13 ms·

Long-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with

by tma-1 10y ago

Long-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. Some worrying figures[1]: * US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015. * Ad blocking grew by 41% globally in the last 12 months. * US ad blocking grew by 48% to reach 45 million active users in 12 months up to June 2015. [1] https://blog.pagefair.com/2015/ad-blocking-report/ https://blog.pagefair.com/2015/ad-blocking-report/

magicalist 10y ago
> More than 90% of their profits come online advertising actually, it looks like this may be the first quarter where their non-advertising revenue was over 10% of their total revenue. $2,071 out of $20,091 (in millions). Growing 24% YoY isn't too shabby, either.
- rtpg 10y ago
  that's about 1.8% monthly growth
- sidko 10y ago
  Because search tends to have a significantly higher margin than Google's other offerings (say Cloud), even if non-advertising revenue reaches 10% of total revenue, the non-advertising profit is below 10%
eva1984 10y ago
And...if YTB starts anti-ad-block because they are desperate...what do you think?
adevine 10y ago
But the majority of that online advertising income comes from ads on their own search results pages, not from adsense ads.
- eru 10y ago
  One can still block those. My adblocker does by default.
  - afarrell 10y ago
    Why? Isn't that the exact time when you would want to see ads?
    - Someone 10y ago
      In my case, I guess 90% of searches either include the term "stack overflow" or "Wikipedia", or get augmented by them when an initial search doesn't give desired results. I can't see how such searches might produce adverts that would help answer my questions. It's very rare that I search for a product and even then, chances are that I add "review" or "sucks" (can work fine in combination with a specific product; negative reviews often tell you more about a product than positive ones, just like a requirements document or a product road map becomes a lot better if one includes things that people might the product to do that it will not do)
    - eru 10y ago
      It would be the time when I'm hating apps the least, yes. Usually, the companies whose ads I'd want to click on rank high in the organic search results, anyway.
      - eru 10y ago
        Ads, not apps..
  - petra 10y ago
    If push comes to shove Google can do any number of things to fight against ads. For example, it started, silently, without explaining,for some who remove ads in youtube, to stop the video in the middle. Heck even creating a credible enough rumor that blocking google search ads seriously degrades results could have a material impact.
rhino369 10y ago
>More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. If I were Tim Cook, I'd be at least a little tempted to update iOS and OSX to include adblocking on by default.
- Steko 10y ago
  Google would have no problem forcing ads into the main SERP hose if it came to Microsoft or Apple blocking by default.
  - adventured 10y ago
    Any attempt to do that, would result in two likely outcomes: 1) It would create a bad product, according to Google's own prior statements on the matter. 2) It would encourage government authorities to look even closer at potential abuses toward consumers (ie what kind of consumer harm is occurring, if any, when a monopoly search provider prevents attempts by consumers to use ad blockers; that would have to be resolved legally). European authorities would likely pounce on such a move immediately, looking for any opening by mistake to go after the company, given how they've handled Google thus far.
    - patrickaljord 10y ago
      Yeah but the alternative would be losing all their revenues.
- r00fus 10y ago
  Isn't that what happened in iOS9 with the Safari Content Blocker framework?
  - lotu 10y ago
    The OP sugggesting updating iOS so if ushered did nothing ads would be blocked.
- bobdole1234 10y ago
tommoor 10y ago
They seem to be doing a pretty good job of diversifying? The profits haven't caught up yet, granted, but this is a company with many of the smartest people in the world working on future game-changing tech and sinking a ton of money into research. Still bullish here :)
- adventured 10y ago
  They are doing a poor job of diversifying. Those side businesses are producing a small amount of revenue. It would be one thing if the profits hadn't caught up, the real problem is there isn't much in the way of sales to begin with. I see no example business of theirs that will get them even moderately diversified off of online advertising in the next five years. And I'm not speaking of technology Alphabet is messing with - what business are they looking to capture in self-driving cars for example? I see no example of an actual business there so far. Granted, this only matters in the scenario in which their online advertising business contracts meaningfully (whether due to ad-blockers or otherwise). If ad-blockers gain usage at an accelerating pace, Google is unlikely to have much time to diversify (and that takes a long time when you're talking $20b in sales to off-set). So far Google has been flaky, disorganized and unprincipled about developing other real businesses. They should have a dramatically larger cloud services business for example, but they handled that incompetently and ceded years and tons of ground to AWS. Essentially Google has to spend the next several years praying that ad-blockers don't rapidly bring their spigot of online ad dollars to an end. That's a real bad position to have put yourself in if you're a $536 billion corporation.
  - omarchowdhury 10y ago
    Advertising will just change form.
  - diffraction 10y ago
    I block ads because "native" ad producers like Taboola, Outbrain, Revcontent, ... you get the point. These advertising companies like to show NSFW content at the end of news articles at some sites. Therefore I block ads for the same reason I block pornographic sites. This was pretty liberating because before "native" ads I felt a pang of guilt for blocking ads. If Google wants to stop ad blockers they should hide sites that use these obnoxious "native" ad networks.
bpodgursky 10y ago
If adblocking becomes a serious problem for Google, they can (and will) block the relevant extensions in Chrome. Also, mobile chrome (increasingly dominant worldwide) doesn't, and won't, have adblocking. Yes, I'm ignoring numerically insignificant installs like rooted hosts redirects, firefox mobile, opera, etc. Those aren't going to impact revenue.
- mwfunk 10y ago
  That's also not good for them, because it grants a potentially huge advantage to their competitors who do support adblocking. That may or may not be a long term big deal, but it's a risk.
- patmcc 10y ago
  That's an excellent way to get people to switch away from Chrome. I love Chrome, use it all the time, but if I can't have any adblocking? No thanks.
  - simula67 10y ago
    Do you use Firefox over Chrome mobile ?
    - eru 10y ago
      I do.
    - makomk 10y ago
      Firefox's mobile version is kind of crap. It's one of the few places where they could do with copying Chrome a bit more than they currently are.
  - thomasz 10y ago
    They could just use an js adblock blocker like wired&co. Sure, there are ways around that, but thats way too much trouble for the average user
tcbawo 10y ago
You can't block ads with streaming services or other captive audiences. They seen well positioned in this regard.
- skrowl 10y ago
  It's also difficult to block in app ads without root / jailbreak
- bigdubs 10y ago
  UBlock origin blocks youtube ads, if that's what you were referring to by "streaming services".
  - jrockway 10y ago
    It doesn't seem to block the channel talking about how you need to support them on Patreon, or how Bose is giving away a new headset, or whatever.
lotu 10y ago
This is part of why so much is going in app it is much harder to block ads in apps.
wstrange 10y ago
The more people that use ad blocking, the more important directed search becomes. Which Google is pretty good at. I don't think ad blocking represents armageddon for Google.
jacobwcarlson 10y ago
> https://blog.pagefair.com/2015/ad-blocking-report/ https://blog.pagefair.com/2015/ad-blocking-report/ Can anyone shed light on the relatively widespread adoption of ad blocking software in Poland and Greece? A cursory search doesn't indicate any particular bandwidth or cost constraints.
- disgruntledphd2 10y ago
  My guess is TV rights. All of the streaming sites have a very heavy ad-load, and are nigh-unusable without an ad-blocker. Poland and Greece probably aren't particularly profitable markets, so translations/releases may be delayed, creating demand for the streaming services and as a consequence pushing up ad-blocking.
albasha 10y ago
Good luck blocking mobile ads :/ Unlike desktop, they control Android and its ecosystem. They just won't make it easy to block them.
bitmapbrother 10y ago
Amusing to say the least. They made nearly 2 Billion more than Microsoft in income this quarter and their Play store made more than 2 Billion in revenue. Ad blocking isn't really a concern. When that day does materialize then Google will simply circumvent them.
jfoster 10y ago
They can definitely have more of an effect against ad blocking if they choose to: - Disable ad blocking in Chrome - Block browsers blocking ads from Google search - Release tools for AdSense that block content when ad blockers are detected The downside to this would be in the backlash that would follow, but they will resort to these measures if ever their business is truly threatened by ad blocking.
WWKong 10y ago
Does ad blocking work with search ads and YouTube ads?
- ChristianBundy 10y ago
  Yep.
  - WWKong 10y ago
    Just tried a google search with adblock enabled. Still getting ads on top of search results. Chrome on OSX.
    - anonred 10y ago
      Use uBlock Origin. AdBlock allows "acceptable ads" through by default, which include Google SERP ads.
vonklaus 10y ago
If anyone knows how the numbers break down, it is google. Luckily, they own 3-10 working backups of the entire user facing internet and pretty key infrastructure that the internet depends on. So, if in the event that people start blocking advertisements they would probably: > Restructure as a Meta Company balkanizing google search to limit anti-trust lawsuits. > Allow other sectors of the company to start using that data to create businesses. > Invest heavily into infrastructure and try to promote google as the main infrastructure for developers to build on. Probably really engage the community by doing open source projects for data analysis & machine learning (their core competency) and provide tutorials, data hosting and google service integration so developers get into their ecosystem. > continue investing in Android for the 1.3 Billion people using > continue delivering chrome for the 40% internet users using it > Consider monetizing the nearly 1 Billion active gmail users. However, if they were really smart, they would release eyeglasses that cost 2-4000 dollars and have less computing power than a calculator. This will be a gamechanger.
tamana 10y ago
Google makes their money primarily from users clicking on ads they want to follow. Ad blockers don't affect that. Not everyone hates ads.
meritt 10y ago
You understand the online advertising encompasses vastly more than the standard IAB Ad Units your plugins block, right? Those barely scratch the surface of the behemoth that lies beneath. There's a reason the vast majority of display ads are so shitty these days: it's because only the bottom of the barrel still utilize them.
sspiff 10y ago
Figure 1 and 3 are duplicates.
coldtea 10y ago
>Long-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. Some worrying figures And yet frequently the press glorifies Google's "innovation" and is bullish on Apple, that has like 4-5 different sources of income (the PCs, the phone, the tablet, the watch, the tv, the cloud services, the app store, the music store) -- with more than one of them earning more profits than the whole of Alphabet put together.
- bitmapbrother 10y ago
  Let's be realistic. The only real profitable revenue stream for Apple is the phone and app store. >with more than one of them earning more profits than the whole of Alphabet put together. Which would those be with the exception of the phone? As for those other other revenue streams you mentioned - they're just a blip on the radar (tvOS and cloud - really?)
  - coldtea 10y ago
    >Let's be realistic. The only real profitable revenue stream for Apple is the phone and app store. The App Store, while big in itself, is insignificant to Apple's revenue stream. Which makes me think you are not really familiar with how it breaks down. Apple's revenue is ~230 billion. Alphabet is around ~80 billion. iPhone revenues were 68 of that, the iPad is 9%+, the Mac another 9%, services is 8% and other products (Apple TV, Apple Watch) around 5%. You could kill the iPhone today and still have a killer company the size of Alphabet. As for the "blip of the radar" regarding the Apple cloud services: http://appleinsider.com/articles/16/04/20/as-a-standalone-company-apples-services-business-could-be-worth-as-much-as-260b-piper-jaffray-says http://appleinsider.com/articles/16/04/20/as-a-standalone-co...

by tma-1 10y ago

magicalist 10y ago

> More than 90% of their profits come online advertising actually, it looks like this may be the first quarter where their non-advertising revenue was over 10% of their total revenue. $2,071 out of $20,091 (in millions). Growing 24% YoY isn't too shabby, either.

rtpg 10y ago
that's about 1.8% monthly growth
sidko 10y ago
Because search tends to have a significantly higher margin than Google's other offerings (say Cloud), even if non-advertising revenue reaches 10% of total revenue, the non-advertising profit is below 10%

eva1984 10y ago

And...if YTB starts anti-ad-block because they are desperate...what do you think?

adevine 10y ago

But the majority of that online advertising income comes from ads on their own search results pages, not from adsense ads.

eru 10y ago
One can still block those. My adblocker does by default.
- afarrell 10y ago
  Why? Isn't that the exact time when you would want to see ads?
  - Someone 10y ago
    In my case, I guess 90% of searches either include the term "stack overflow" or "Wikipedia", or get augmented by them when an initial search doesn't give desired results. I can't see how such searches might produce adverts that would help answer my questions. It's very rare that I search for a product and even then, chances are that I add "review" or "sucks" (can work fine in combination with a specific product; negative reviews often tell you more about a product than positive ones, just like a requirements document or a product road map becomes a lot better if one includes things that people might the product to do that it will not do)
  - eru 10y ago
    It would be the time when I'm hating apps the least, yes. Usually, the companies whose ads I'd want to click on rank high in the organic search results, anyway.
    - eru 10y ago
      Ads, not apps..
- petra 10y ago
  If push comes to shove Google can do any number of things to fight against ads. For example, it started, silently, without explaining,for some who remove ads in youtube, to stop the video in the middle. Heck even creating a credible enough rumor that blocking google search ads seriously degrades results could have a material impact.

rhino369 10y ago

>More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. If I were Tim Cook, I'd be at least a little tempted to update iOS and OSX to include adblocking on by default.

Steko 10y ago
Google would have no problem forcing ads into the main SERP hose if it came to Microsoft or Apple blocking by default.
- adventured 10y ago
  Any attempt to do that, would result in two likely outcomes: 1) It would create a bad product, according to Google's own prior statements on the matter. 2) It would encourage government authorities to look even closer at potential abuses toward consumers (ie what kind of consumer harm is occurring, if any, when a monopoly search provider prevents attempts by consumers to use ad blockers; that would have to be resolved legally). European authorities would likely pounce on such a move immediately, looking for any opening by mistake to go after the company, given how they've handled Google thus far.
  - patrickaljord 10y ago
    Yeah but the alternative would be losing all their revenues.
r00fus 10y ago
Isn't that what happened in iOS9 with the Safari Content Blocker framework?
- lotu 10y ago
  The OP sugggesting updating iOS so if ushered did nothing ads would be blocked.
bobdole1234 10y ago

tommoor 10y ago

They seem to be doing a pretty good job of diversifying? The profits haven't caught up yet, granted, but this is a company with many of the smartest people in the world working on future game-changing tech and sinking a ton of money into research. Still bullish here :)

adventured 10y ago
They are doing a poor job of diversifying. Those side businesses are producing a small amount of revenue. It would be one thing if the profits hadn't caught up, the real problem is there isn't much in the way of sales to begin with. I see no example business of theirs that will get them even moderately diversified off of online advertising in the next five years. And I'm not speaking of technology Alphabet is messing with - what business are they looking to capture in self-driving cars for example? I see no example of an actual business there so far. Granted, this only matters in the scenario in which their online advertising business contracts meaningfully (whether due to ad-blockers or otherwise). If ad-blockers gain usage at an accelerating pace, Google is unlikely to have much time to diversify (and that takes a long time when you're talking $20b in sales to off-set). So far Google has been flaky, disorganized and unprincipled about developing other real businesses. They should have a dramatically larger cloud services business for example, but they handled that incompetently and ceded years and tons of ground to AWS. Essentially Google has to spend the next several years praying that ad-blockers don't rapidly bring their spigot of online ad dollars to an end. That's a real bad position to have put yourself in if you're a $536 billion corporation.
- omarchowdhury 10y ago
  Advertising will just change form.
- diffraction 10y ago
  I block ads because "native" ad producers like Taboola, Outbrain, Revcontent, ... you get the point. These advertising companies like to show NSFW content at the end of news articles at some sites. Therefore I block ads for the same reason I block pornographic sites. This was pretty liberating because before "native" ads I felt a pang of guilt for blocking ads. If Google wants to stop ad blockers they should hide sites that use these obnoxious "native" ad networks.

bpodgursky 10y ago

If adblocking becomes a serious problem for Google, they can (and will) block the relevant extensions in Chrome. Also, mobile chrome (increasingly dominant worldwide) doesn't, and won't, have adblocking. Yes, I'm ignoring numerically insignificant installs like rooted hosts redirects, firefox mobile, opera, etc. Those aren't going to impact revenue.

mwfunk 10y ago
That's also not good for them, because it grants a potentially huge advantage to their competitors who do support adblocking. That may or may not be a long term big deal, but it's a risk.
patmcc 10y ago
That's an excellent way to get people to switch away from Chrome. I love Chrome, use it all the time, but if I can't have any adblocking? No thanks.
- simula67 10y ago
  Do you use Firefox over Chrome mobile ?
  - eru 10y ago
    I do.
  - makomk 10y ago
    Firefox's mobile version is kind of crap. It's one of the few places where they could do with copying Chrome a bit more than they currently are.
- thomasz 10y ago
  They could just use an js adblock blocker like wired&co. Sure, there are ways around that, but thats way too much trouble for the average user

tcbawo 10y ago

You can't block ads with streaming services or other captive audiences. They seen well positioned in this regard.

skrowl 10y ago
It's also difficult to block in app ads without root / jailbreak
bigdubs 10y ago
UBlock origin blocks youtube ads, if that's what you were referring to by "streaming services".
- jrockway 10y ago
  It doesn't seem to block the channel talking about how you need to support them on Patreon, or how Bose is giving away a new headset, or whatever.

lotu 10y ago

This is part of why so much is going in app it is much harder to block ads in apps.

wstrange 10y ago

The more people that use ad blocking, the more important directed search becomes. Which Google is pretty good at. I don't think ad blocking represents armageddon for Google.

jacobwcarlson 10y ago

> https://blog.pagefair.com/2015/ad-blocking-report/ https://blog.pagefair.com/2015/ad-blocking-report/ Can anyone shed light on the relatively widespread adoption of ad blocking software in Poland and Greece? A cursory search doesn't indicate any particular bandwidth or cost constraints.

disgruntledphd2 10y ago
My guess is TV rights. All of the streaming sites have a very heavy ad-load, and are nigh-unusable without an ad-blocker. Poland and Greece probably aren't particularly profitable markets, so translations/releases may be delayed, creating demand for the streaming services and as a consequence pushing up ad-blocking.

albasha 10y ago

Good luck blocking mobile ads :/ Unlike desktop, they control Android and its ecosystem. They just won't make it easy to block them.

bitmapbrother 10y ago

Amusing to say the least. They made nearly 2 Billion more than Microsoft in income this quarter and their Play store made more than 2 Billion in revenue. Ad blocking isn't really a concern. When that day does materialize then Google will simply circumvent them.

jfoster 10y ago

They can definitely have more of an effect against ad blocking if they choose to: - Disable ad blocking in Chrome - Block browsers blocking ads from Google search - Release tools for AdSense that block content when ad blockers are detected The downside to this would be in the backlash that would follow, but they will resort to these measures if ever their business is truly threatened by ad blocking.

WWKong 10y ago

Does ad blocking work with search ads and YouTube ads?

ChristianBundy 10y ago
Yep.
- WWKong 10y ago
  Just tried a google search with adblock enabled. Still getting ads on top of search results. Chrome on OSX.
  - anonred 10y ago
    Use uBlock Origin. AdBlock allows "acceptable ads" through by default, which include Google SERP ads.

vonklaus 10y ago

If anyone knows how the numbers break down, it is google. Luckily, they own 3-10 working backups of the entire user facing internet and pretty key infrastructure that the internet depends on. So, if in the event that people start blocking advertisements they would probably: > Restructure as a Meta Company balkanizing google search to limit anti-trust lawsuits. > Allow other sectors of the company to start using that data to create businesses. > Invest heavily into infrastructure and try to promote google as the main infrastructure for developers to build on. Probably really engage the community by doing open source projects for data analysis & machine learning (their core competency) and provide tutorials, data hosting and google service integration so developers get into their ecosystem. > continue investing in Android for the 1.3 Billion people using > continue delivering chrome for the 40% internet users using it > Consider monetizing the nearly 1 Billion active gmail users. However, if they were really smart, they would release eyeglasses that cost 2-4000 dollars and have less computing power than a calculator. This will be a gamechanger.

tamana 10y ago

Google makes their money primarily from users clicking on ads they want to follow. Ad blockers don't affect that. Not everyone hates ads.

meritt 10y ago

You understand the online advertising encompasses vastly more than the standard IAB Ad Units your plugins block, right? Those barely scratch the surface of the behemoth that lies beneath. There's a reason the vast majority of display ads are so shitty these days: it's because only the bottom of the barrel still utilize them.

sspiff 10y ago

Figure 1 and 3 are duplicates.

coldtea 10y ago

>Long-term, I am not very bullish on Google/Alphabet. More than 90% of their profits come online advertising, something that can be easily blocked for life with a simple browser extension/plugin. Some worrying figures And yet frequently the press glorifies Google's "innovation" and is bullish on Apple, that has like 4-5 different sources of income (the PCs, the phone, the tablet, the watch, the tv, the cloud services, the app store, the music store) -- with more than one of them earning more profits than the whole of Alphabet put together.

bitmapbrother 10y ago
Let's be realistic. The only real profitable revenue stream for Apple is the phone and app store. >with more than one of them earning more profits than the whole of Alphabet put together. Which would those be with the exception of the phone? As for those other other revenue streams you mentioned - they're just a blip on the radar (tvOS and cloud - really?)
- coldtea 10y ago
  >Let's be realistic. The only real profitable revenue stream for Apple is the phone and app store. The App Store, while big in itself, is insignificant to Apple's revenue stream. Which makes me think you are not really familiar with how it breaks down. Apple's revenue is ~230 billion. Alphabet is around ~80 billion. iPhone revenues were 68 of that, the iPad is 9%+, the Mac another 9%, services is 8% and other products (Apple TV, Apple Watch) around 5%. You could kill the iPhone today and still have a killer company the size of Alphabet. As for the "blip of the radar" regarding the Apple cloud services: http://appleinsider.com/articles/16/04/20/as-a-standalone-company-apples-services-business-could-be-worth-as-much-as-260b-piper-jaffray-says http://appleinsider.com/articles/16/04/20/as-a-standalone-co...