How Much Webmasters Make From Ads

coins with clock
Pennies and dimes add up over time

This morning’s announcement that websites keep 68 cents of every dollar spent when visitors click Google ads is the latest salvo in the company’s scramble to woo webmasters.

Google has a seemingly insurmountable lead in search.  We’ve written before that Google’s lead mirrors Microsoft’s software lead a decade ago and IBM’s hardware lead a decade before that. Something will come along.  There’s already a shift led by Facebook which provides entertainment and Google which provides utility via search.   That’s not to say that Google is going anywhere… yet.   And I’m certainly not ready to proclaim this the Facebook Decade. But Google VP Neil Mohan writing in what he calls the interest of transparency disclosed a number that has been hotly debated for years.  Even if the number isn’t exact or there are extenuating circumstances, one has to look at the intent behind the disclosure and ask what has changed.

The difference is the fragmentation in ancillary markets.   As a small business, you may choose to earn money on certain pages of your site (please don’t do this on your pre-sales pages!) with Google’s AdSense program.  As Mohan points out, you’ll get 68% of the earnings and if someone promises you 80%, how much more are you going to get from the trust created by the industry leader and its partner companies?

Mohan’s argument is compelling, and the number is important.  Because here is the math he hopes that you do: Assume you have ads running on your website and that those ads generates $4.00  for every thousand pageviews.   Google’s announcement today would tell you that its advertising network receives $5.88 in advertising for those thousand views.   At 100,000 pageviews, the number is $588.  So if those pages are generating that much, couldn’t you just sell them for $600 at that level? Sure.  But you can’t find a buyer at that level because you’re a small business and those 100,000 pageviews are your week or even your month.  That’s why there are other advertising networks:  AOL’s Advertising.com, Chitika (which works with Google and Yahoo!) and niche marketplaces like Glam Media.  In all, there are more than four dozen active ad networks. Google’s announcement today of its revenue sharing percentages just may be the company’s recognition that this area of the business needs to be protected.

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