Google to competitors: I drink your milkshake

Henry Blodget, a Wall Street analyst during the dot-com heyday who now runs Silicon Alley Insider, published a report Friday that examines Google's advertising growth in 2007 against those of 17 online and traditional media rivals, including Yahoo, Microsoft, Time Warner, Disney, Viacom, CBS, and Clear Channel.

Specifically, Blodget's analysis, which was drawn from company press releases, showed that Google is drinking everyone else's milkshake.

From the story:

"The year-over-year growth of revenue (in 2007) on Google.com (U.S.)--approximately $2 billion--was more than twice as much the growth of ad revenue in all of the offline media companies in this sample combined. This is such an amazing fact that it bears repeating: A single media property, Google.com (US), grew by $2 billion. All the offline media properties owned by the 13 offline media companies above, meanwhile--all of them--grew by about $1 billion."

Google's advertising revenue in the United States last year totaled about $8.7 billion, up 44 percent from 2006 revenue. That's remarkable considering that U.S. Internet advertising was only expected to grow by 13.4 percent last year over 2006, according to estimates from TNS Media Intelligence.

To put it into perspective, Google's take of the total U.S. advertising market was about 5.7 percent of $153.7 billion last year, according to TNS Media projections of annual spending. (The research firm will report 2007's actual spending on March 25.) TNS estimated that in 2007, Internet advertising would make up about 7.2 percent of total ad spending--not that much more than Google's share, so it's hard to say how accurate that is.

Google, of course, is growing much faster than others online because it has built a better business around direct response ads online. It's obviously outpacing traditional media because those are mature businesses.

But what Google has yet to capture are the billions of dollars marketers spend on branded advertising on television, radio, and outdoors. Its 5.7 percent of the overall ad market shows that there's still much more milkshake to drink.

See Blodget's statistics here.

[hunter_jc]

This is a very sad day.

If google take all the ad spending, then there won't be anymore media company that rely on ads. Since Google produce no content at all, we will never get a chance to read quality magazines.

[bvdon]

Not a sad day

I am just one of millions who publish and use Adsense to generate
revenue. I provide content in a niche market that satisfies my
visitors needs. When you multiply that by millions of publishers, I
think its safe to say that content will be just fine. The larger media
companies need to learn how to monetize their content.

[sal-magnone]

Darn

I thought this post would be allot kinkier...

[limefan913]

And the reason is...

Small ad publishers/purchasers. Google has made it VERY easy and simple for those with very little time on their hands to either sell ads to drive traffic or place ads upon their content. This creates a base of small publishers already installed. Once you have a base, it's pretty simple to see it grow towards the top of the money pyramid.