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Google Still King of the World

http://www.fool.com/investing/high-growth/2006/05/31/google-still-king-of-the-world.aspx

Tim Beyers
May 31, 2006

Look out fishwraps: A new study by the Interactive Advertising Bureau and PricewaterhouseCoopers found that U.S. Internet advertising grew 38% in the first quarter to a record $3.9 billion. And you know what that means, right? Our future rests withGoogle (Nasdaq: GOOG  ) .

Or does it? Google certainly is hugely influential, but I expected more when I ran the numbers. It turns out that the heavy in search probably earned a still-impressive but hardly earth-shattering 22% of total domestic ad revenue in Q1.

Here's how the math works. According to Google's most recent 10-Q, 58% of its advertising revenue originated in the U.S. during the first quarter. No explicit numbers are given, but multiplying Google's reported $2.23 billion in ad revenue by .58 equals $1.29 billion. Using the same formula for Google's traffic acquisition costs reduces its total applicable TAC to $419 million. Subtracting the two ($1.29 billion-$419 million) leaves $872 million in Q1 U.S. ad revenue, or 22% of $3.9 billion.

That's not to say Google isn't doing well. Consider Q4, for example. Google says in its 10-K that 62% of its revenue originated in the U.S. during the four