Google offers no transparency on ad revenue splits, and its numbers don't make sense
Google may make more press for its NSA ties and self-driving cars, but at its core it is an advertising agency and an increasingly unpopular one at that. And it is not just Matt Cutts and his merry band of pranksters getting people's shackles up by banishing companies from search. Google's transparency in how it divides up the advertising loot with independent publishers has also come under fire for a lack of openness and transparency.
Last week, a web publisher of a popular blog with more than one million unique readers approached me with an annoyed question. Google says that it pays her 80-90 percent of the advertising revenue generated on her site. But it offers no transparency whatsoever in reporting how much money is made on her page.
Why won’t it be clearer on how the pie is really divvied up?
As her advertising manager walked me through the back end of the website’s advertising exchange, I could see her problem. Last month, according to the account report, Google’s DoubleClick advertising exchange paid out $2,092.44, from 1,675,888 hits on their website, at a CPM (annoying ad lingo for cost per thousand impressions) of $1.25.
That was all of the information afforded to them. There’s no mention of the overall revenue generated by their site. They get slid their share of the money, and like an upstart band dealing with a shady club promoter, have to take Google’s word for it that the math is fair.
“There’s no breakdown, not unless you’re the Washington Post,” the publisher said. Questions and calls to Google didn’t bring any answers, either. The entire system is rigged to keep you away from talking to an actual person.
“We can’t have a personal rep,” they added, annoyed.
Which gets interesting, because when you slice it up, some of Google’s numbers look a little funky.
Let’s go on a mathematical journey. Digital ad spending in 2013 was $119.8 billion worldwide. Google’s share of that, according to its 2013 annual financial reporting, was $50.57 billion. Of those billions, $13.1 billion came from ads placed on Google Network Members’ websites. In other words, ads placed by Google on websites like the disgruntled web publisher that spoke to us.
Keep in mind, that $13.1 billion is supposedly a small sliver of the overall pool of money Google ads generated on websites around the Internet in 2013. From the contract supplied to Pando by the publisher in question, Google's Doubleclick advertising exchange lists the revenue split between publishers and Google to be between 80-20 and 90-10, depending on the type of ad served up. Google has also previously stated publicly that for its AdSense service, which is a lower end version of DoubleClick, it gives publishers 68 percent.
Google doesn’t break down its revenue stream down by product (it only reports the amount of money made from ads on Google web properties and non-Google web properties). But you can infer from the numbers above, somewhat confidently, that this $13.1 billion is somewhere between 10 and 32 percent of the overall amount of money being spent on Google network websites.
Which, if accurate, would put the real amount of money coming in through these sites to be somewhere over $40 billion.
Now that is a really high figure -- greater even than what the entire global display advertising market was estimated to be worth last year. (Estimates run from the high $20 billions, through to $40 billion.)
Google has a monopoly here, virtually. According to the ad administrator, this particular site in question runs five non-Google controlled ad exchanges, but all of those have to plug into the Google servers in some way and Google also withholds the right to outbid any of those exchanges for the ad.
The publisher says that there’s a piece of software, reportedly, that offers more breakdown of the numbers. Only they can’t have it. “You have to put a ticket in. There’s not an account rep that we can contact,” they said.
They spoke under the condition of anonymity, out of fear of ending up punished by Google for negativity, referencing having spoken with a number of similarly independent publishers who are also too nervous to make a fuss about it.
“Everybody is paranoid to speak out.”
“Google is very vindictive,” they said. “We were bounced out of Google News when we started criticizing Google on our site. We published a series on Google 18 months ago and our CPMs fell immediately from $1.80 to 30 cents.”
A lack of transparency. Fear. Small publisher frustration. Maddeningly impersonal customer relations tactics. A take it or leave it attitude. It’s a story we’re starting to hear a lot from Google’s customers.
What’s it going to take to get through? A Yelp page?
[illustration by Hallie Bateman]