Schmidt: Someday, AdSense Publishers May Know Google’s Cut Of Ad Revenues

How much money does Google keep back for itself from the AdSense ads it places on third party sites across the web? Right now, most publishers don’t know. But that might change in the future, says Google CEO Eric Schmidt.

AdSense is largely a black box for publishers. They agree to carry ads from Google. Those ads generate revenue. Google deducts a cut and gives the rest to the publisher, but the percentage deducted isn’t disclosed. The exception is for large publishers who negotiate deals to carry AdSense ads.

Shouldn’t this change, especially to be in keeping with Google’s talk about how open and transparent things should be?

“We’re doing better. As you know five years ago when we started all of this … it was a complete black box,” said Schmidt, when I talked with him earlier this week. “The criticisms of the lack of transparency, they were quite valid. The reason we didn’t go into the details was that we kept changing things. And that’s still the case. And the problem is that if we … say well this is exactly how it works, and people get themselves organized around some outcome, and we make an algorithmic change, then we create a huge negative wave.”

Continuing, he said:

“Ninety percent of people seem to be quite happy with that [few details disclosed], because revenue keeps going up. And 10 percent want much, much more information for god-knows-whatever reasons,” he said. “We have a lot of ideas about giving you more information about traffic to the site, advertiser behavior. I don’t think we will ever fundamentally give people what the critics want there, because the net of that is that we would then become frozen in time.”

But it seems so simple to reveal the cut. Why not show how much a site earned in aggregate and the percentage that Google kept from that?

“That kind of stuff, my guess is we’ll do, but there won’t be much more that. I think the answer is you’ll see us do things in very high aggregates but not a lot more,” Schmidt said.