Why Google's Partners Should Be Worried

Google today announced its third-quarter 2008 earnings — which were in line with investor expectations, thus giving market a reason to exhale. For the quarter, Google reported net income of $1.35 billion on sales of $5.54 billion.

Google’s partners however, should gulp hard, for the Mountain View, Calif.-based search and online advertising company is keeping more and more of its online ad bounty for itself. You can see that from the three metrics: revenues from Google-owned sites, revenue generated by partner sites and the traffic acquisition costs. Google’s partners’ piece of the pie isn’t growing that much. Check out the table:

Q3 2008 Q2 2008 Q3 2007
Google-owned site Revenues $3.67 billion (67% of total revenues) $3.53 billion (66% of total revenues) $2.73 billion (65% of total revenues)
Revenues from Partners $1.68 billion(30% of total revenues) $1.66 billion (31% of total revenues) $1.45 billion (34% of total revenues)
TAC $1.5 billion (28% of total revenues) $1.47 billion (28% of total revenues) $1.22 billion (29% of total revenues)

What that table is saying is that Google today is less reliant on partners for ad inventory. This shift isn’t going to change anytime soon, especially as Google launches more and more ad-supported services and finds new users for Google Mail and Google Android.

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