After it outsells every newspaper, magazine, and TV network in advertising this year, one analyst thinks revenue could hit $9.5 billion next year. Sparse home page. Major ad revenue.
Editor’s Note: Google looks like they are tightening their grip on the whole advertising industry. Discuss Google’s role in reshaping Internet advertising and became so dominant in doing so at WebProWorld.
The New York Times discussed the Google phenomenon, and cited an analyst at Goldman Sachs in providing the lofty revenue figures for the report.
How lofty? If Google does $9.5 billion in ads next year, it would rank behind Viacom, News Corp, and the Walt Disney Company in ad sales. Think of it as CBS, Fox, ABC, then Google. Followed by NBC and AOL.
Google didn’t particularly want to do paid search ads, as it considered various methods of generating a revenue stream. But when Omid Kordestani arrived from Netscape to take his place as Googler number 12, he was able to demonstrate how the profitability of banner advertising sales at Netscape could be a model for Google.
Over time, the ad model morphed into an auction-based system, as AdSense and AdWords users know it today. Advertisers bid on keywords and phrases and pay per click. The model has had some lingering issues, like frequent complaints of click fraud, while becoming very successful.
The ad model has been supported by what the Times notes is “one of the most sophisticated artificial intelligence systems ever built.” People click on Google ads from 50 to 100 percent more often than they do on Yahoo, Goldman Sachs analyst Anthony Noto said in the article.
“Improving ad quality improves Google’s revenue,” CEO Eric Schmidt said in an interview at the Googleplex. “If we target the right ad to the right person at the right time and they click it, we win.”
David Utter is a staff writer for Murdok covering technology and business. Email him here.
