How would you estimate Google AdSense revenue?
Google- Bina Campos
1. Clarify – Adsense is a service by Google, using Adsense website publishers can display ads to their viewers using Google Ads. Google adsense selects ads that are relevant to your website or viewers.
How does Google make money with Adsense? There is no cost for subscribing to this service so google won’t make any money from subscription. When users click on ads, Google will make money. Our of that Google will pass on some amount to the website publisher who signed up for Adsense.
Scope – is this for US or global? I can calculate for US and extrapolate for global.
Timeframe – revenue in one year?
2. Equation
Google’s Revenue from Adsense in one year = Revenue per add click * # of ads clicked in a year
3. Calculation
Revenue per ad click
Lets say everytime a user clicks a Google ad, Google makes $0.01. Out of this, Google pays 20% to the publisher on whose website the ad was displayed. So Google makes $0.008 per ad click
# of ads clicked in a year = # of ads clicked in a day per user * 365*# of daily users * revenue per ad
# of ads clicked in a day per user = # of ads displayed * CTR
Assume CTR = 0.5% for display ads
# of daily users = 130M
| Population | 320,000,000 | % users who browse daily | Potential Users who browse daily | Users with Internet (70%) |
| 0-12 | 48,000,000 | 0% | 0 | 0 |
| 12-18 | 24,000,000 | 50% | 12,000,000 | 8,400,000 |
| 18-65 | 188,000,000 | 80% | 150,400,000 | 105,280,000 |
| 65-80 | 60,000,000 | 40% | 24,000,000 | 16,800,000 |
| 320,000,000 | 130,480,000 |
# of ads clicked in a day per user = 200*0.5% = 1Assume a user browses the internet 5 times a day and visits 10 webpages on average each time. That’s 50 web pages. Lets say each webpage can display up to 4 ads, thats a total of 200 ads displayed in a day per user.
# of ads clicked per day ~110M assuming 4 ads per page
| Frequency (per day) | Pages per visit | Total pages | Total displayed ads per day | Ads clicked per day (0.5%) |
| 2 | 5 | 84,000,000 | 336,000,000 | 1,680,000 |
| 5 | 10 | 5,264,000,000 | 21,056,000,000 | 105,280,000 |
| 2 | 5 | 168,000,000 | 672,000,000 | 3,360,000 |
| 5,516,000,000 | 22,064,000,000 | 110,320,000 |
Google’s daily revenue from Adense in US ~$1.1 M assuming $0.01 per ad click, which is ~400M per year.
Google pays a percentage to the publishers, assuming that’s 10%, Google’s revenue from Adsense in US is ~390M per year
If US is ~45% to 50% of total revenue, then Google can make ~800M per year from Adsense
4. Sanity check
390M per year in US is ~$1 per use, this means the user clicks about 100 ads per year. Seems like a reasonable number to me