According to a SEC filing, Google had 1 million advertisers in 2007 at an average spend of $16,000/each equaling $16.6 billion in revenue. Estimates put the number of advertisers now around 1.3 to 1.5 million. With that large number of advertisers, Google has a competitive advantage in contextually targeting them to searches and content, yielding higher click rates. Not to mention the increase in competitive bidding for a limited universe of popular keywords. Now, it would be very interesting to see — although this data is not publicly available — how those 1.3-1.5 million advertisers at $16,000 a pop divide out by local market.
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Also I’d like to know, if they spent $16,000, how much revenue did that generate? 0.5x, 1x, 2x, 3x? That’s how we do it in direct response TV. Do online advertisers measure success that way?
I don’t know the source of that $16k figure because I haven’t delved into the filing, but if it’s coming from Google, then it has to include YouTube marketing deals, DoubleClck or something and if it’s from the UBS analyst, it’s probably bunk.
The number might just be made-up either way because I’ve bought Adwords, I have clients using Adsense and I’m a halfway intelligent human being; There’s no possible way that those little ads people rarely click are averaging that much revenue and because I do occasionally click or are familiar with some advertisers, I really doubt they’re paying anywhere near enough to average a million advertisers down to $16k.
And, though you’d think the number of advertisers might have increased and it may very well have, but the economy and the lack of newness could be working against an upward trend, especially if I’m wrong and to make up the difference between the $1200-$1500 that I might average with Adwords, those folks whom I’m occasionally clicked and from whom I don’t know that I’ve ever bought anything, they’d have to be paying one heck of a LOT.
You will understand what I have all along if you only look at the current TechCrunch article listed on the front page, Why Google Employees Quit (did I manage to link Anonymous with the URL)?
It’s a lot of giggles.
@discreet_chaos: averages rarely are a representation of reality.
No doubt that underneath this $16.000 average lies a hockey-stick distribution (tha long tail), with a small group of advertisers paying huge sums on SEA, while the majority of mom & pop shops is only spending a few hundred to a few thousand.
What Google revolutionised is the creation of a level-playing field: pop & moms shops are now able to generate business on equal terms.
It’s new brand world out there, and search is the new game of the names (brands).