With Google for the first time
disclosing its mobile ad revenue on an annualized basis, you have to wonder if the search giant didn't want to wait until it had a nice round number ($1 billion) to report. As Sean Parker tells
Facebook founder Mark Zuckerberg in "The Social Network," "A million dollars isn't cool. You know what's cool? A billion dollars."
By that logic, Google just made mobile advertising cool.
Against the larger backdrop of Google's overall annual revenue, which is on track to hit about $30 billion this year, the mobile portion still looks like peanuts. Even so, $1 billion is nothing to
sneeze at, and Google CEO Eric Schmidt sounded a bullish note on the company's third-quarter earnings call
about Android as the means for delivering growing mobile search ad revenue and profit.
"So, if you think of mobile as platform, as phone plus tablet, plus all of the other things, we hope to
become the leading platform in that space and we are doing it with an open-source approach," he said. Nielsen reported this month Android had become the most popular smartphone operating system among
people who bought high-end phones in the last six months.
Google didn't break out mobile search and display revenue, but it's safe to assume the vast majority is coming from search, with the
number of mobile queries increasing five-fold in the last two years. Schmidt also said Android users access search twice as much as anything else, boosting related ad sales.
Ross Sandler, an
analyst at RBC Capital, said the investment bank had previously estimated Google's mobile revenue at $650 million -- $500 million in search and $150 million in display. But that the total is actually
higher isn't surprising, because mobile is "growing significantly," he said.
With so little information to date about mobile revenue of any kind, the Google figure immediately becomes an
industry benchmark and will hopefully prod other companies, including Apple, Yahoo, Microsoft and AOL, to be more forthcoming about their own mobile businesses. Then again, they may be more reluctant
if their own mobile numbers haven't yet come close to hitting the 10-figure level.
Even competitors, though, may be likely to hail Google's $1 billion in mobile ad revenue as "validating" the
segment, as they said about the company's $750 acquisition of AdMob and brands lavishing big dollars on iAd (while privately bashing the Apple mobile ad platform). For the time being, what looks valid
is Google's mobile search business.