Would Google make MORE money doing affiliate marketing themselves with their own ad space?

I was thinking the same thing and I actually think they would. But that would require more time and research on there part.

shhh dont tell google

they have enough money

real people like us can use it to our advantage

The difference is that there current ad space is guaranteed money, anytime anyone clicks one of those links Google gets money.

If they were affiliate links, even highly targeted ones would their purchase to click ratio bring in the same revenue. (not to mention cover the additional cost of managing the affiliate system)

If Google selling affiliate products, they will not be focus and eventually screw up the search algorithm...trying to make more sales in affiliate sales.

There are a couple reasons I think they don't or wouldn't do that. 1) Organizing the worlds information is their main goal and advertising is simply their means to subsidize that because they've come across a relatively easy and effective way to target the ads to that information... 2) that would imply tacit approval or endorsement of various merchants or products which they don't own outright. Unless it's a product that gives Microsoft heartburn (Firefox) they really haven't pushed products from "outside their ecosystem".

Realize that most of the people that try the affiliate+adwords approach lose money and give up. It's easy by some reports to make things work, but let's face it - it's not as easy and reliable as selling ad space. They have what most anyone on the internet needs - TRAFFIC. Various products have their ups and downs and ultimately require a certain amount of hands on research/tweaking to make things happen. Their goal with many things is to let the algorithm handle it. Could they let an algorithm manage an affiliate marketing program? Probably, but the initial product discovery would probably need to involve more manual screening.

Certainly they would have the deep pockets to do it, but for the other complications (and perhaps the chilling effect on OTHER people buying their ad space...) I don't know if they would see the big picture as being worth it. They're real cost for an ad may be more than say a $7 top position, but it also may be lower rates for the 2nd/3rd/4th and so on ads because people realize that the Google sponsored ad will always be first so don't bother bidding for #1.

So... they don't own the producs, it could undermine advertising revenue, manual intervention, tacit approval of products or affiliate programs, etc...