hans.gerwitz.com

Propping up Adsense

Google is a pretty easy company to understand. They are a media company that sells and resells advertising space. Self-driving cars and thermostats are side projects. Operating systems such as Chrome and Android are self-disruption projects that are still legible only as continuations of the eyeball-selling game.

Today, selling on their own properties (e.g. AdWords, YouTube ads, &c.) continues to grow steadily:

  Σ %
2012 $31.2B 68%
2013 $37.4B 67%
20141 $43.5B 68%

"Other" revenues are growing even faster, taking a larger share of the mix:

  Σ %
2012 $2.4B 5%
2013 $5.0B 9%
20141 $6.7B 10%

Reselling of display space (AdSense), however, has been flat and is dropping as a percentage:

  Σ %
2012 $12.5B 27%
2013 $13.1B 24%
20141 $13.7B 21%

This is troubling for the AdSense, as Amazon and Facebook are both attacking and iOS apps continue to consume some of the most valuable consumer viewing time.

By no means is this an existential threat to the world's dominant personal data and attention trading empire. It only indicates Google's contemporary incentive to drive traffic to its own sites is growing. They have failed to claim any of Facebook's ground in personal communications, watched Netflix keep "TV" relevant despite YouTube, and struggled along with the industry to make display advertising work as well as it has for the web. Meanwhile, Amazon and Microsoft have made major acquisitions that threaten to stake claims to the next generation of audiences (in Twitch and Minecraft).

This may be enough cause for a publicly-traded growth-fueled beast to behave dramatically as their owners demand growth. In 2015, I expect more skirmishes with Amazon, Apple, Facebook, and others who compete for consumer attention (or, in Apple's case, dilute its value to advertisers).

  1. 2014 revenue is bluntly projected as 4/3 of Q1–3. 2 3