Google 2007 Annual Report Download - page 84

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Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Google AdSense is the program through which we distribute our advertisers’ ads for display on the web sites of our
Google Network members.
We recognize as revenues the fees charged advertisers each time a user clicks on one of the text-based ads that are
displayed next to the search results pages on our site or on the search results pages or content pages of our Google
Network members’ web sites and, for those advertisers who use our cost-per impression pricing, the fees charged
advertisers each time an ad is displayed on our members’ sites. In addition, we recognize as revenues the fees charged
advertisers when ads are published in the magazines or broadcasted by the radio stations (or each time a listener responds
to that ad) of our Google Network members. We recognize these revenues as such because the services have been
provided, and the other criteria set forth under Staff Accounting Bulletin Topic 13: Revenue Recognition have been met,
namely, the fees we charge are fixed or determinable, we and our advertisers understand the specific nature and terms of
the agreed-upon transactions and collectibility is reasonably assured. In accordance with Emerging Issues Task Force
(“EITF”) Issue No. 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent (“EITF 99-19”), we report our
Google AdSense revenues on a gross basis principally because we are the primary obligor to our advertisers.
In the third quarter of 2005, we launched the Google Print Ads Program through which we distribute our advertisers’
ads for publication in print media. We recognize as revenue the fees charged advertisers when their ads are published in
print media. Also in the first quarter of 2006, we acquired dMarc Broadcasting, Inc. (dMarc), a digital solutions provider
for the radio broadcast industry and launched our Google Audio Ads program, which distributes our advertisers’ ads for
broadcast in radio programs. We recognize as revenue the fees charged advertisers each time an ad is broadcasted or a
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 second quarter of 2006, we launched Google Checkout, an online shopping payment processing system for
both consumers and merchants. We recognize as revenues any fees charged merchants on transactions processed through
Google Checkout. Further, cash ultimately paid to merchants under Google Checkout promotions, including cash paid to
merchants as a result of discounts provided to consumers on certain transactions processed through Google Checkout, are
accounted for as an offset to revenues in accordance with EITF Issue No. 01-9, Accounting for Consideration Given by a
Vendor to a Customer (Including a Reseller of the Vendor’s Products).
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 announced our trial to deliver Google TV ads to viewers and help 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.
In the third quarter of 2007, we acquired Postini, a provider of electronic communications security, compliance, and
productivity software. We recognize as revenue the fees we charge customers for hosting enterprise applications and
services ratably over the term of the service arrangement.
Revenues realized through the Google Print Ads Program, Google Audio Ads, Google TV Ads, Google Checkout,
YouTube and Postini were not material in any of the years presented.
We generate fees from search services on a per-query basis. Our policy is to recognize revenues from per-query
search fees in the period we provide the search results.
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