Monday, March 21, 2011

Google’s YouTube Revenues Will Pass $1 Billion In 2012

YouTube’s gross revenues hit $825 million in 2010, and will reach $1.3 billion in 2011 and $1.7 billion in 2012, according to Citi analyst Mark Mahaney. After stripping out revenue share, the net revenue contribution Google will get to keep from YouTube is estimated to go from $544 million last year to $1.1 billion in 2012.

Mahaney also tracks ads on Youtube’s Topp 100 videos. Currently, 81 percent of YouTube’s Top 100 videos show ads, compared to about 60 percent a year ago.

It wouldn’t take much for local search advertising to become another billion-dollar business for Google. Using an estimate of $16.6 billion for the total local online advertising market in the U.S in 2012, Mahaney estimates Google needs to capture 10 percent of that market to add $1.3 billion in incremental net revenue.

Those are important revenue figures for one reason: Firms the size of Google need new market opportunities generating a billion dollars a year to be worth chasing. That same logic holds for telcos, Cisco and lots of other large firms.

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