Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Reasons Why Media and Bloggers Should Not Run Google AdSense - Just Say No!

Posted by Tom Foremski - November 25, 2007

Anybody that employs humans to create content that they want to be paid for through advertising--and that includes traditional media companies and bloggers--should not give up valuable online real estate to Google AdSense.

I've been saying this for about three years, ever since I became an online publisher but I've been saying it mostly offline. Here it is online:

If you want to make a living from your online activities through online advertising do NOT use Google AdSense because:

Running Google AdSense will return pennies per click, you cannot make a living off of AdSense. But by running AdSense you are undermining your own efforts to charge a meaningful amount for online advertising.

By running Google AdSense you have to accept the pricing of the advertising as determined by Google's AdWords advertising network. AdWords is ads run on GOOG's own sites, next to its search box, GMail etc. That is far more efficient that running GOOG adverts next to media such as journalism, and that shows by the smaller amount of revenue Google gets from AdSense.

AdSense is now just a little above one-third of Google's revenues, it used to be 50/50 with AdWords when it IPO'd. That shows you how more efficient Google's advertising on its own web sites is compared with Google ads on other people's sites!

GOOG can sell advertising at a low cost because it doesn't have to pay for the content. Most of the content GOOG uses to place advertising around it, is harvested from the Internet for free. If you pay editors and writers to create content you are at a huge disadvantage because your advertising revenue is determined by GOOG's efficiency at not paying editors or writers to create content. You cannot compete with this business model.

Overall, AdSense devalues content. It makes all content that carries AdSense equal to the value of freely harvested web content.

Remember that Google is a technology-enabled media company. It publishes pages of content with advertising around it.

And Google can change the mix of its payments to its AdSense publishers. Take a look at its recent financial results:

Google Cuts Payments to Publishing Partners by $24m, Beats Analyst Estimates
Foremski's Take: In the third quarter Google AdSense network partners lost $23.99m in revenues because GOOG kept a larger share of AdSense revenues compared with the second quarter.
Here are the numbers:
The percentage of revenue from GOOG's publishing partners fell in the third quarter of 2007 to 34% of total revenues compared with 35% of total revenues in the immediately prior quarter.

Google Cuts Payments to Publishing Partners by $24m, Beats Analyst Estimates
Also:
Is GOOG Shafting Its AdSense Partners?
The most interesting thing about Google's recent quarterly financial report is why there has been virtually no coverage of a fascinating fact in its third quarter numbers.
I wrote about it last Thursday when the report was announced, and
got a scoop. Four days later on Monday, Rick Aristotle Munarriz over at "The Motely Fool" noticed it too: Don't get cocky, Google

Is GOOG Shafting Its AdSense Partners?

Shut off AdSense if you pay editors and writers to create content and want to make a living from online advertising, imho.

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