Revenue Round Trips in Search - Partying Like It's 1999
Remember back before the Internet Bubble burst, when companies routinely did 'revenue round-trip' deals whereby one online company bought traffic, services or product from the other, and the other reciprocated by buying traffic, services or product from the first? Homestore & AOL did it, Enron did it, as did a number of other growth firms trying to maintain investors' enthusiasm for their equity value.
Post-Bubble that sort of thing is frowned upon, not so much on moral grounds but rather because no one wants to end up like Ken Lay (cut to visual: Fred Sanford having 'The Big One', looking up and telling Elizabeth he's comin' to her)
Yet the practice - albeit in slight modified form - is alive and well in search in the form of the AdWords-to-site-with-AdSense-back-to-Google ad model. As an example consider Shopzilla/Bizrate, who is a huge keyword buy and generates leads for merchants in retail and other verticals. In addition to monetizing their Adwords buys via leads, they *always* include AdSense ads on their landing pages, which then send the searcher to other merchants via these merchants' AdWords ads.
This could almost certainly be deemed a revenue round-trip: Shopzilla buys traffic from Google, sends the traffic to their site and then Google 'buys' AdSense distribution traffic back from Shopzilla, thus inflating both firms topline revenues. Granted:
1)Google has hundreds of thousands of advertisers;
2)This relationship, unlike those of Homestore, AOL and Enron in the past, is largely automated/self-service and requires no active involvement or knowledge on the part of mgmt; and
3) merchants monetizing the long tail of their own site traffic makes sense
...but aren't the two firms in essence creating topline revenue out of thin air?