Posted October 10, 2007 2:59 pm by with 2 comments

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As Google’s popularity grows, they rely less on advertising partners than ever. Here’s a case in point. reports that the advertising deal between and Google is about to expire. has Google’s sponsored links on its site but the contract will end at the beginning of next year. At first the company was confident they could renew the contract, but it hasn’t happened yet.

How things change. Google used to pay and others to be their partner. Now is doing the asking and has more to gain than Google does on the deal. Here’s the data: in the second quarter, Google earned $997 million from ads on “partner sites.” was responsible for about 10% of that, according to Barry Diller, CEO of IAC. That’s about $100 million. Google’s own sites brought in more than that—with $1.43 billion. Google shares in that revenue, maybe 80 to 85% of it. So the profit margins aren’t that thick—perhaps near 1%.

Perhaps the biggest reason to sign another deal with is to prevent Microsoft from doing it. However, if Google will make them much better returns, as is likely, they will probably hold out for another contract. And it sounds like this time, they’ll have to give up more to get it.

  • The question is how overconfident can Google afford to get. Is it wise to kill off distribution? ASK still have market share – although it’s not as big as Google’s it is still revenue that they won’t get if they don’t sign with Ask.

  • Happens all the time. Equations keep changing in partnerships. If you want to operate on your terms, you have to “make an offer that Google can not refuse”