Google’s share of ad spending: 2.66 percent

Venture Beat — Mon, 29 Jun 2009 16:41:44 -0400

A set of charts by Search Engine Land contributing editor Greg Sterling show that while Google seems like a gigantic corporation, its revenue isn’t that big, even for a tech company. To boil down Sterling’s article: Google’s revenue is one-fifth that of IBM, Verizon or AT&T. Even Microsoft collects three times as much per year: $60 billion against Google’s $21 billion.

The New York Times has a report on Google’s we’re-not-that-big defense against government intervention. But Sterling’s charts are a better read. The chart above shows how small Internet advertising still is. Google’s AdWords and AdSense programs have grown the market for online ads, rather than just capturing a portion of the pre-existing pie. Yet Google’s 30 percent share of U.S. online ad revenue — a bit over $21 billion — is less than three percent of total U.S. advertising. Many companies still balk at advertising online, or at committing more of their ad budgets to Web ads.

One reason is that for higher-priced items, shoppers still want to talk to a human being rather than one-click a $1,000 purchase. RingRevenue, a Santa Barbara-based startup, claims to have technology to connect online campaigns and over-the-phone sales to track which ads resulted in what sales. Surely Google has its own solutions under development.

Meanwhile, Sterling’s charts make a great case against Google’s alleged monopoly of the Internet. The company has an enormous presence both online and in pop culture. Yet it takes in only a sliver of the spending in the market it serves. That’s not a monopoly, it’s a call to grow 10 times bigger.

[Image by Search Engine Land]

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Google’s share of ad spending: 2.66 percent