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

Google Partner Sites Show Weak Growth - Bad News For Publishers

Posted by Tom Foremski - April 14, 2011

Google's Q1 2011 financial results show a significant shift in revenues away from its partner sites in its AdSense advertising network.

Google [$GOOG] typically relies on partner sites for about 30% of total revenues but over the past year it has managed to reduce that to 28%.

Many Google partner sites have been criticized for being spam sites and content mills. But there are also many respectable news sites, such as The New York Times, in the partner program.

In the most recent quarter Google paid its partner sites $1.7 billion, up 19% from a year ago.

However, revenues to Google's sites jumped 32% from a year ago. This represents an unusually large change in relative growth rates.

During 2010 Google sites revenue growth was equal to, or smaller than, growth by its partner sites:

- In Q1 2010 Google sites grew 20% and partner sites grew 24%
- In Q2 2010 Google sites grew 23% and partner sites grew 23%
- In Q3 2010 Google sites grew 22% and partner sites grew 22%
- In Q4 2010 Google sites grew 22% and partner sites grew 24%

- In Q1 2011 Google sites grew 32% and partner sites grew 19%

Google has not offered an explanation for the large difference in growth rates following a long period of parity.

If partner sites had maintained their near lockstep relationship with Google sites, they would have boosted their revenues by as much as $214 million in the most recent quarter.

If this continues in 2011 they could miss out on nearly $1 billion in revenues.

Why would Google sites grow so much faster than partner sites in Q1?

What happened in Q1 that Google partner sites lost their growth momentum?

It's a massive 68% difference in revenue growth rates when for all of 2010 Google sites never grew faster than partner sites.


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