I was doing some research today into Google. One thing that frustrates me is the thought that people have already worked out answers to a problem but, because they do not share their findings, another person has to duplicate time and effort in recreating the work. When I say that, I'm not talking about stealing other people's work, or being lazy. And there certainly are benefits to doing research and analysis ourselves even if it has already been done by someone else. But there would be a big benefit if we could use our brainpower less to recreate what’s already been done, and more so to build off of others’ findings.
In that spirit, I put a little extra time into today's research, and wrote up and shared part of it here in the hope that at some point, someone may benefit from Google's generous indexing of it and build something using it.
First, I made the spreadsheet just a little bit neater than I otherwise might have, I added a source, and published the result here
Next, I wrote up my findings when I might not usually have. I find writing things up helpful to structure thoughts, anyway, so it was not much extra work . And some benefit to me!
Here are my notes.
And
here is my PowerPoint making a couple of basic points and setting them in some context.
The first slide shows forecast Google revenues and the proportion of Google revenues forecast (by one of the sources I looked at) as coming from non-US geographies. Non-US revenues are big and their growth represents most of Google's revenue growth going forward.

I used a couple of bullet points that help to illustrate the chart's basic message (as it relates to the questions I had in my head). They also provide a small insight into the numbers on the chart. The second slide digs into the strong forecast non-US revenue growth. Is it driven by volume of queries or revenue per query? It turns out that both are forecast to grow, but that the big driver is the revenue per thousand queries, which is forecast to grow at 40% per annum over the period. This is combined with a very large number of search queries (see the left hand chart), which explains how the non-US revenue on the first slide is forecast to grow so much.

There are a couple more points that this slide raises. First, you will notice that non-US search is three times as large as US search in terms of number of queries. You'll then see on the right hand side that Google hasn't realised nearly as much revenue from non-US queries as it has from US queries. For every thousand queries in the US, Google makes $106 in revenue. For the same number of queries outside the US, Google makes just $27.
Now, Google is notorious for not releasing too much business data, so it may not be possable to dig in to this in too much more detail. I'll take a look tomorrow if I have time, but in the meantime were the data available, my next questions would be:
- What is the geographic distribution of the non-US revenues? (Much of it is UK, France and Germany, and so my guess is that we should be able to expect revenues per thousand clicks to increase to US levels in time. But how much is in China and other parts of the world where we would not expect these levels of revenue per thousand queries?)
- How large is online advertising in these markets? What is the average cost per click? How is it forecast to grow in the coming years?
- What market share of searches does Google enjoy in these other markets? (This will speak to Google's ability to attract advertising and to scale the systems and relationships needed to successfully generate large revenues from queries.)
- What revenue-generating strategies has Google employed in the US but not, or not fully, in the non-US markets? (If there are significant strategies that have not been implemented--as has been suggested-- then we might well expect significant revenue growth.)
Add a comment