For most AdSense publishers, Google doesn’t disclose how much of the
AdWords revenue they keep and share.  One thing I always look for in
Google’s earnings announcement is their TAC (traffic acquisition cost)
as a percent of their advertising revenues.  If the TAC percentage
falls, it generally means that Google is keeping more revenue.

Yesterday, there was a piece in the Wall Street Journal 
that depicted two stories on search revenues.  Efficient Frontier, a
paid search management firm, pegged U.S. search revenues down 8% in Q4
in 2008 over the final quarter of 2007.  Other analysts are projecting
double-digit search revenue growth in the 4th quarter for Google,
specifically, and eMarketer, looking at the current year, has projected
double-digit growth for 2009 at 14.9%.

If Efficient Frontier is right and search ad dollars are shinking,
it’s highly likely that contextual ads will shrink as well.  Compound
the shrinking ad spend with Google keeping a bigger share of its ad
revenue and this could be a significant reduction in earnings for
publishers.

If the TAC holds, and revenue growth is up, the decrease in earnings
some publishers are seeing is more likely caused by the industry they
cover.  For example, if your site focuses on financial, autos, or real
estate segments, these areas have been hit particularly hard in the
economic downturn we’ve all been experiencing, and that’s been
particularly true for advertising in them (also mentioned by Platform-A’s Mike Peralta).

So, we’ll be watching Google’s earnings this Thursday for these two key indicators.