Thanks to Seth Goldstein (his blog is a good readBTW), I get fresh research from his company Majestic, and it always has interesting stuff. They’re having a small internet conference in NYC next week, and I was supposed to go, but I bagged out so I can work on the book. Sorry Seth. But thanks for the great insights, keep em coming.
Today’s insights have to do with Google. My headline? On average, Google gets nearly a dime for every search it serves in the US. A recent report from Majestic, based on proprietary Comscore data as well as Majestic’s own panels and other sources, notes:
– 98 percent of GOOG revs are from paid search. 65% of revs are domestic.
– Q3 domestic growth driven by 7% quarter to quarter increase in paid introductions (paid clicks), to 964 million, and a 2% quarter to quarter increase in average price per click, to 5%.
– Average CPC: 54 cents, up a cent quarter to quarter.
– Revenue per query grew 8.3% quarter to quarter to nine cents. (That’s right, every search we do on Google makes them nearly a dime, on average).
– Overall US searches grew 6% quarter to quarter, Google powered searches grew by .2%.
– In Q2, 51.9% of all searches on the Google Network included at least one paid listing.
– Of those, 32% include at least one paid introduction.
That’s nearly 17% of all searches ending up with a click on a paid link.
“98 percent of GOOG revs are from paid search.”
I highly doubt that. Yep, 98 percent is from ADVERTISING, and that means contextual+search. Contextual is not search — and if Majestic is not breaking that out, then the idea it’s a dime a search is completely wrong.
Haven’t seen the data, but I’m guessing Majestic has taken the number of searches that comScore estimates, then Google’s ad revenue and divided. Again, without breaking out contextual revs, that means they are counting revenue that never was generated from an actual search.
“Google powered searches grew by .2%”
Does that imply that Google market share growth is slowing, or am I misreading this?
Danny, good guess, maybe that’s how one would go about with a complete lack of transparancy? But, guessing without any information can often lead to incorrect assumptions — This can been seen throughout the history of typical non-data driven sell-side analysts.
Majestic Research estimates that approximately 98% of Google’s domestic revenue is derived from advertising which includes both paid placement on search as well as contextual advertising.
To derive this, Majestic Research utilizes a robust portfolio of data sources including several online panels, the largest of which is approximately 10 million internet users, as well as proprietary in-house panels.
Our analysis and modeling captures both price-per-click and paid introductions. With this data we’re able to accurately breakout the four drivers of Google’s business: searches, keyword coverage, click thru rate, and price-per-click. Paid introductions are a derivative of searches, keyword coverage, click thru rate as well as contextual advertising. Our methodology
Thanks for the additional information, John. And I will follow up to get in touch. But the key issue remains — are you breaking out contextual revenues from search revenues when calculating the revenue Google is earning per search?
If yes, great. If not, then it’s difficult to predict what’s going to happen with Google’s domestic paid search growth when contextual is not search. That’s because the number of searches on Google will have no impact on Google’s contextual placements.
In other words, tomorrow Google signs major deals to distribute contextual ads on a series of new web sites. Assuming these aren’t loss making deals, “search” revenue is going up. Only it’s not search revenue that got sparked by this deal. It’s contextual. More money, yes. How did we get the more money? Not through more searches.
The 6 Myths Of Creativity Google is the leader
Uh.. Couldn’t you just skip the research and ask Google themselves?
You could ask, but I doubt they’d say 🙂
They don’t break out any of their contextual versus search revenues in any of the filings I’ve seen so far.
Any idea of the google revenue by industry?
Good point. definitely agreeed with it.