Google’s Ads Will Pay Publishers More

But not until other ads pay publishers more.

This is only speculation, really. But isn’t the point obvious? Despite Google’s nearly-by-definition efficient auction with AdWords, AdSense refuses to reveal what portion of each dollar of AdWords revenue goes to AdSense publishers.

Google will share more when it has to. Till then, it will enrich itself. I don’t fault Google for that. I fault others for failing to get at their own pieces of the pie.

Some other ad network will pay more. But first it must bring users to ads as well as Google does.

In the end, other ways of serving ads could work. But the economics of advertising call for networks—big platforms. The folks buying the ads demand that. RSS aggregators could serve their own ads and share revenue. Or Techmeme could set up a network in which bloggers allow Techmeme to display an entire post coupled with an ad and then to share the revenue back with the blogger. Once we figure out better platforms that serve at least as effectively as Google does, they can grab Google market share by paying more. If Google’s marginal revenue is greater than its marginal cost, it will begin to pay more.

And then news’s bright future will become more apparent.

(It’s been a long day, and my brain is creaky dead as a doornail. Many thanks in advance to the person who can tell my why the following it true (it’s got to be, ya?): If markets are working, then mathematically speaking, the product of Google’s effectiveness and its sharing coefficient (the portion of each dollar of AdWords revenue that goes to AdSense publishers) should be about even with, say, the product of Yahoo’s effectiveness coefficient and its sharing coefficient. If Google’s contextual search is more effective, we would expect its sharing coefficient to be lower. If Yahoo’s search is less effective, its sharing coefficient should be higher.)

2 Responses to “Google’s Ads Will Pay Publishers More”

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  2. 2 nagatlakshmi 2007 November 9 at 2:55 pm

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