Re: False Clicks/Click Fraud

From: David Hallerman <DHallerman_at_emarketer.com>
Date: Wed 16 Aug 2006 22:31:53 -0500

Adam Audette wrote:

>The hurdles Google faces with click fraud, with their 58% share of
>online advertising, and their developing business trust issues (or maybe
>they're just PR issues?), are what is contributing to the huge conflict
>of interest inherent in this debate. Whether we trust Google or not is
>beside the point - business self-interest issues are implicit.

Quick reality check: Google's share of Q1 online ad revenues in the US
was 23%, not the 58% figure mentioned.

Here's how that flows: To get that incorrect 58% figure, you'd divide
the IAB/PwC Q1 figure (US only) of $3.86 billion by Google reported
revenues of $2.25 billion. However, that $2.25 billion is worldwide, not
US only, so that calculation is mixing apples with oranges. In addition,
by using Google's gross revenue figures, you're double-counting; instead
you need to subtract the company's reported TAC (traffic acquisition
costs), since Google's TAC is another firm's revenue (that is, already
part of the $3.86 billion total).

Instead, to get to the more accurate 23%, you'd divide the IAB/PwC Q1
figure of $3.86 billion by Google's US-only revenues for the same
quarter, minus TAC, which was $0.88 billion.

Now, I'm not saying that nearly one-quarter of the US online ad revenues
going to one company isn't substantial (what other industry would you
find one company with such a large revenue share), but Google doesn't
take in substantially half of the online ad money...at least in the US.

David

David Hallerman
Senior Analyst
eMarketer, Inc.
"The First Place to Look"
dhallerman_at_emarketer.com
212-763-6047




Received on Wed Aug 16 2006 - 22:31:53 CDT