Welcome To The Googleconomy

At Petsky Prunier’s Spotlight Dinner in New York last night, two dozen digital marketing executives talked about some amazing small companies.  So I talked about an amazing big one:

  • Nine years ago, Google was two guys in a dorm room.  Now it’s a $17 billion global behemoth with a $225 billion market cap.
  • Google’s market cap is:The fifth largest in the United States.Bigger than Wal-Mart, Procter & Gamble, and Citigroup (not saying much)Bigger than Time Warner, CBS, Viacom, and Disney combinedThree times the size of the public ad industry (16 companies)70-times the size of the New York Times…
  • The fifth largest in the United States.Bigger than Wal-Mart, Procter & Gamble, and Citigroup (not saying much)Bigger than Time Warner, CBS, Viacom, and Disney combinedThree times the size of the public ad industry (16 companies)70-times the size of the New York Times…
  • The fifth largest in the United States.
  • Bigger than Wal-Mart, Procter & Gamble, and Citigroup (not saying much)
  • Bigger than Time Warner, CBS, Viacom, and Disney combined
  • Three times the size of the public ad industry (16 companies)
  • 70-times the size of the New York Times…
  • In contrast to the lunatic valuations of the late 90s, Google’s market cap is almost deserved:$1.1 billion of free cash flow in Q3$4.4 billion of free cash flow annualizedFree cash flow multiple of a not-crazy 50XSimilar free cash flow to Wal-Mart
  • $1.1 billion of free cash flow in Q3$4.4 billion of free cash flow annualizedFree cash flow multiple of a not-crazy 50XSimilar free cash flow to Wal-Mart
  • $1.1 billion of free cash flow in Q3
  • $4.4 billion of free cash flow annualized
  • Free cash flow multiple of a not-crazy 50X
  • Similar free cash flow to Wal-Mart
  • Google’s profitability and productivity are, in a word, astonishing Apparent operating profit margin of 50% (on net revenue)Actual operating profit margin on core business of 75%+Annual revenue per employee of $1.1 million (including janitors)Annual free cash flow per employee of $275,000(Exceeding only by Plenty of Fish, which has $3.3 million of revenue per employee)
  • Apparent operating profit margin of 50% (on net revenue)Actual operating profit margin on core business of 75%+Annual revenue per employee of $1.1 million (including janitors)Annual free cash flow per employee of $275,000(Exceeding only by Plenty of Fish, which has $3.3 million of revenue per employee)
  • Apparent operating profit margin of 50% (on net revenue)
  • Actual operating profit margin on core business of 75%+
  • Annual revenue per employee of $1.1 million (including janitors)
  • Annual free cash flow per employee of $275,000
  • (Exceeding only by Plenty of Fish, which has $3.3 million of revenue per employee)
  • Google is 2.5 times the size of its closest competitor (Yahoo), and counting
  • Google’s market share is 50% in the U.S. and 90% in France (a sign of things to come?)
  • In Q2, the major media sub-sectors grew year over year advertising revenue as follows:Outdoor   +13%TV         -1%Print       -5%Radio      -7%Total Offline:  -3% Online Ex Google   +13%Google     +43%
  • Outdoor   +13%TV         -1%Print       -5%Radio      -7%Total Offline:  -3% Online Ex Google   +13%Google     +43%
  • Outdoor   +13%
  • TV         -1%
  • Print       -5%
  • Radio      -7%
  • Total Offline:  -3%
  • Online Ex Google   +13%
  • Google     +43%
  • In Q2, the online share of total U.S. advertising jumped from 25% to 30%.
  • In Q2, Google’s share of total U.S. advertising jumped from 11% to 15%.
  • Since 2002, the major U.S. market indexes have basically doubled.  Here’s how the stocks of some Google competitors have done:New York Times    Then: $40    Now: $18  (Lagged market) Time Warner          Then: $18    Now: $18  (Lagged market) Yahoo                   Then: $30    Now: $30  (Lagged market) News Corp.            Then: $15    Now: $22  (Lagged market) eBay                     Then: $20    Now: $33  (Lagged market)Google                   Then: $85    Now: $730  (Beat market)
  • New York Times    Then: $40    Now: $18  (Lagged market) Time Warner          Then: $18    Now: $18  (Lagged market) Yahoo                   Then: $30    Now: $30  (Lagged market) News Corp.            Then: $15    Now: $22  (Lagged market) eBay                     Then: $20    Now: $33  (Lagged market)Google                   Then: $85    Now: $730  (Beat market)
  • New York Times    Then: $40    Now: $18  (Lagged market)
  • Time Warner          Then: $18    Now: $18  (Lagged market)
  • Yahoo                   Then: $30    Now: $30  (Lagged market)
  • News Corp.            Then: $15    Now: $22  (Lagged market)
  • eBay                     Then: $20    Now: $33  (Lagged market)
  • Google                   Then: $85    Now: $730  (Beat market)
  • Next up?  Mobile, Enterprise, Video.
  • Alas, Google will not become the first $1 trillion company.  That’s PetroChina.

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