Google forecast to overtake C4 in advertising revenues
By stephendavis on Nov 03, 2006
According to recent forecasts by the media buying agencies Mindshare (owned by WPP) and Initiative (part of the interpublic Group) Google's internet search advertising revenue in the UK is set to overtake Channel Four's 2006 revenues of £800 million. Within 18 months both companies expect it to surpass ITV1, Britain's leading commercial television channel. ITV1 accounted for 90 per cent of the ITV group's £1.63 billion total advertising revenues last year.
Only 20 or so years ago, ITV which was then organised as a group of 13 or so independently owned regional broadcasters was described by media mogul Lord Thompson as a "license to print money" and was able to support many of the same working practices common to Fleet Street newspapers.
According to many commentators, Google and its Adsense performance-based advertising model has become the ad industry's new 'license to print money'. Unlike the commercial television companies, Google is unfettered by the need to create any of its own editorial content to generate audience that can be monetised through advertising. User generated content such as video clips uploaded to YouTube are increasingly driving online traffic.
However, despite several commentators including a lead article in The Economist a few months suggesting that Google's inextirable rise signifies the slow death of conventional advertising, Google Adsense will at some point hit a peak since it is mainly based on classified and direct-response advertising.
Despite all the hype, the latest IPA Bellweather Report published in July estimates that online advertising accounts for just 4% of total marketing spend - up from 3% a year ago. Main media advertising such as television, radio, print and outdoor accounts for 33%, Direct Marketing 27%, Sales promotion 12% and All Other 24%.
Whilst Google Adsense is highly cost effective at generating content proximity based click thrus online, it cannot substitute for the more creative, emotional demand building side of advertising. Without being exposed to the 40 second ads on television of the beautiful people driving beautiful cars down beautiful traffic-free country lanes, online users would not be aware of the brandnames appearing in the right hand column of search results.