Google likes to report big numbers — like yesterday’s quarterly earnings callreport of $7.29 billion in revenue. But up to now, it’s been relatively quiet about how much it makes in other emerging businesses — especially those that impact telecom service providers, like mobile or over-the-top video (ie, YouTube). But yesterday, Google opened its kimono, as they say, just a bit.
And what did we see?
MOBILE – A BILLION HERE, A BILLION THERE ADDS UP TO A BIG NUMBER SOON
Google is on a run rate to make $1 billion in mobile this year. The bulk of that comes from search-based mobile advertising via Android devices, a market in which Google has made great strides this year. Since most of the built-in capabilities on an Android device — including not just search but maps, location, video and even social — are Google-based, the upside in mobile is obviously tremendous for the company with $1 billion per year just the starting point.
OVER-THE-TOP VIDEO – YOUTUBE GETTING INTO REALM OF ‘BIG NUMBERS’ TOO
Google’s YouTube property has always faced criticism that it’s the realm of user-generated videos that can’t be monetized. But by quietly adding multiple video ad unit options over the years, Google has turned YouTube into yet another revenue engine. Although it didn’t break out YouTube earnings on the call, it did say it is running ads against 2 billion YouTube view views per week. Overall, YouTube gets about $1 billion views per day, so it’s monetizing about one in seven videos.
OVERALL – STILL MAKING 97% OF REVENUE ON ADS
Google is still in the ad business, let’s make that clear. And that colors every move it makes — into mobile, into voice services, into location, etc. Everything is built to drive ad impressions and ad revenue. And that, more than anything, puts the company in a fundamentally different business than the telco business – regardless of whether its service mix starts to enter telco territory.