Why doesn't Google disclose its adsense revenue formula?

[Miss Orange]

I don't get this. It's true it's free, but you carve out space on your website, and then they don't tell you whether you'll get a penny per click or a buck. Just some sort of vague information that "It depends on . . ."

Why the secrecy?

[felgall]

It depends on how much the advertisers pay Google as to how much you get. Since each advertiser pays differently each click will pay differently.

Google select which ads to display in order to try to maximise the revenue when people click by trying to select the best compromise between relevance and the payment amount.

The only part that they are actually keeping secret which would be useful for those selling ad space to Google to know is what the formula is that Google use to determine what fraction of the money that they receive for each click that they pass on. Of course since that formula might also influence how much the advertisers are prepared to pay (particularly those who both advertise and provide advertising space).

[pulkitgenius]

You can't tell anybody about what you don't know yourself. Same is with Google. Google can't tell how much advertiser will have to pay in order to get his ad on the relevant page, and as the competition for keywords keep on changing, the cost to display ads also changes. Therefore, google can not disclose its adsense revenue formula.

[Professional Dude]

It depends on the clicks and content of your site. Some advertisers may more money than other based on their advertising category. I don't think they would disclose such info because the click rates would be changing depending on location.

[CFA1973]

At least it would be interesting to know how high the revenue share is that tey are willing to pay you.
Did anyone do some research with adwords and adsense?

[Korr]

Well, from what I've seen, they pay out most of the ad revenue to the publisher. I've had my sites on both sides of the Google ad system, so I happened to notice that the amount I was paying for clicks in a particular niche was almost identical to the amount I was getting paid for clicks in that niche earlier.

So while they might take a tiny fraction from published ads, they're really making their money on the ads that appear on Google's own sites - like in the search results and other Google.com areas where ads are published.

[CFA1973]

That really surprises me. Usually the revenue share (for example for affiliating) is in the area of 20 to 40%; so my first guess would have been, that they only give you about one third of what they earn. But of course I have no data for this, so your estimate is probably by far more accurate.

[Jolly]

Forgive me for what is a super basic look at this issue - but it may provide a useful model for thinking about it. I've read somewhere that the majority of Google's income comes from Adwords and that the main cost for Adwords is Adsense. If you accept this then...

When you look at Google's financial statements, they report their Traffic Aquisition Costs as 30% in 2007, 28% in 2008 and 26% in 2009. Assuming this is mainly payments to Adsense affiliates, this suggests to me that the overall payout to Adsense affiliates is gradually dropping. And I would suspect that these basic numbers indicate the general payout, which fits in with the 20-40% affiliate commission for other sites which was stated above by CFA1973

Have a look here

http://investor.google.com/fin_data.html