Determining what metrics actually matter in video are hard, especially when you’re a content producer. I’d explain specifically what I mean, but I just had an idea for a pretty in-demand service/product.
The point of the post (let’s for bloody once try to keep a post under 13,000 words) is this: Between January 1 and April 30th, 2007, the total traffic on WatchMojo.com was greater than all of the traffic throughout 2006 (according to Google Analytics). Not too shabby.
Digg this Blog
Share on Facebook
WatchMojo on Twitter
WatchMojo on YouTube
Add to Favorites
WatchMojo NewsletterThe Final Days of Google is a very interesting take on the likelihood that Google will let its size get to it, no doubt. But much the same way that neither Yahoo! nor Microsoft nor IBM died, but stabilized, the stronger likelihood is that Google will continue to grow, it is, after all, a company that is only 11 years old.
If you look ahead at what can happen over the next decade, chances are that the doomsayers won’t be right, especially when you consider the broader macro-level trends. Sit back and just think:
The year is 2020, the overall US advertising market grew at an average rate of 2.5% from 2007 to 2020, growing from $250B to $400B. Madison Avenue retained some of its aura, especially after MSFT acquired WPP, Oracle integrated Omnicom, and Apple scooped up Publicis. Oh, Interpublic and Havas merged.
Each new behemoth bought a block on Madison Avenue to set up their advertising HQ here. Well, the US HQ anyway, advertising is a truly global venture now, but more on that in a bit.
IN 2020: SIZE OF ADVERTISING MARKET IN THE US
The online advertising market grew at an average growth rate of 25% from 2007 to 2013, from 5.9% of total billings up to 25%. In 2013, the total ad market in the US represented a $338B market, with the digital component getting nearly $85B.
From 2013 to 2020, with the continued growth of advertising, online advertising soared to $100B in the US alone, though it never got more than 25% of the total advertising pie.
IN 2020: US VS. WORLD
The US now accounts but for one third of total advertising. The breakdown is as follows:
- US: 30%
- Asia: 30%
- Europe: 30%
- With South America, Australia and Africa getting the remaining 10%.
As such, the total global advertising market is now a $1.333 Trillion market and coming in at 25% of that, the global online ad market is now a staggering $333B marketplace.
In the US, Google gets 15% of all ad dollars (down from 25% in 2006) - 15% x $100B - or $15B.
Around the World, Google gets 15% of all ad dollars - 15% x $233B - $35B.
This continued the trend started in the early 2000s when Google began to generate more revenues from non-US markets.
In all, Google generates $50B in total ad sales in 2020.
Its hiring spree slowed down once it hit 20,000, and it maintained 25% profit margins, netting shareholders nearly $12.5B in earnings.
In 2020, over 24 years after being founded, Google trades at around 30 times earnings.
Its market cap?
$375B.
[Sounds absurd, but 24 years after being founded, Microsoft boasted a market cap nearly $500B in 1999… today it has settled down to $300B.]
Related Posts:
“The biggest innovation in the advertising industry during the last 70 years before digital was color TV,” says Ajaz Ahmed, chairman and co-founder of independent digital marketing agency AKQA. “The agency of the future will be half a software company and half an entertainment company because that’s the new landscape.”
I love that line.
More, from an article off WSJ:
Marketers — seduced by the perception that Internet ads offer a more cost-effective way to reach specific consumers and measure results — have shifted more of their ad budgets online. Internet advertising has grown into a $16.9 billion industry — 5.9% of the $285 billion total U.S. advertising market in 2006, up from 4.7% in 2005, according to the Interactive Advertising Bureau.
I thought we were at 7-8%, but it looks like online ads are only at 5.9%… people spend on average 25% of their time online. I recall seeing 7-8% earlier this year when I was putting together our business plan.
“According to McCann Worldgroup, Internet ad spending as a percentage of the total for all American media will reach 7.1% in 2006 and 10.4% percent in 2009. Using the $285.1 billion figure for total American advertising, and the 7.1% share for Internet advertising, then this pegs the size of online advertising at $20.2421 billion, and this excludes paid search.”
With the IAB and PWC announcing final 2006 revenue figures at $16.9B, cleary McCann Worldgroup’s 7-8% - which would have meant $20B in revenue for digital - was too aggressive. But the flip side is that this means it’s still really, really early in the game.
Do the math. 5.9% of ad budgets = $16.9B. Total advertising market in the US alone: $285B. Looking at the following, you can see the upside:
The assumption is that total advertising in the US will grow 2.5% per annum, with online advertising growing 25% per annum, and capped off at 25%, which will match people’s consumption of online media as a proportion of total media consumption time.
I do not think it will be uniterrupted growth, of course, this was the mistake of most analysts in the first wave of the Web, but right now, given broadband penetration and more and more real marketers shifting ad dollars online, there’s no reason to assume the overall assumption is more right than wrong. Lastly, this is US only.
Are prices for digital assets rising? Yes, no doubt. But do you see much of a letdown given that disequilibrium? Probably not in the mid to long term, not by a long shot.
Walt Disney has been a gentle giant, so to speak, online. I actually chose Walt Disney as 2006’s Media Stock of the Year, just edging out my former company News Corp., and frankly, I think it’s well-positioned to do well over the next few years, largely thanks to its digital operations, which are growing at 30% a year, and already clocking in over $1.5B in revenues in 2007. Yes, that’s right. I was floored. Floored, because that is 3 times what Viacom and / or News Corp. are aiming to hit.
Mind you, the $1.5B figure is misleading (not in an unethical or illegal way), because:
Last year, it was e-commerce–including the sale of merchandise and travel packages–that accounted for most of the group’s revenue at $800 million. But, while Web media and services–including paid and ad-supported content–brought in just $350 million last year, Wadsworth said it is this segment that will drive digital revenue growth in the future as the company aggressively pursues opportunities to monetize its vast content base across new media platforms.
(…)
Subscription revenue is a huge component of Disney’s strategy, and the company plans to increase use of free ad-supported services to lure consumers into subscription deals, according to Wadsworth.
“[Content] will be free to a certain point,” he said, explaining Disney’s up-sell strategy of baiting consumers with free content.
This is surprising when you hear/read Disney and think Mickey Mouse. Truth is, Walt Disney’s Internet and mobile properties include ABC.com, ABCNews.com, Disney.com, ESPN.com, ESPN360, and Mobile ESPN. That is a massively successful collection of very strong brands that advertisers trust and look forward to working with.
You know how much I like tables, so let’s compare some numbers, for fun:
Some notes, details, explanations, regarding:
- First off, to see how we derived NBCU’s value - since it is a part of GE - click here.
- Actually, first off should have been this: “multiple of price to digital revenue” is just something I added for your information, I don’t really think the market actually cares about this.
- TWX: $8B is AOL’s revenue for 2006, it does not include all of TW’s online assets, like Time.com, SI.com, etc. Which could be anywhere from $200M to $500M.
- DIS: notwithstanding AOL’s contribution to TW, clearly Disney is in a league of its own.
- NWS: very aggressive with M&As, MySpace clearly a large slab of ad inventory, but not yet the leader Murdoch wants it to be in digital.
- VIA: Ditto. Philip Dauman comes in as CEO of Viacom, time will tell if Viacom’s digital strategy galvanizes, but the fact is, at $500M in digital revenues in 2007, it is on par with News Corp. on an absolute run rate and twice the relative contribution.
- NBCU’s digital revenues are in fact for 2006, and not 2007.
- CBS’ digital revenue is a guesstimate based on a comment made by CBS President Les Moonves. CBS is also a wild card, because trigger-happy dealmaker (we say that in a nice way, since we’re personally trigger-happy dealmaker wannabe’s ever since our finance days) Quincy Smith has made a lot of small but interesting moves that could pan out paying off. In fact, in a small, modest way, we’re molding the WatchMojo.com Web TV Syndication Network after CBS’s Interactive Network… again, I stress, adjusting for the relative size and leverage of the respective firms. I’m surprised I said all of that without cracking up.
- We understand eyeballs matter, but we did not include size of online audiences because let’s fact it, traditional media companies don’t trade as a function of eyeballs, but revenues, EBITDA and net income.
- Last but not least, it will be interesting to see a) when NWS/NBCU’s NewSite launches and b) what, if impact it will have on revenues, earnings etc.
Sources of digital revenue figures:
:: Viacom Aiming for $500M in Digital Revenues in 2007.
:: Walt Disney to Generate $1.5B in Digital Revenues in 2007.
:: News Corp. Aims for $500M in Digital Revenues in 2007.
:: NBC aims for $1B in Digital Revenues by 2009, up from $300M in 2006; NBCU revenue.
:: CBS Digital Revenues: “Hundreds of Millions of Dollars”.
:: AOL Revenues for 2006: $8B.
Read more about the Mediapost that led us down this post.
I was writing a post on “which media company was king of digital media,” when I realized it was hard to compare the media companies because NBCU was a part of GE.
GE is arguably the most valuable diversified company, but while there is great merit in the conglomerate strategy, many voices have always called for GE to spin off some assets, namely NBCU.
The company that brings good things to life:
- operates in a myriad of different industries: we’re talking jet engines to power generation, financial services to plastics, and medical imaging to news and information.
- boasts a market capitalization of $386B.
- has an enterprise value (mkt cap + debt - cash) of $815B.
- has a company-wide price to sales ratio of 2.36.
- has a company-wide price to earnings ratio of 18.
- generated $163B in 2006 sales.
- generated EBITDA of $34.55B.
- generated net income of $21B.
But, many are calling for GE to shed its media assets, NBC Universal.
How much is NBCU worth? Not what could it get in an auction. But what’s its intrinsic value?
Well, there’s many ways to look at that, but using comparables of other large media companies, here is the analysis:
Would you pay more or less than $32B for NBCU. And if NBCU were independent, would you then merge it with another media (old or new) company?
:: Related: which media company is king of digital media?
YouTube is latest to join our video syndication network (officially at least):
Today we’re announcing another important milestone in the history of WatchMojo.com, which is a small step for us but a major leap for mankind - at least for the online video producing variety…
As Google and YouTube continue to shape the future of online video as the premier destination to watch and share original videos, WatchMojo.com is very proud to announce our new relationship with the leader in online video as a professional content company. We’ve worked with YouTube informally since our launch in 2006 and have always viewed the platform as a great distribution and marketing channel, and with this new agreement we look forward to creating value for all stakeholders.
This is just the latest example of the expansion of the WatchMojo.com Web TV Syndication Network, as YouTube officially joins other major distribution channels like Joost, NBBC, Roo, GoFish that carry WatchMojo.com’s vast library of short, entertaining and informative clips on fashion, travel, cars, video games and much, much more.
Here’s our old user page on YouTube and the new one on YouTube.
Expect many more such agreements to come.
