- September 27, 2009
A while ago I dug up this quote from Business Week from 2000:
But how will Google ever make money? There’s the rub. The company’s adamant refusal to use banner or other graphical ads eliminates what is the most lucrative income stream for rival search engines. Although Google does have other revenue sources, such as licensing and text-based advertisements, the privately held company’s business remains limited compared with its competitors’.
We now know what people were missing back then and why Google generates such massive revenues from advertising. The lesson is that the RPMs* of online ads are directly proportional to the degree** to which the user has purchasing intent. This is why when you search Google for “cameras” you’ll see ads everywhere (and those advertisers are paying high CPCs), but when you search for “Abraham Lincoln’s birthday” Google doesn’t even bother to show ads at all.
This is also why Nextag will have revenues this year in the ballpark of Facebook’s revenues, even though Nextag gets a fraction of the visits:
When people talk about search being a great business model (for, say, Twitter), they should distinguish between search with puchasing intent, which is an incredible business model, and search without purchasing intent, which is a terrible one.
This may change as brand advertising moves to the web. But for now web advertising is dominated by “direct response” ads, and those are all about purchasing intent.
* RPMs = revenue per thousand impressions – can we please agree to start saying RPMs instead of CPMs or eCPMs? :)
** degree being how close the user is to actually purchasing multiplied by the profit margin on what they are purchasing
Pingback: Twitter and Facebook share a problem: Proving social ads work — Tech News and Analysis
Pingback: Twitter and Facebook share a problem: Proving social ads work | Apple Related
Pingback: Twitter and Facebook share a problem: Proving social ads work | TechDiem.com
Pingback: - Horoscope Advice
Pingback: Twitter and Facebook share a problem: Proving social ads work » Meslema
Pingback: GIASTAR – Storie di ordinaria tecnologia » Blog Archive » Twitter and Facebook share a problem: Proving social ads work
Pingback: Twitter and Facebook share a problem: Proving social ads work
Pingback: Twitter and Facebook share a problem: Proving social ads work | iPhoneUnlocKey.Net - unlock iphone
Pingback: Twitter and Facebook share a problem: Proving social ads work | Internetideas
Pingback: Twitter and Facebook share a problem: Proving social ads work | yoursite
Pingback: Twitter & Facebook share a problem: Proving social ads work | TechDiem.com
Pingback: Facebook’s business model - Chris Dixon
Pingback: Facebook’s Next Business Model « SmoothSpan Blog
Pingback: Facebook’s biggest problem is that it’s a media company — Tech News and Analysis
Pingback: Facebook’s Next Business Model : Enterprise Irregulars
Pingback: Google Has A Magic Money Making Machine (GOOG, FB) | Don't Call Me Tony
Pingback: Google Has A Magic Money Making Machine | My Banking tips - tips on bank,money and investment
Pingback: Google Has A Magic Money Making Machine (GOOG, FB)
Pingback: Google Has A Magic Money Making Machine (GOOG, FB) |
Pingback: Google Has A Magic Money Making Machine (GOOG, FB) | Share Blog
Pingback: Google Has A Magic Money Making Machine (GOOG, FB) | TechDiem.com
Pingback: Google Has A Magic Money Making Machine | My Banking tips - tips on bank,money and investment
Pingback: Google Has A Magic Money Making Machine | Making Money Online
Pingback: Google vs Facebook, Banksy, The No Hitter by Santana,Making Choices,Drew Barrymore Marries. « Vegasmike43366's Blog
Pingback: Social Media Advertising: Should Bloggers Bother? : @ProBlogger
Pingback: Slate Asset Blog Network » Blog Archive » Social Media Advertising: Should Bloggers Bother? » Slate Asset Blog Network
Pingback: Social Media Advertising: Should Bloggers Bother?
Pingback: Social Media Advertising: Should Bloggers Bother? » E BLADE
Pingback: Social Media Advertising: Should Bloggers Bother? : Webmaster Tutorials
Pingback: Social Media Advertising: Should Bloggers Bother? | Ic2global.com
Pingback: Facebook’s Next Business Model | WikiCloud