"Google would have to place $35 billion of gross advertising spending.. to double its current operating profits from 2006 levels."
I'm a bit behind on my foreign movies, but having exhausted all other films at the local Balnarring DVD outlet, I'm into the Asian triad/kungfu flix. Started with Infernal Affairs 1-2-3 which The Departed is based on (script and scenes are about 85% the same) and tonight was a bite of South Korea - A Bittersweet Life, which had me at hello, the title. It rocked. Supposedly not as much as Google will in reselling offline advertising, that is unless it comes up with a new algorithm, as it also needs to do for YouTube, social networks, and when it purchases Spotrunner and emulates and extend on its me-too DoubleClick play.
InternetOutsider : "Because, for every dollar of advertising spent on AdSense, Google captures only a tiny fraction of the profit that it captures for every dollar spent on AdWords. When an advertiser buys a $1 per-click AdWord key word, Google generates $1 of revenue and about 60-70 cents of operating profit (very rough numbers). When an advertiser buys a $1 per click AdSense keyword, meanwhile, Google generates $1 of GROSS revenue but only about 40 cents of net revenue--and only about 10-20 cents of operating profit.. So how much TV, Radio, and Print spending would Google have to capture to, say, double its current operating profits from 2006 levels? (Assuming no further growth of the online businesses, which obviously should continue to grow quite nicely). Google generated about $3.5 billion of operating profit last year. To generate this much from an offline TV, radio, and print placement business, assuming a generous 10% operating margin (very generous, I think), Google would have to place $35 billion of gross advertising spending. This compares to about $4 billion it generated from its wildly successful online ad rep/placement business, AdSense, in 2006."
Not sure about the no growth factor. Web ads have overtaken newspaper ads in the UK. Wonder when that happens downunder ? BBC : "Spending on UK internet advertising surged in 2006, overtaking newspaper ads for the first time, a report says. Online advertising expenditure jumped 41.2% to £2.01bn during the year, the report by the Internet Advertising Bureau and PricewaterhouseCoopers said. In contrast, spending on national newspaper ads grew just 0.2% to £1.9bn, taking a 10.7% share of the market."
InternetOutsider : "Because, for every dollar of advertising spent on AdSense, Google captures only a tiny fraction of the profit that it captures for every dollar spent on AdWords. When an advertiser buys a $1 per-click AdWord key word, Google generates $1 of revenue and about 60-70 cents of operating profit (very rough numbers). When an advertiser buys a $1 per click AdSense keyword, meanwhile, Google generates $1 of GROSS revenue but only about 40 cents of net revenue--and only about 10-20 cents of operating profit.. So how much TV, Radio, and Print spending would Google have to capture to, say, double its current operating profits from 2006 levels? (Assuming no further growth of the online businesses, which obviously should continue to grow quite nicely). Google generated about $3.5 billion of operating profit last year. To generate this much from an offline TV, radio, and print placement business, assuming a generous 10% operating margin (very generous, I think), Google would have to place $35 billion of gross advertising spending. This compares to about $4 billion it generated from its wildly successful online ad rep/placement business, AdSense, in 2006."
Not sure about the no growth factor. Web ads have overtaken newspaper ads in the UK. Wonder when that happens downunder ? BBC : "Spending on UK internet advertising surged in 2006, overtaking newspaper ads for the first time, a report says. Online advertising expenditure jumped 41.2% to £2.01bn during the year, the report by the Internet Advertising Bureau and PricewaterhouseCoopers said. In contrast, spending on national newspaper ads grew just 0.2% to £1.9bn, taking a 10.7% share of the market."
posted by redbarren at 2:28 AM
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