Google's Revenue Breakdown Shows It Controls Even More Advertising Than You'd Think

Last Updated May 25, 2010 4:34 PM EDT

After years of silence, Google (GOOG) has revealed how it shares advertising revenues with people who provide the content on which its Adsense and search services sit, showing that the search giant appears to be in charge of a much larger online advertising empire than previously known. The company said 68 percent of advertising revenue goes to the content provider from AdSense, and 51 percent from search. Those are better rates than Apple (AAPL) offers for iAd, which is a 60-40 split in favor of the content vendor.

A little back-of-the-envelope math shows that last year, Google potentially channeled about $58.3 billion in advertising, making it a much larger player than current estimates suggest.

Google revenues last year were $23.6 billion, 99 percent of which came from advertising, the company said. Google doesn't break down which of its services earn what, and it still hasn't disclosed share breakdowns from content on YouTube or mobile devices.

So let's assume that the 51 percent split is the lowest share Google gives, and 68 percent is its highest (which seems reasonable given that Apple's mobile offering is at 60 percent). The rough average of Google's revenue splits is therefore 59.5 percent -- almost exactly what Apple's is.

If Google's revenues only represent the 40.5 percent cut that it takes from everything spent on its networks, then the total amount of advertising dollars spent through Google last year was $58.3 billion

Google says 47 percent of its revenues are from the U.S. That would put total U.S. spend via Google at $27.4 billion. Recent estimates by eMarketer and IAB put 2009 online advertising spend at $25 billion and $22.7 billion, respectively. Those numbers include all adspend on all companies -- Google, Yahoo, Microsoft, Aol, whoever. On my numbers -- which, granted, are extremely rough -- spend via Google alone eclipses both those estimates.

That would indicate the Web ad universe is a lot larger than we think it is -- not an implausible thought when you consider how many millions of web sites and devices are offering ad space.

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