February 16, 2006

7 billion, $108 billion. 45 billion, $46 billion.

by at 6:02 PM

No, these aren't the latest bank statements from early Google investors, rather they are Google’s and Yahoo’s monthly page view and market cap statistics. The 7 billion and the 108 billion belong to the big G, and the 45 billion and 46 billion belong to the big Y.

Why do I point these out? Well, to be honest, as a publisher, they kind of jumped out at me. In the month of December, Google, according to comScore Media Metrix, served up 7 billion page views and, as of the date of this post, had a market value of $102 billion. Yahoo, on the other hand, served up a whopping 45 billion page views for the month and was valued at a mere $46 billion.

Hmmmm.

So I dug further. Google and Yahoo earned $1.098 billion and $1.007 billion, respectively, in on-site revenue this past fourth quarter. In other words, for all their hard work of attracting an audience to their site that is literally almost *seven* times that of their competitor, Yahoo brings in $91 million *less* per quarter.

Yikes.

A couple of more swags:

According to Nielson Net Ratings, Google owns about 46% of the search market, Yahoo 23%. So let's do some guess work here...since Google is really only a search site (ok, not really, but for these purposes it's a safe assumption), let's assume that the 7 billion monthly page views mentioned above represented 100% search page views. So, 21 billion search page views for the quarter (7 billion per month for 3 months) earned Google $1.1 billion.

Now, since Google has twice the search market that Yahoo has, that would mean that Yahoo has 10.5 billion on site search page views per quarter. Presuming that Yahoo and Google monetize searches at the same rate, those 10.5 billion searches would bring in $500 million or so. So far, so good.

What that also means is that for the non-search page views for the quarter, all *124 billion* of them, Yahoo earned $500 million or so. Put simply, search pages earn $50 CPM while non-search pages for Yahoo earn an average of about $4 CPM site wide.

Well.

So I guess we’re clear now on why Wall Street values the online search leader at twice that of the online publishing leader.

So where does that leave the rest of us in the publishing world? Is racking up 45 billion page views a month the only way an online publisher can build a big business on the web? What does that say for Web 2.0 and the long tail? Can folks who serve up page views in a de-centralized manner even cover their costs absent a compelling search offering? Will the millions of bloggers who are hoping to strike it rich publishing their daily musings actually earn enough money to pay the electric bills their laptops generate?

Well, maybe. Probably, not right now though. It is going to take continued developments in both technology and business models to successfully morph the current advertiser experience delivered by the publishing world (access to eyeballs) to that delivered by the search world (access to actual leads). Obviously, performance advertising was a great first step in this direction.

Here at Topix.net we think we’ve taken what the next step by using our own technology to further contextualize performance ads. To be certain though, we’re not at search levels of performance. The folks at Google (Adsense) and Yahoo (Yahoo Publisher Network) likewise also making steps in the right direction, as are folks like Kanoodle, Quigo, etc. But as far as I am concerned, the field is wide open. In any event, this type of problem is true opportunity - whoever cracks this code will be sitting on top of a huge market.

The industry wags like to talk a lot about empowering the people, citizen journalism, new media, blogging, the future of publishing, blah, blah, blah…and that’s all well and good. I guess my point is let's not forget that we still have lots of work to do in figuring out how to pay the bills.