On June 30th, Google announced that it is “retiring” its Adsense referral program.

As posted on the Adsense Blog (and also sent in an email to all users of the referral program):

“We’re constantly looking for ways to improve AdSense by developing and supporting features which drive the best monetization results for our publishers. Sometimes, this requires retiring existing features so we can focus our efforts on the ones that will be most effective in the long term. For this reason, we will be retiring the AdSense Referrals program during the last week of August.”

The change is set to go into affect at the end of August, 2008.

For those unfamiliar with the program, Adsense publishers had the option to select from a list of advertisers and choose specific ads (text, as well as varying banner sizes) to display on their site.  Included among these ads, and probably the most popular, were advertisements for Google’s own services:

Unlike Adsense content-matched advertising, or searchthis feature gave the advertiser control over which ads showed on their site— basically, acting like affiliate advertising.  Payouts varied by the advertiser, usually paid as a flat fee based on a selected action. 

In fact, it was the purchase of affiliate manager Doubleclick that ultimately led to the program’s demise:

“We are currently reevaluating the Google Referrals program to ensure that it is providing the best possible monetization opportunity for our publishers as well as meeting the needs of Google. At this time, we have suspended the Google Referrals program.”

This change should not come as a surprise to anyone who has followed Google’s acquisition of Doubleclick/Performics.  The industry has expected Google to incorporate Doubleclick’s affiliate management system into their own, to expand their content network (beyond text-based PPC ads, where the majority of usership has always been) and move towards a more action-driven model.  It remains unclear what Google intends to do with the rest of Doubleclick/Perfomics, namely the account-management side— which, Google has always stated represents something of a conflict of interests.  It also remains to be seen if Google will choose to advertise their own products on the system, including Adsense or Adwords (these products are not yet appearing on Doubleclick).  Perhaps the investment is no longer worth it, with Google being the defacto search advertising solution for such a broad usership.  Maybe it isn’t a cheap source of leads any more.