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# Google Making \$1 Per Internet User

May 26th, 2007

Check out Don Dodge's recent article, entitled 'Why 1% of search market share is worth over \$1 Billion'. His math concludes that each search query produces \$0.12 ad revenue, which gives a value of \$1B for just 1% of total search market share. Don is from Microsoft and this post was a response to the latest ComScore search market share numbers, showing that Google increased its market share lead to about 50%. Yahoo has about 27%, Microsoft 10%, AOL 5%, and Ask.com has 5%. So let's look closer at the numbers...

Fact #1 - Don Dodge's math implies a \$2B valuation in 2.5 years

The graph below is from a Forrester research document published in May, 2005. According to this, the total online ad spending is expected to jump 50% in 2.5 years, from \$20.3B to \$29.4B.

Now check out how closely that graph reflected the reality in the last couple of years. Google's annual revenues were:

• \$6,138.56 B in 2005
• \$10,604.92 B in 2006

This 72% boost compares with the 33% increase on the graph for the same time period. The difference is understandable because Google, as the leading ad network operator, should have a larger growth in earnings than others.

Hence, when we consider this derivation and Don Dodge's propositions true, we conclude that a 100% increase in revenues and valuation from Google is highly likely to happen in the next 2.5 years.

Fact #2 - Reaching Google's numbers with another method

OK, now let's try an alternative method to analyze Google's numbers:

Facts:

• Google's last quarter revenues was \$3.664B
• which implies to monthly revenues of \$1.221B
• which implies to daily revenues of \$40.7 M
• There are approximately 1.2 B internet users worldwide
• Google holds 50% of the search market