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Table of Contents Alphabet Inc. and Google Inc.
59
Revenue Recognition
The following table presents our revenues by segment and revenue source (in millions):
Year Ended December 31,
2013 2014 2015
Google segment
Google websites $ 37,422 $ 45,085 $ 52,357
Google Network Members' websites (1) 13,650 14,539 15,033
Google advertising revenues 51,072 59,624 67,390
Google other revenues (1) 4,435 6,050 7,151
Google segment revenues $ 55,507 $ 65,674 $ 74,541
Other Bets
Other Bets revenues $ 12 $ 327 $ 448
Consolidated revenues $ 55,519 $ 66,001 $ 74,989
(1) Prior period amounts have been adjusted to reflect the reclassification primarily related to DoubleClick ad serving software
revenues from Google other revenues to Advertising Revenues from Google Network Members' websites to conform with
current period presentation.
We generate revenues primarily by delivering performance and brand advertising. Performance advertising
creates and delivers relevant ads that users will click, leading to direct engagement with advertisers. Brand advertising
enhances users’ awareness of and affinity with advertisers’ products and services, through videos, text, images, and
other ads that run across various devices.
Google AdWords is our auction-based advertising program that enables performance advertisers to place text-
based and display ads on Google websites and our Google Network Members’ websites. Google AdSense refers to
the online programs through which we distribute our advertisers’ AdWords ads for display on our Google Network
Members’ websites. Most of our customers pay us on a cost-per-click basis, which means that an advertiser pays us
only when a user engages with the ads by clicking on an ad on Google websites or Google Network Members' websites
or by viewing YouTube engagement ads like TrueView (counted as an engagement when the user chooses not to skip
the ad). We also offer advertising on a cost-per-impression basis that enables our brand advertisers to pay us based
on the number of times their ads display on Google websites and our Google Network Members’ websites as specified
by the advertisers.
Revenue from advertising is recognized when the services have been provided or delivered, the fees we charge
are fixed or determinable, we and our advertisers or other customers understand the specific nature and terms of the
agreed upon transactions, and collectability is reasonably assured. We recognize as revenues the fees charged to
advertisers each time a user clicks on one of the ads that appears next to the search results or content on Google
websites or our Google Network Members’ websites. For those advertisers using our cost-per-impression pricing, we
recognize as revenues the fees charged to advertisers each time their ads are displayed on Google websites or our
Google Network Members’ websites. We report our Google AdSense revenues and traffic acquisition costs due to our
Google Network Members on a gross basis principally because we are the primary obligor to our advertisers.
Revenue from hardware sales to end customers or through distribution channels is generally recognized when
products have been shipped, risk of loss has transferred to the customer, objective evidence exists that customer
acceptance provisions have been met, no significant obligations remain and allowances for discounts, price protection,
returns and customer incentives can be reasonably and reliably estimated. Revenues are reported net of these
allowances. Where these allowances cannot be reasonably and reliably estimated, we recognize revenue at the time
the product sells through the distribution channel to the end customer or when the return period elapsed, as applicable.
For the sale of certain third-party products and services, we evaluate whether it is appropriate to recognize
revenue based on the gross amount billed to the customers or the net amount earned as revenue share. Generally,
when we record revenue on a gross basis, we are the primary obligor in a transaction, and have also considered other
factors, including whether we are subject to inventory risk or have latitude in establishing prices.
For multi-element arrangements, including those that contain software essential to hardware products’ functionality
and services, we allocate revenue to each unit of accounting based on their relative selling prices. In such circumstances,
we use a hierarchy to determine the selling prices to be used for allocating revenue: (i) vendor-specific objective