This week’s earnings call might have Google finally moving away from its one trick pony, at least from an accounting perspective.
With the exception of Google’s Apps for Enterprise, just about everything it does is advertising-based. From YouTube to Android to Maps to its bread and butter search, revenues come from an advertising model.
The issue many analysts have with Google GOOG isn’t that it is almost entirely advertising-based. What troubles investors is that so much (over 90% traditionally) of Google’s advertising revenue comes from Search alone. If Microsoft MSFT or Facebook somehow threatens a large part of search, Google is in big trouble.
Susquehanna’s Mariane Wolk thinks that Google may be likely to break out its Display Network group which will grab a meaningful 10% of the overall revenue. If it does Thursday at its conference call (there is increasing pressure for Google to diversify) the Display Network will be a big #2 to Search.
The numbers for display only go up from there…
Google estimates that global display advertising could be a $50 billion business by 2015. Google’s own estimates show that they could capture a third of that which would bring them in $5 billion in revenue (after everyone else gets their cut).
Wolk also sees opportunities for Google to better monetize their current properties. Google Finance and Google News could brandish targeted Display advertising, for instance.
Other upcoming revenue opportunities:
- Google Chrome Web App Store
- GoogleTV (long term)
- Continued Android growth
- Content hosting (YouTube) for networks like AOL and TV networks