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As one of the world biggest online companies Google Inc. is also facing the economic slowdown. Google has been showing increasing profit in the last couple quarters when almost every company was showing a decline. How is that possible?

Well… I have to hand it to them on this one. Google’s majority of revenue comes from Adwords, which is its pay per click advertising program. At any given point of time there are millions of services and products being advertised on Google search and through Google content partners (Adsense publishers). Whenever an advertiser creates a Adword compaign on Google, the campaign by default is also listed with the content partners as well. However if an ad is clicked on Google search, Google keeps 100% of the revenue from the Ad. but if it is clicked on any content partner page, then Google has to share a percentage of that revenue with the Adsense publisher.

This delicate balance between ads clicked on searches vs. ads clicked on content partners can lead to significant revenue changes if we alter the percentage of each. Now to show value to Google’s shareholders Google is keeping more ads to itself and giving away less to its content partners. They have also moved the ads close to their search results so that the chances of ads being clicked increases.

I am not saying that their move is wrong, but as a result millions of publishers who rely on Adsense to make them money have to suffer as their CTR and CPM has significantly dropped over the last few months as a result a major decline in their profits.