LookingConfident's  Instablog

"If you're a big publisher, you're going to need compelling audience at-scale & content to either drive a better deal with Google or, perhaps, enable a competing marketplace that can drive similar yield and, importantly, keep the business from being beholden to a single entity-Google.

Can anyone create a competitive marketplace?  We'll see."

www.adexchanger.com/

This above comment came from AdExchanger today.

Their short story "Google And The Publisher" was a follow-up to the query made by Silicon Valley Watcher's Tom Foremski - Read more, that I had featured this blog-post myself here:

tinyurl.com/6gkth5c

Tom says: "The payments to Google partner sites are not audited by any independent third parties. - - - - - - Google says it pays out about 80% of AdSense revenues it receives to its partners but not evenly.

Some receive a higher percentage while others get much less than 80% because of special deals with large publishers."

AdExchanger's reply:"When you're the biggest player of all & still pay publishers the best to a large degree, this sort of arbitrage is the reward.

Google can continue to play the game and as market disruptors force more transparency, it can loosen the reigns on their rev share & feed the AdSense beast (as in, keep publishers tied to Google.) To date, their AdSense powder remains relatively dry."

I totally disagree & feel that adexchanger should know better!

[Mike On Ads says: "90% of what we read is… well bullshit.!" Or, what is commonly referred to as being, HYPE. http://j.mp/rg6QjI]

I continue to see it a lot different and yes, there will be.. a competing marketplace that can drive similar yield and (importantly, keep the business from being beholden to a single entity-Google) -- further more, it may be closer to unfolding than many can imagine.

(Well, I guess that adexchanger can be included in the 'many', no?)

Google are only just now facing what is the 'real world' of (global) RTB marketplaces. - - Where many of their own advertisers will be bidding against others (in what becomes an OPEN auction), including, yes - - even against advertisers that may come into the open auction through Google also - who all get to compete in what will results in a much more fairer and a neutral to all, marketplace.

Many Ads, then being served direct or, through Exchanges, onto a number of other Google Network Member's (it's partner's), publisher sites.

Google is confusing people (I feel) in not explaining just WHO are the Google [RTB?] Network Members and that this is (& should) NOT (be) meaning those over one million adsense publisher partners, that Google has for so long served ads to.

Google are clearly mulling them both (all) together, I feel!

How Google chooses to report this (and has done, over the past couple of quarters), is Google's own determination. That, they have done so.

(Google "Do No Evil", right?)

As RTB quickly emerges further, Google will then have a much bigger fight on it's hands. And one that Google fully recognizes and (as has been pointed out in comments to Tom's article), Google has clearly said so, with .."the margin we earn on revenues generated from our Google Network Members could decrease in the future - - - - if we pay an even larger percentage of advertising fees to our Google Network Members." (See Post Script below)

LC

ps; Page 37 of Google's April 2011 10-Q that helps explain this:

"We believe our operating margin will experience downward pressure as a result of increasing competition and increased expenditures for many aspects of our business.

Our operating margin will also experience downward pressure if a greater percentage of our revenues comes from ads placed on our Google Network Members’ websites compared to revenues generated through ads placed on our own websites or if we spend a proportionately larger amount to promote the distribution of certain products, including Google Chrome.

The margin on revenues we generate from our Google Network Members is significantly less than the margin on revenues we generate from advertising on our websites. Additionally, the margin we earn on revenues generated from our Google Network Members could decrease in the future - if we pay an even larger percentage of advertising fees to our Google Network Members."

pps; From the comments in Tom's article:

"Google says it pays out about 80% of AdSense revenues it receives to its partners but not evenly." ???

I don't think this is right. Google has posted its AdSense rates publicly at http://adsense.blogspot.com/20... where they state: "we pay 68% of the revenue that we collect from advertisers for AdSense [........] Since launching AdSense for content in 2003, this revenue share has never changed."

So it's clear that for dealings with Google [RTB?] Network Members, the Co does get to retain a much smaller "margin" only and it says that this may even get to decrease in the future ... IF Google .."pay an even larger percentage of advertising fees to its Google Network Members." (To its AdSense Partners? Hardly!)