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I got curious about this and wanted to spitball some numbers. According to a Google search, Google's average user "conducts 3-4 searches each day." Nobody goes
by bryans 5y ago
I got curious about this and wanted to spitball some numbers. According to a Google search, Google's average user "conducts 3-4 searches each day." Nobody goes into details, so we don't know if those include subsequent searches or the average number of pages they looked at -- though I think we can assume that would be pretty close to 1, as most people are going to find what they're looking for in the first few results.
Let's say the average searches per day is 4 and they are general enough queries to be showing ads, of which there are an average of 3 per page. It would be a mix of CPM and clicks, but each placement will average out to roughly $0.007 in revenue. That's 360 ads per month resulting in ~$2.50 per user.
Of course, that doesn't include the specific overhead of brokering the ads or developing and maintaining such a bizarrely complicated system, and it's safe to assume their margins are at most 20-30%. So, after expending all of that effort in creating this anti-privacy, anti-consumer, anti-competitive system that's rigged against both the advertisers and users, they're making a whopping $0.75/mo per search user.
Which is all to say that if search were simply search, then they could: charge $10/year for an ad-free and privacy-focused service, drastically simplify their entire infrastructure, reassign the ad support staff toward much-needed consumer issues, and actually be making more money in the process. However, this doesn't include Maps or other services, which is how they convert that $0.75/mo search user into a $10/mo ecosystem addict (or $1,000/mo supporter of content creators).
Search is the method for directing traffic where they want it to go, and the trick is to also be making money from all of those places, with even more profitable ads or salable products. I think any search engine will struggle with this when it inevitably grows beyond its core product, because the alternative is a mess of different companies, products, APIs and methodologies that barely work together -- moral high ground wages aren't exactly an ingredient for explosive, cohesive and industry-competitive innovation.
- ascagnel_ 5y agoA couple of thoughts on this: - You're completely discounting the overhead of running a $10/mo service, not to mention the cost of acquisition. - Google and other free-to-use search engines aren't going away in this scenario, so this hypothetical paid search engine will need to "compete with free" - If you're competing with free, you need to offer a better experience than the free service. Cutting the BS sounds good, but is it $10/mo better than the free service? Finally, the biggest issue is that, with the ad model, the minimum Google earns per user is $0.75/mo, but they could make notably more off of negotiated deals for big purchases (eg: Google could sell placements against high-dollar things like real estate for more money) or could just get a windfall from high-frequency months; with your model, the maximum the business can ever earn is $10/mo.
- bryans 5y ago> You're completely discounting the overhead of running a $10/mo service, not to mention the cost of acquisition. You're entirely misreading what I said. They already have the service and that is an existing cost. To have the ads is an additional cost (and a massive one at that), which could be entirely replaced with a virtually zero-cost purchase form. That's less overhead, not equal -- and certainly not more. Also, I specifically referenced the overhead in my comment, so it's amazing that you would claim I'm disregarding it. > Google and other free-to-use search engines aren't going away in this scenario, so this hypothetical paid search engine will need to "compete with free" I literally used Google as an example of how they could make more money without ads, and I didn't say anything at all about them only having a paid option. Also, my conclusion was that paid can't compete with free, so you just reiterated my point in an attempt to "prove me wrong." > If you're competing with free, you need to offer a better experience than the free service. Cutting the BS sounds good, but is it $10/mo better than the free service? I said $10/year, not $10/mo. Is $1/mo worth it from a user perspective to remove ads and privacy invasive features? The universal answer to that for any employed individual is yes (even if they've been tricked into thinking otherwise), because all of these companies have repeatedly proven that they can't be trusted to monetize free services without acting incredibly harmful in the process. > Finally, the biggest issue is that, with the ad model, the minimum Google earns per user is $0.75/mo, but they could make notably more off of negotiated deals for big purchases (eg: Google could sell placements against high-dollar things like real estate for more money) or could just get a windfall from high-frequency months; with your model, the maximum the business can ever earn is $10/mo. I said that $0.75 was the average, not the minimum, and that was already based on an average of all of the higher and lower term rates. If users are contributing $0.75/mo on average via ads, then a switch to paying $1/mo averages out to more revenue. That's how averages work. And again, my conclusion was that paid doesn't actually beat free from the amoral business perspective, so all you're doing is agreeing with me while also trying to tell me I'm wrong (based on things nobody said).