When i used to have a rep we would split the advertising costs, but that was for mailers and buying pages in the black book- all out of date in todays world. Now online advertising is what sells images.
Google adwords sells search advertising  that you pay on a cost per click basis. What that means is that if you search for "stock photo" you will see ads from istock, dreamstime, shutterstock, etc. at the top of the page or along the side. As of today, in order to get an ad placed in the top or second position it will cost $4.31 per click. That means every time someone clicks on that ad, google gets $4.31. It doesn't mean a sale, just driving traffic to the site.
A year ago the cost was around $2.65, so even in the face of a slow economy, the price has doubled in a year.
Search advertising is by far the most effective way to drive customers to the site, but it is incredibly expensive. The traffic figure for the "stock photo" search term is 165000 searches per month.
Obviously you would buy other terms- "stock images"-$8.94, "royalty free"-$4.46-  you can even buy the term "istockphoto" for a mere $60.84 per click.
Having purchased CPC advertising in the past, i can tell you that the money adds up at an astonishing rate. It does drive traffic, however, which is why the agencies buy the ads.
Then there's banner ads, like the thinkstock ads that are running all over the place.
An advantage of these type of ads is that they can be tracked- all the way through to what pages you looked at, how long on the site, etc.
You can run a full page ad in a magazine such as communication arts for maybe $12,000 for a full page full color all edition ad. that's peanuts compared to the online advertising budget, and almost useless, except as a brand builder. No tracking.
I'm not defending the various agencies share of revenue, but i can tell you from experience that it costs a ton of money to drive eyeballs to a website, and then you have to close the sale.
In my opinion, the best company to be in all of this is google.

I agree, not many look at Google ads.  I've never clicked on a google ad, ever and on Firefox I have ads disabled.  Since Firefox is the most popular browser these days, advertising with google seems pointless. As for microstock agents, I'd say a lot of their advertising dollars go to third parties.

I wouldn't second guess Google's profits:
http://www.nytimes.com/2010/04/16/technology/16google.html

Quote from: Microbius on September 29, 2010, 12:44

... I would normally want the site that fits my search criteria or is popular, not the one that happens to have paid to appear at top of the page.

I was under the impression that the sponsored links are supposed to be relevant to the search term... 

I thought as long as you paid you got the position, anyhow, the most relevant would be at the top of the search, not the top sponsored link.
I don't quibble with the fact that Google makes a fortune, I'm just wondering how much the ads genuinely help the companies paying for them and how many of the links are clicked just because they belong to the specific company that the clicker as looking for anyway.

I find it really odd that Google ads actually pay off. When I do a Google search for info I never click the ads, only the non sponsored links.
When I do a search for a specific company I often click the sponsored link, but only when it's for the company I was looking for anyway and it's the first link to that company that catches my eye.
Is it only people that don't understand that the top or side links are paid for that use them? If not why click on the ads? I would normally want the site that fits my search criteria or is popular, not the one that happens to have paid to appear at top of the page.

Google ads are not only displayed within Google, but also on millions of pages of websites which have joined the Google AdSense program.  I own an online company (not related to photography) and thousands of our visitors click on those text ads (and that brings us a good amount of money every month).
So, I do think Google ads is a good investment for advertisers.

Quote from: Microbius on September 29, 2010, 12:44

I find it really odd that Google ads actually pay off. When I do a Google search for info I never click the ads, only the non sponsored links.
When I do a search for a specific company I often click the sponsored link, but only when it's for the company I was looking for anyway and it's the first link to that company that catches my eye.
Is it only people that don't understand that the top or side links are paid for that use them? If not why click on the ads? I would normally want the site that fits my search criteria or is popular, not the one that happens to have paid to appear at top of the page.

Google ads are not only displayed within Google, but also on millions of pages of websites which have joined the Google AdSense program.  I own an online company (not related to photography) and thousands of our visitors click on those text ads (and that brings us a good amount of money every month).
So, I do think Google ads is a good investment for advertisers.

"stock photo" is a relevant term for microstock agency ads. It directly corresponds to the search criteria.

It's a truly amazing thing to set up a campaign in Google Adwords and set it running. You can go to your stats page and see the traffic increase by leaps and bounds. Unfortunately, the cost increases by leaps and bounds also. To make it work, you have to be able to turn visitors into buyers. The big microstock sites are doing that very well, pulling in buyers with their incredible selection of images at a cheap price. That's why you don't see the lower volume microstock sites in the sponsored search results. they are relying on word of mouth or being stumbled upon in the regular search results, which is another way to do it. If I had to extrapolate from the trends, i would say that the big will get bigger and the small fry will get lost.
Of course, another trend is google image search, which is already driving a substantial portion of sales to the big agencies, at no cost. That may change the game in the long run as well.