Google Float

[Tom]

The Sunday Times reports that 96% of Google's revenue in the first quarter of 2004 derived from Adwords/Adsense, and that revenue is expected to rise from $962m in 2003 to $1.5bn in 2004. The company's profit margin is 59% before tax. These are amazing figures. Quite apart from content providers needing to think about them, media buyers need to be thinking about how to harness the potential of Adwords to their business plans.

[francis]

The more we talk about Google ads, the more aware I've become of them. They're so ubiquitous now that they've become almost like pop-up ads, and I find them really annoying. I'm really hoping that some thoughtful software manufacturer will come out with Google ad blocking in much the same way that popup blocking. Can't I look at a website without being advertised to? Surely it's not too much to ask?

[James]

Hi,

I don't feel that way about Google ads yet, but I know what you mean about them appearing everwhere - but it's a testament to its success. No wonder there's so much hype about the float.

I think the biggest threat to AdSense is the ease with which people can manipulate the system. I read in this month's Internet Magazine that someone in the US has been charged with extortion after trying to blackmail Google.

This guy devised a program to create multiple untraceable IP addresses that spider the web and hammer away at Google Ads with hits. Quite simply, generating click-throughs from customers that don't exist, rendering the whole scheme useless as the click-throughs create the revenue - for Google, the AdSense host, and the retailer (if a sale results). In this case the plot was foiled but surely it's not that difficult to envisage a malicious spider (a barking spider?) could be created in this way.

Let's not forget the AXA-esque trademark cases. Google has already lost cases in the US. Will the French courts rule in favour of AXA, a French multi-national company that contributes billions of euros to the French economy? Can they avoid bias in this France v US case? I'm undecided who I think should win. I love AXA (I have to, it pays me) but I love Google too.

I hope the AdSense programme will be a lucrative revenue scheme when I launch my free images project. My site doesn't launch for at least a year, a long time in the internet world. Can I be confident AdSense will deliver?

[Tom]

I've got a copy of my grandad's equivalent of the London A-Z map. It has maps on one page and small ads on the facing pages. And I've got a copy a front page of The Times covered in small ads. Both ideas have gone. One cannot be at all sure that Adsense will survive. But one can be very confident that the principle of linking good content to relevant adverts will survive.

Nor does the prosperity of one medium imply the non-propserity of competitors. There are occasional casualties (like The Listner and Punch) but as society becomes wealthier it just seems to have an ever-larger for diversified and specialised media products.

Its a shame that Google is, for the short term, stopping people exchanging details of their Adsense experiences. My guess is that some Adsense users are doing very well and others are having very thin pickings (which I guess they will lose interest in).

My personal experience of clicking on Adwords and Adsense has been very disappointing - it hardly ever takes me to something I want. But the reports from advertisers is that the medium is very cost-effective.

[David]

AdWords are everywhere and the Google financial stats do not surprise me. I do, however, much prefer AdWords to pop-ups and if Google has managed to make AdSense so popular with webmasters (and they have), those webmasters are much less likely to resort to pop-ups. It would be interesting to see if there is a corresponding fall in the number of pop-ups as AdWords increase. They are low-bandwidth, mainly unobtrusive and highly targeted. I have found myself clicking on the ads generated by my own site (and not just to make a few extra cents ;) ) and have discovered a number of useful products I never knew existed.

IMHO they do work but as for how long they will last, only time will tell.

[francis]

Looking at the revenue figures, it reminded my of the "Stealing Time...The Collapse Of AOL Time Warner" book I read. AOL were generating massive income through selling banner ads. The situation is different now as Google aren't demanding multi-million dollar sums to advertisers to place adverts. But I'm wondering how long their level of income will last.

They are relavively unobtrusive - especially compared with popups. And when XP SP2 rolls out sometime this year, IE is (strongly rumoured) to be getting popup blocking. So maybe that will see the slow demise of the popup in favour of just text ads. Google look to have played a blinder in getting their first.