Google’s Earnings, Adsense and Credit Cards

Google’s AdSense program generated revenues of $1.68 billion, or 30% of total revenues, in the third quarter of 2008. This represents a 15% increase over revenues generated in the third quarter of 2007 ($1.45 billion). So clearly this is a big and growing money earner for them. However one thing I have noticed is that while the number of clicks I am getting on my Adsense ads has gone up the earnings fom all the clicks (based on actuals and effective cost-per-thousand impressions – eCPM) has gone down. That is, I am earning less than I used to from every click. I have noticed this pattern over the last few months where clicks are now only bringing in a fraction of what they used to bring in. This leads to me to conlcude that if Google is still growing their adsense revenue, then all else being equal they must have reduced their publisher payouts (a closely guarded secret of the comapny). Have other bloggers noticed this?

Here’s some insight into Google’s actions related to their paid ad clicks:

Its paid clicks rose 4% from the previous quarter, and 18% compared with the same period a year earlier. While some slowing in the growth of the company’s paid click rate has generated concern, Google has pointed to quality initiatives. Google has undertaken a number of quality initiatives aimed at reducing the overall number of paid clicks, in order to increase the individual value of each click, the company has said. However, the company indicated in July that it might reexamine efforts to cull the number of clicks in the interest of quality, fearing the effort may have gone too far.

Further on the topic of Google and Adsense, here is one of their Sneakiest Money earners : Delayed payments. For those who use Adsense on their sites and earn enough to get a google payout ($100), realize that it takes about 35 (EFT) to 55 (Check) days for Google to pay you. During this time they are already earning interest on money they have received from their advertisers/customers without taking any risk at all. Think about how much interest they generate. Using last quarters numbers, $1.68 billion would mean that they generate about $23 million a month or more than $270 million a year in interest (assuming a 4% yield and 30 day interest period) without taking any risk whatsoever. This is similar to a very simple and effective strategy consumers can apply when it comes to credit cards with which you can up get upto one month of free credit. Between when you make the purcahse on your credit card and when you have to make the repayment you could use put the cash (you would have bought the item with) in the bank, and still make a full payment on the due date without incurring a penalty. I do this with my Amex Blue Cash Card and while the numbers on my balance sheet are much, much smaller I esitmate that I make about $100 a year on this interest rate arbitrage. Not bad I think. So if Google can do it, so can you.

Appearances this week:

I participated in three blogging carnivals this week – Carnvial of Personal Finance (@ Greener Pastures), the Festival of Stocks (@ College Analysts) and the Money Hacks Carnival (@ Where you are now). Thanks to all the hosts for including my articles and check out all the other great posts there.