Posts about wwgd

Google finally reveals AdSense cut: 68% on content

At last, Google is revealing its split on AdSense: 68% to publishers for content ads, 51% for search ads.

I had two primary complaints about Google in my otherwise admittedly and obviously wet-kiss book, What Would Google Do?: Google’s policy aiding government censorship in China and its opacity on advertising relationships. The first is pretty much fixed and this morning, Google is addressing teh second. so is the second. (Uh-oh, now I have fewer excuses not to be a fanboy.)

At a press meeting with Google execs in Davos in January, I pressed them about the advertising openness, having discussed the issue with publishers at DLD in Munich right before. In Davos, Google’s president of global sales, Nikesh Arora, replied that the company was reconsidering its transparency on AdSense. This morning, they’re revealing the deal in a blog post (to which I’ll link as soon as it’s up; this news was embargoed for 10a ET). From the post:

Today, in the spirit of greater transparency with AdSense publishers, we’re sharing the revenue shares for our two main AdSense products — AdSense for content and AdSense for search. . . .

AdSense for content publishers, who make up the vast majority of our AdSense publishers, earn a 68% revenue share worldwide. This means we pay 68% of the revenue that we collect from advertisers for AdSense for content ads that appear on your sites. The remaining portion that we keep reflects Google’s costs for our continued investment in AdSense — including the development of new technologies, products and features that help maximize the earnings you generate from these ads. It also reflects the costs we incur in building products and features that enable our AdWords advertisers to serve ads on our AdSense partner sites. Since launching AdSense for content in 2003, this revenue share has never changed.

We pay our AdSense for search partners a 51% revenue share, worldwide, for the search ads that appear through their implementations. As with AdSense for content, the proportion of revenue that we keep reflects our costs, including the significant expense, research and development involved in building and enhancing our core search and AdWords technologies. The AdSense for search revenue share has remained the same since 2005, when we increased it.

We also offer additional AdSense products including AdSense for mobile applications, AdSense for feeds, and AdSense for games. We aren’t disclosing the revenue shares for these products at this time because they’re quickly evolving, and we’re still learning about the costs associated with supporting them. Revenue shares for these products can vary from product to product since our costs in building and maintaining these products can vary significantly. Additionally, the revenue shares for AdSense for content and AdSense for search also can vary for major online publishers with whom we negotiate individual contracts.

Of course, we can’t guarantee that the revenue share will never change (our costs may change significantly, for example), but we don’t have any current plans to do so for any AdSense product. Over the next few months we’ll begin showing the revenue shares for AdSense for content and AdSense for search right in the AdSense interface.

They’re also not revealing splits for YouTube, a program that just started. Note also that big publishers, such as the New York Times Company, have long known — and negotiated — their splits, which also aren’t revealed. A Google spokesman told me last night that these splits hold for classic AdSense pay-per-click ads and also for newer display, CPM ads. They also hold globally.

How do the splits compare? It’s not uncommon for ad networks to take 50% or more. BlogAds, one of the more generous networks, customarily takes 30% on sales it makes and has other models (if sales come through a publisher site, only 14%; they also offer networked sales).

: LATER: On Twitter, I noticed some confusion about agency commissions vs. sales commissions. Agency commissions are on the buy side as ad agencies take a commission — often, 15% — for placing media. That’s not what we’re talking about here. This is a sell-side commission and I know, for example, that when it started, DoubleClick took at least 50% for sales. DoubleClick also serves ads and that’s a separate fee. I don’t have the latest numbers for these separate tasks; if you can add figures, I’d be grateful.

Google’s German screw-up

Since some have asked — from media and Twitter — here’s my take on Google collecting too much data via its Street View car — not just wi-fi addresses but “payload data” that went over those networks:

Google fucked up.

It’s pretty much as simple as that. And their screw-up sure doesn’t help me when German media come to me asking how I can defend the Google they love to hate. I got a bunch of conspiracy-laden questions from a German reporter this morning: Google says it was a mistake and the reporter asks — not without betraying a considerable bias — “Is that really possible?” I responded: “Yes. Google is not perfect.” The reporter asked: “What will Google do now? Is there a chance to completely recover?” There’s wishful thinking in that question, eh?

Let’s analyze the situation: To what conspiratorial use could Google have possibly put a trace smattering of random data caught in one moment on a given street? I would challenge anyone to take that data and find a business purpose for it. In one second on one street in Hamburg one unknown user read a story on Focus.de. Yeah, so what?

Somebody fucked up. It was sloppy and stupid of them and sure doesn’t help their PR problem in Germany. But I struggle to see how this story shows anything more than that.

Well, it does show one thing: The bias that German media have toward Google. When I was at re:publica in Berlin, I got questions like these from many German reporters: “Isn’t Google too big?” they’d “ask.” Show me the law that defines “too big,” I responded. I contend that German media are merely jealous: Google understood how to make money online better than they did. And they are reflexively running to government to regulate it and can’t find a reason why. So when something like this screwup happens, they get their hopes up.

But this also shows how out of touch German media is with its audience on this point, for the German populace clearly does not mistrust and hate Google the way media do. They use Google more than just about any country on earth, giving Google search a 97.26% share of market. Was gibt? Was geht?

Source: StatCounter Global Stats – Search Engine Market Share

Finally, good news for Google

James Fallows writes an important cover story for The Atlantic on how Google wants to help save the news. It doesn’t break a single new nugget of news. It’s the piece’s attitude that makes it must reading for everyone in the news business, in the U.S. and even moreso in Europe.

Google is not the enemy. But don’t take my word for it if you don’t want to. Take Fallows’.

Fallows, who has been admirably forward-thinking and curious in his coverage of technology and media (see his test of Bing v. Google, for example), comes at the question of Google’s relationship to news as neither enemy nor fanboy. He simply wants to understand what Google’s attitude is toward the news and then what the company is doing to back up its expressed sentiments about helping save (or I’d prefer to say, advance) news. He writes:

Everyone knows that Google is killing the news business. Few people know how hard Google is trying to bring it back to life, or why the company now considers journalism’s survival crucial to its own prospects…. But after talking during the past year with engineers and strategists at Google and recently interviewing some of their counterparts inside the news industry, I am convinced that there is a larger vision for news coming out of Google; that it is not simply a charity effort to buy off critics; and that it has been pushed hard enough by people at the top of the company, especially Schmidt, to become an internalized part of the culture in what is arguably the world’s most important media organization. Google’s initiatives do not constitute a complete or easy plan for the next phase of serious journalism. But they are more promising than what I’m used to seeing elsewhere, notably in the steady stream of “Crisis of the Press”–style reports.

Fallows says that the three pillars of a new online business model for news, in Google’s view, are “distribution, engagement, and monetization.” My equivalents are the conveniently alliterative engagement (for the public), effectiveness (for advertisers), and efficiency (in the operation). That is to say, Google doesn’t touch — nor should it want or need to — the fourth and vital leg to sustainable business models for news: cost. That’s what will make it easier to get Politico’s local product, TBD.com, to profitability more easily than the competitive Washington Post can stay there. That’s why I am looking more at the entrepreneurial than institutional future of news. That’s why I think this quest Google and others are on is about more than saving newspapers and more than saving news; it’s about finding new opportunities. But nevermind that.

What Fallows finds inside Google is people who care about news, who are working to try to create new forms for news and structures for the companies that produce it, who are indeed making it a priority. He finds people who want to work together. I say news companies are fools not to at least listen.

Mobile=local

At the Brite conference, I talked about mobile coming to be synonymous with local. Here are a few paragraphs I wrote on the topic for an essay in a German book about the future of the net:

The biggest battlefield is local and mobile (I combine them because soon, local will mean simply wherever you are now). That’s why Google is in the phone business and the mapping business and why it is working hard to let us search by speaking or even by taking pictures so we don’t have to type while walking or driving.

The winner in local will be the one that knows more about what’s around me right now. Using my smartphone’s GPS and maps—or using Google Googles to simply take a picture of, say, a club on the corner—I can ask the web what it knows about that place. Are any of my friends there now? (Foursquare or Gowalla or soon Facebook and Twitter and Google Buzz could tell me.) Do my friends like the place? (Facebook and Yelp have the answer.) Show me pictures and video from inside (that’s just geo-tagged content from Flickr and YouTube). Show me government data on the place (any health violations or arrests? Everyblock has that). What band is playing there tonight? Let me hear them. Let me buy their music. What’s on the menu? What’s the most popular dish? Give me coupons and bargains. OK, now I’ll tell my friends (on Twitter and Facebook) that I’m there and they’ll follow. This scenario—more than a newspaper story—will define local.

To do all this, Google—or the next Google—needs two things: First, it needs more data; it needs us to annotate the world with information (if Google can’t find this data elsewhere on the web, it will create the means for us to generate it). Second, Google needs to know more about us—it needs more signals such as location, usage history, and social networks—so it can make its services more relevant to us.

Post-postal

Imagine an America in which everyone has an internet connection, a device to use it, and a printer.

Ruth Goldway, the chairman of the U.S. Postal Regulatory Commission, imagined such a world when the head of the U.K.’s Royal Mail International asked at an industry conference a year ago what Google would do with the Postal Service. Goldway (who hadn’t read my book) replied, “They’d give every household a computer and a printer.” (And I’d add, of course, a broadband connection.)

Goldway was just speculating. As someone who believes in the Postal Service’s universal service obligation, it makes sense that she’d wonder about universal connectivity.

Now — as is my habit — I’ll take it farther — too far — and ask: When we all are connected, do we need a Postal Service? Or what kind of Postal Service do we need? What still needs to be delivered? What are the economics of that delivery — who’s being served and who should pay? Do we still need daily (let alone Saturday) delivery? Do we need to guarantee physical delivery to every address in America? How much could we save? Can the market take over delivery of things while the net takes over delivery of information and communication? What’s the impact on publishing and advertising, on retail, on education?

These are fascinating questions I’ve been tossing back and forth with a new friend, John Callan, a high-level consultant in the delivery industry. He did read my book (and gave Goldway a copy) and came to visit me to talk about the post office in the Google age. Callan, his colleagues, and I are thinking of holding an event to explore these questions and opportunities.

The Postal Service is forecast to lose $7.8 billion in 2010. A USPS presentation here reveals the dynamics: a 17% decline in volume from ’06-’09; a forecast 37% drop in first class ’09-’20. With its universal service obligation, the USPS has to deliver to 150 million addresses a day. With its post offices, it has 36,500 retail locations, more than McDonald’s, Starbucks, Walgreens, and Wal-Mart in the U.S. combined — and it’s not allowed to close offices for economic reasons. Its retiree health benefits alone cost $5 billion a year. Dropping Saturday delivery, as has been proposed, would save $3 billion a year — but that doesn’t solve the problem. Federal Times says the USPS is “officially in a panic” (not a bad thing, I’d say) because it could lose $250 billion in a decade.

The US Postal Service as we know it is, in a word, like much of the rest of the economy disrupted (or, if you prefer, doomed). I think it’s time to ask the radical question: Do we need it?

If all of us are connected, we don’t need the USPS to deliver letters; email is precisely the reason that first class mail is already plummeting. We consumers are, in my view, subsidizing the delivery of advertising because 71% of the USPS margin available to cover its costs comes from first class, only 21% from advertising. Yet in 2009, the USPS delivered an equivalent number of ads vs letters and by 2020 it will deliver far more ads (86 billion ads vs. 53 billion letters, according to the USPS projection). Should an ad-delivery service be the province of a government-anointed entity? I don’t think so.

So let’s zero-base the Postal Services’ services: Once more, information and communication can be handled electronically. Commercial delivery should be handled commercially. There will be an increase in parcel delivery as more and more retail moves online; that’s a profitable business the market should take over. Junk mail should pay full freight — if it is still delivered once mobile becomes a better, more targeted, and more efficient delivery mechanism for coupons and such (and if do-not-mail lists threaten to cut their volume). Magazines? Sorry, but I don’t really want to subsidize their businesses — and besides, tablet triumphalists insist we’ll be using iPads before you know it. Do we need six-day-a-week delivery to every one of 150 million addresses in America then? No; delivery of things is made on an as-ordered basis. What about out-of-the-way addresses (see: Sarah Palin)? Maybe that requires some subsidy, but that would be minimal.

What about the post offices? The USPS presentation shows far lower costs if these services were run through partners (e.g., other retailers), online, and self-service machines.

What about delivery of government paperwork? Well, it’s ludicrous that we’re not given the option to fill out the census online. We are shifting our taxes online.

Mind you, I have nothing against mailmen anymore than I have anything against pressmen. It’s just that they work in antiquated industrial structures and we can find not only efficiency but improvement of service thanks to digital — if we are all connected.

That is why I wish the FCC broadband plan went farther faster (as is happening elsewhere in the world), assuring everyone a high-speed connection quickly. This examination of the Postal Service is just one example of the impact universal connectivity would have on the economy. Some of that impact is painful — lost jobs, severance cost, unused real estate, mothballed trucks. But much of that impact is positive — improved service, reduced costs, reduced environmental impact, new opportunities, new entrepreneurship, new innovation. New companies would emerge to take up the opportunities this change presents, creating new jobs and value.

That’s why I was so impressed with Chairman Goldway’s answer to the WWGD? question: Rather than trying to paddle against the flood, she was at least willing to at least wonder about going with the flow.

I’ll ask: What happens if we spend capital not on money-losing, dying institutions (repeat: $250 billion losses over a decade) but on subsidies to get every American connected? If we fully examine the opportunities that presents, it could have a profound impact on policy, budgeting, and many sectors ofsociety. Let’s model that impact on the economy.

So Callan and company and I would like to get together both incumbents and entrepreneurs to imagine the near-future world of delivery after digital ubiquity. I’d like to continue the discussion with other sectors: newspapers and media, obviously, but also education (how would it change if every child were connected and equipped?); retail; real estate (what happens when all that retail leaves its brick-and-mortar stores?); financial services (why the hell are banks still building branches?); government; and on and on. That is what should inform the policy debate over broadband policy: Let’s map out all the opportunities — for entrepreneurial innovation and growth, for savings, for improvements in life, for export value — and let that inform the resources and speed we put into universal broadband.

What do you think?