Two reports are out today on the size of the Internet advertising market. The Interactive Advertising Bureau has a preliminary estimate of $21.1 billion for U.S. Internet ads in 2007, a 25 percent increase over 2006. (For the fourth quarter of 2007, it is estimating $5.7 billion for the size of the industry, up from $5.2 billion in the third quarter).
Meanwhile, the Kelsey Group puts U.S. Internet advertising at $22.5 billion for 2007 (IDC, as previously reported, is at the high end with $25.5 billion).
The Kelsey Group also provides a global estimate of $45 billion for Internet advertising, which is 7.4 percent of the total $600 billion global advertising market. That compares to a 6.1 percent share of global advertising for online ads in 2006. And for what it’s worth (not much) it is forecasting global internet advertising to reach $147 billion in 2012. These forecasts are always wrong, but the 2007 numbers are helpful.
I don’t know if this is causing Google’s stock to drop. Today they were down almost 6%. Their current market cap is roughly 144B which is more than 3x the total market for their industry.
Wow, $21 billion dollars for the entire US – that’s half of what Microsoft has offered for Yahoo! alone. And probably 5% of Google’s market value.
Looks like a lot of catching up to do to keep justifying all these lofty valuations for advertiser-supported services.
Correction – $21b would be ~ 15% of Google’s market cap. Still…
Tough fight is growing among the giants…. $21 billion dollars is a huge growth, will go up with competition.
Let me just check the share price of google…oh yeah, down again.
When shall I buy?
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Google is suffering from a few things:
1) Valuation had gotten ahead of expecations and to a point where it did not support itself.
2) The valuation that was assigned 1-2 months ago was based on 30-35% growth over the next 5 years. Think about that.
3) If they miss their number again (which they did last quarter) that will cause people to completely revise their growth projections, thereby significantly altering the valuation model for this stock.
4) Go look at the number of stocks trading at less than 10x free cash flow. Over the past 2-3 months many great companies have moved into this territory, including some growth stocks. Why would you buy GOOG at $500-600 (25-35x free cash flow) when there are such other great opportunities? The answer is you won’t and that’s why this things is a dog right now.
I’ve posted here before about shorting at $700+ and that this thing would head south at or close to the three’s. I’m happy to say so far i’ve been right and closed out half my position today.
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Goog share price today: $312
The Russian internet advertising market was about 1 percent of global market in 2007 but it doubles every year http://blog.qui...illion-in-2008/
That is absolutely huge. I wonder if there is much more room to grow.
If Kelsey Group’s global estimate of $45bn is correct, then Japan online advertising market accounted for 12.2% or $5.5bn of this amount:
http://analytic...92-in-2007.html
Would 20/20 foresignt reveal these online advertising projections to merely be the tip of the icerberg? What happens as customer behavior continues to evolve? What happens when companies better allign with customers?
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Would 20/20 foresight reveal these online advertising projections to merely be the tip of the iceberg? What happens as customer behavior continues to evolve? What happens when companies better allign with customers?
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Internet advertising is bound to grow. But as consumers are bombarded with ads, there will be a push for non intrusive ads.
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