the value proposition for the websites owners from search engines is quite simple : search engines sends you traffic, and you let search engines index your site. search companies makes money due to it’s search, you make money with traffic. right?
lets look at some back-envelope numbers to see how fair the deal is, taking google example. google does about 5 billion searches a month (as of sep 2007) , and it’s index probably has about 10 billion pages in its index. that’s one query per 2 pages per month. if an average site has 100 pages, it’s about 50 queries per month per site. assuming that it’s equivalent to 50 unique users coming to the site from google. if each users views 2 pages after coming in from google, its equivalent to a total of 100 page views per month.
even if you have the best monetization scheme, you are probably raking in a modest $4 eCPM ($4 per 1000 page views), which means that
an average site is making $0.40 per month due to google traffic. if you take long-term value of the traffic to be 2.5x, may be $1.0 per month due to google-generated traffic.
at 5 billion searches per month and $15B in annual revenue ($1.25B per month), you are looking at google’s revenue of $0.25/search. it may not be that high, but not too far of an order of magnitude. so if google is sending 50 searchers your way,
google makes 50*0.25 = $12.5 per month due to the traffic it sends to a site.
assuming long-term value is roughly equivalent to per-user revenue on a monthly run rate, google makes $52.36 per user 113M unique users per month. it compares with the $1.0 long-term value per user for a site.
bottomline, google makes roughly 30-50 times the money you make with this business deal. yahoo is probably in the 15-30x range.
And now here’s where a site owner should get the “used-condom” feeling: and over time, search engines will develop a site that could compete with yours (health site, travel site, news site, etc.) and can screw the websites even of that little bit of revenue share: all by optimizing their own sites to be getting more traffic than other websites. mapquest is the latest victim. wouldn’t it be nice to have a rev-share law that protects the little guys from being divided and royally screwed over by the big guys??
Update: A similar post from GigaOm: Google is a Fair Weather Partner