Google 2007 Annual Report Download - page 54

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Please find page 54 of the 2007 Google annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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listener responds to that ad. We consider the magazines and radio stations that participate in these programs to be
members of our Google Network.
In the fourth quarter of 2006, we acquired YouTube, a consumer media company for people to watch and share
videos worldwide through the web. We recognize as revenue the fees charged advertisers each time an ad is displayed on
the YouTube site.
In the second quarter of 2007, we began delivering Google TV ads to viewers and helping advertisers, operators and
programmers buy, schedule, deliver and measure ads on television. We recognize as revenue the fees charged advertisers each
time an ad is displayed on TV in accordance with the terms of the related agreements. We consider the TV providers that
participate in this program to be members of our Google Network.
We believe the factors that influence the success of our advertising programs include the following:
• The relevance, objectivity and quality of our search results.
• The number and type of searches initiated at our web sites.
• The number and type of searches initiated at, as well as the number of visits to and the content of, our Google
Network members’ web sites.
• The advertisers’ return on investment (ad cost per sale or cost per conversion) from advertising campaigns on
our web sites or our Google Network members’ web sites or other media compared to other forms of
advertising.
• The number of advertisers and the breadth of items advertised.
• The total and per click or per impression advertising spending budgets of each advertiser.
• The amount we ultimately pay our Google Network members and our content providers for traffic and content
compared to the amount of revenue we generate.
• The monetization of (or generation of revenue from) traffic on our web sites and our Google Network
members’ web sites.
We believe that the monetization of traffic on our web sites, and our Google Network members’ web sites is affected
by the following factors:
• The relevance and quality of ads displayed with each search results page on our web sites and our Google
Network members’ web sites, as well as with each content page on our Google Network members’ web sites,
including the relevance and quality of an ad’s “landing page” or page a user views after an ad is clicked.
• The number and prominence of ads displayed with each search results page on our web sites and our Google
Network members’ web sites, as well as with each content page on our Google Network members’ web sites.
• The rate at which our users and users of our Google Network members’ web sites click on advertisements.
• Our minimum fee per click.
We also generate revenue from the sale and license of our Search Appliance, which includes hardware, software and
12 to 24 months of post-contract support. We recognize as revenue the fee we charge customers ratably over the term of
the post-contract support arrangement.
In the second quarter of 2006, we launched Google Checkout, an online shopping payment processing system for
both consumers and merchants. We did not charge merchants any fees associated with the use of Google Checkout in
2007. On February 1, 2008, we began charging merchants who use Google Checkout to process sales 2% of the
transaction amount plus $0.20 per transaction to the extent these fees exceed 10 times the amount they spend on
AdWords advertising. We recognize as revenue any fees charged merchants on transactions processed through Google
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