centre costs, credit card fees, etc. This leaves the bulk of Google's revenue — the $1.4 billion (58%) it makes from displaying ads on its own sites — to cover the other costs in the company, which means most of that revenue is pure profit — over $700 million last quarter!
And people wonder why Google doesn't crack down more on made-for-AdSense (MFA) sites?
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Eric Giguere is the contextual advertising expert who wrote Make Easy Money with Google and Uncommon AdSense. You can read this blog by mail if it's more convenient for you, just send a blank email to memwg-blog@aweber.com to subscribe.
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