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The veteran web users (webmasters, search engine optimizers, site owners, etc.) are cognizant of the fact that relevant organically listed sites with their unique revenue model compete with the paid listings on search engines. The former relevant sites listed with higher rankings generally take away the bulk of traffic for related keywords and hence the potential customer and other patrons. Hence, search engines do not generate much revenue when traffic is diverted to such relevant sites. In their 2005 Annual Report, Google under its “Risk factors” section (Page 34-52) has mentioned:  

“We compete with Internet advertising companies, particularly in the area of pay-for- performance and keyword-targeted Internet advertising. Also, we may compete with companies that sell products and services online because these companies, like us, are trying to attract users to their websites to search for information about products and services. We many also compete with destination websites that seek to increase their search-related traffic. If our competitors are more successful than we are at generating traffic, our revenues may decline.”

“We expect our revenues growth rate to decline and anticipate a downward pressure on our operating margins in the future.”

Google generates most of its revenues from paid advertisements (adwords) i.e. sponsored listings. These sponsored listings compete with the organic listings all the time with a direct co-relation between the relevancy of organic search results and the revenues from paid listings.

Better the relevancy of the organic search results/sites, lower the revenues from paid listings. So what could be the prefect recipe to increase revenues from Paid listings? Generate more clicks from visitors!! With a constant traffic and almost same number of advertisers, how would that be possible?

Yes, you got it right - “Poor organic results with spam and irrelevant sites.” The Billion Dollar Recipe ought to be a perfect imbalance between the editorial and paid listings.

The relevancy of (organic/natural) results on searches made Google popular with the people and now it is the undisputed No. 1 search engine in the world. So why would it worry for more market share when there is still loads to be made from the current traffic?

The poor public would continue to perceive these results to be a result of an intelligent algorithm with no human manipulation and end up relying more on the Paid listings as organic results continue to be distorted. Gradually, the search engines visitors will start relying on the relevancy of the paid listings. Could it get any better?

As Google anticipates its revenues to decline (in the long run) due to increasing competition and inevitable decline in growth rates, what is the harm in focusing on revenue maximization in the short-run? After all it’s Google that generates the entire traffic on its robust engine and deserves to have the most out of it.

And as they admit that the sites in their organic results are Google’s competitors, why wouldn’t they deploy killer tactics to reduce and eventually phase out competition from the sites promoted by Internet Advertising companies and webmasters?  

Internet Advertising Companies

Most of the sites that appear with high rankings on the organic results are generally optimized by these companies who want to promote or sell their products and offer services online.

Google in its annual report clearly mentions, ‘We may compete with companies that sell products and services online because these companies, like us, are trying to attract users to their websites to search for information about products and services. We many also compete with destination websites that seek to increase their search-related traffic. If our competitors are more successful than we are at generating traffic, our revenues may decline.”

A large number of such sites run on an affiliate marketing model. These affiliate sites focus on generating free traffic for merchants offering products and services, who in return offer commissions against the traffic that they receive against the lead or sale generated, rather than on a pay per click basis.   

More Revenues from Clicks

Search engines like Google have long known the advantages of an Affiliate Marketing Model and how they constantly loose traffic to relevant sites/players coming up on organic search results; sites that do abide by the search engine’s guidelines and keep getting away with free traffic without paying a dime to the search engine.

Google is left out in the above process as these affiliate model sites generates free traffic for relevant keywords. Google understands and admits that the volume of the revenues generated from such traffic is gigantic. 

So how do they join the bandwagon and make more money from those clicks?

Cost-Per-Action Program

The program, called Cost-Per-Action, is being revealed via an invitation e-mail from the Google AdSense team to Web site owners. (http://internet.seekingalpha.com/article/12363)  

"The Google AdSense team would like to invite you to test a feature that provides you with a new way to earn revenue from your Web site by hosting ads that are compensated based on a Cost-Per-Action (CPA) basis," read the e-mail. "These ads are very different in that you will be able to choose amongst a selection and you will also have more flexibility in promoting them."

The CPA ads differ from AdSense ads in that a site owner gets paid whenever a visitor clicks on an ad and performs a specific action, such as purchasing a product from the advertiser. An AdSense text ad, on the other hand, generates revenue for the site owner if a user simply clicks on the ad. In other words, Google is launching a fully-fledged cost-per-action — otherwise known as affiliate marketing — network.

The Good Old AdSense

If you have an AdSense account, all you need to do is generate traffic. No matter how!

Google is a sensible company that never defaults on payments with its AdSense account holders.

Q: How can spammers get the best bang for the traffic that their spam websites generate from Google?
A: AdSense

As a spammer, when you manage to find loopholes in the algorithm (That’s what the Search engine says) and your sites flood the organic SERPs, with top results for hundreds of keywords, you tacitly become a Google ally. 

Normally, these organic search results are relevant sites that compete with Google for their share of traffic. As these relevant sites topple and loose out to the Spam sites, the spam sites in return divert the traffic to Google AdSense.

Spam sites are not made to last and so they rely on a short-term revenue model. Their main goal is to generate traffic with their network of sites that may cover as many industries targeting a variety of keywords. 

Spammers find AdSense a reliable merchant with a perfect paying policy for the related traffic.

Why would Google hesitate in paying against the traffic generated from such spam sites as these sites reduce Google’s competitors and brings in more revenues from clicks generated on its Advertisers Listings on AdSense?

AdSense advertisers pay more money to Google than what google pays to sites using adsense on them. “Advertisers pay either when users click on ads, or when the advertiser's ad is shown on your site. You'll receive a portion of the amount paid for either activity on your website. Although we don't disclose the exact revenue share, our goal is to enable publishers to make as much or more than they could with other advertising networks.”

What about Irrelevant site results?  

Irrelevant sites in organic results prevent search engine traffic to leak to relevant sites (competitors). Appearance of irrelevant sites in top results, may lead the visitors to relevant paid listings, i.e., Adwords or a spam site with AdSense on it.

With great power comes great responsibility!

The current scenario and search strategy in the search engine industry is orchestrated by three major players: Google, Yahoo and MSN. Supremacy in web search gives these prevailing search engines an important accountability to uphold the importance of relevancy and a fair access to as many sites as possible.

Search engines fully understand the value and potential of their search services to the online community as they have become essential to the quest for learning and knowledge in the Internet Age and central to our everyday lives and online existence. Millions of people out there are dependent on free editorial traffic from Search Engines on a day to day basis.

As search engines continue to abandon all fundamentals of editorial integrity by adopting deceptive practices at the expense of their users, netizens wonder if they would ever be able to effectively navigate billions of pages on the web and retrieve appropriate information.