How much are users $Worth$ to Google?

[rumblepup]

I always wondered this, and I haven't really found any information on this, so I'm wondering what you guys think.

In terms of dollars, how much is 1 Google user worth to Google? In other words, I use Google, everyday. What do I,as a user represent to Google in terms of money from any type of revenue.

Do I represent 2 dollars a day? Or 10 dollars a year, or 50 dollars a month?

I'm trying to figure this out because of all the user-centered moves Google is planning and implementing in the future. Free wireless broadband for one. If that model grows, as I think it should, Google will have a tremendous advantage. What if they just start giving away both wireless as well as 56k, or even broadband? That positions them to do a bunch of stuff that they can make even more money on.

Look at it this way, McDonalds and Burgerking and all the other food joints have combo meals or cheap buy one get one free burger deals. Why? So you will buy their soda. They make almost nothing on a burger, but make BIG TIME money on the soda.

So apply the same principal to Google, which looks like something similiar is going to happen. In this case, their giving away connectivity, to get you to click or buy, what?

How much am I worth to Google?

[Mel]

In terms of cash, virtually nothing since all most all of Googles income is from advertising partners, but since that advertising makes money because of the eyeballs that Google can provide there must be some correlation.

In October Comscore reported that Google had nearly 90 million unique vistors so perhaps someone can base some figures on that.

[janeth]

Originally Posted by rumblepup

In terms of dollars, how much is 1 Google user worth to Google? In other words, I use Google, everyday. What do I,as a user represent to Google in terms of money from any type of revenue.

I guess it would depend on how many paid ads you click on in a day. (-:

[crankydave]

Let's see...

Advertising revenue accounts for no less than 98% of their income.

For the nine months ended Sept 05 their revenue was $4.21B

Their net profit for than same period was 25.9%

$4.21B x 0.98 x 0.259 = $1.0686B

$1.0686B ÷ 9 ÷ 90M = $1.3193 a month per unique visitor.

That would make each unique vistor worth $15.83 a year. (approximately)

Dave

[dburdon]

I like Crankydave's attempt to measure value per user. I guess the weakness in any valuation of this sort is that nobody signs up. I recall that at the height of the mobile (cell) phone boom, companies were changing hands at $10,000 dollars per subscriber. I was paying just £80 ($140) per year for the phone and an inclusive 100 minutes per month. I never went over. So in pure revenue terms -without applying a discount - it would have taken 71 years a 5 months to recoupe the $10,000.

In essence, all these valuations rely on averages. Rumblepup needs to workout how many pay per click and banner ads he clicks on and what Google receives in earnings or commissions.

[Thoma]

Looks like crankydave answered the question perfectly.

[Mel]

well yes.... if every one of the users clicks on adwords ads but since I never click on them someone else must be worth $30 per year.

[crankydave]

Originally Posted by Mel

well yes.... if every one of the users clicks on adwords ads but since I never click on them someone else must be worth $30 per year.

Yes, I should have qualified my answer with average.

Dave

[pemburung]

Not sure if all the figures are right here. The October report from Comscore (which I haven't seen) quoted says "90 million visitors." Over what period? Crankydave assumed it was over a month, as it seemed from the original post. However, that would mean 1.08 billion unique visitors per year. One-sixth of the world's population. On-line on Google? Perhaps. But even if so, after less than 6 years at that rate(allowing for deaths) they would be relying on children less than 6 years old for new, unique visitors. Not noted as a major internet ad-clicking user group. Moreover, this calculation should have begun pretty much with Google's start. So, in theory, by now there are very few unique visitors available, if any. I'm not going to do the math, but available unique visitors is a series along the lines of (world's population of 6.5 billion - unique visitors month 1), (6.5 billion - unique visitors month 1 - unique visitors month 2), etc. If 90 million was the figure for one month after about 84 months, and assuming a reasonablly smooth curve that is probably logarithmic in nature, it would seem that most of the world has been used up already.

I doubt though that even the 90 million figure does represent unique people, as implied in Dave's calculation, in any case. For starters, I would think that a large percentage of visitors would access from both home and work/school, reducing the number of real pople, although these two locations would be seen as "unique visitors." On the other hand, a family of six using the same computer would be seen as one unique person, as would a library computer.

Most importatnly, and most in line with reality, is that is could easily be that everyone who uses
Google does so every month, the statistical period used by Comscore it seems. If this were the case, then Google's total user base would be 90 million (the truth probably lies somewhere in between 90M and 1080M). In this case, the crude figure, with no allowance for multiple use of the same address, or single users using multiple addresses, would be closer to $140 per year. So, we have a range of $16 to $140 per year per person.

So, Rumblepup, you may be worth more than you think.

[crankydave]

Originally Posted by pemburung

Not sure if all the figures are right here. The October report from Comscore (which I haven't seen) quoted says "90 million visitors." Over what period? Crankydave assumed it was over a month, as it seemed from the original post. However, that would mean 1.08 billion unique visitors per year. One-sixth of the world's population. On-line on Google? Perhaps. But even if so, after less than 6 years at that rate(allowing for deaths) they would be relying on children less than 6 years old for new, unique visitors. Not noted as a major internet ad-clicking user group. Moreover, this calculation should have begun pretty much with Google's start. So, in theory, by now there are very few unique visitors available, if any. I'm not going to do the math, but available unique visitors is a series along the lines of (world's population of 6.5 billion - unique visitors month 1), (6.5 billion - unique visitors month 1 - unique visitors month 2), etc. If 90 million was the figure for one month after about 84 months, and assuming a reasonablly smooth curve that is probably logarithmic in nature, it would seem that most of the world has been used up already.

I doubt though that even the 90 million figure does represent unique people, as implied in Dave's calculation, in any case. For starters, I would think that a large percentage of visitors would access from both home and work/school, reducing the number of real pople, although these two locations would be seen as "unique visitors." On the other hand, a family of six using the same computer would be seen as one unique person, as would a library computer.

Most importatnly, and most in line with reality, is that is could easily be that everyone who uses
Google does so every month, the statistical period used by Comscore it seems. If this were the case, then Google's total user base would be 90 million (the truth probably lies somewhere in between 90M and 1080M). In this case, the crude figure, with no allowance for multiple use of the same address, or single users using multiple addresses, would be closer to $140 per year. So, we have a range of $16 to $140 per year per person.

So, Rumblepup, you may be worth more than you think.

The 90 million represents a monthly figure for unique visitors.

The November numbers according to Comscore are...

87.849M unique visitors for Google.com
90.889M unique visitors for all Google sites

The January 2005 numbers according to Nielson//NetRankings are...

70.998M unique vistors for Google Search

These are unique visitors for the time frame stated as defined by Comsat and Nielson//NetRankings.

If you take the January figure, then the yearly figure would be $20.07 per unique vistor per year.

Again this figure repesents an average, is approximate, and based on figures collected from Niellson//NetRatings, Comsat, and Googles 10Q SEC filing.

pemburung... Your range is at best a wild guess.

Dave

[pemburung]

Maybe I wasn't clear. Rumblepup's original question was " How much am I worth to Google?" Not, "how much is the average visit to Google's website worth to Google?" The former refers to a person, the latter to a visitor to a website, from a computer address. To get to the 90 million or so each month each address is counted only once regardless of how many actual visit there are from it, and the clock is started again each month, I assume. As I said, if it is interpreted as not starting again, then in 2005 at these figures approximately 1/6 of the world's entire population would click on Google; the year before, about the same; the year before, a little less. I don't believe that over the last three years half of the entire world's population has clicked on Google.

Rumblepup mentioned several time frames; I think what he is trying to get at (correct me if I am wrong, R), is the concept referred to as "the life of the client." DBurdon also took the meaning this way. This treats a customer as a unique entity, and the business looks at the profit from the entity, rather than the profit from a sale. Most catalog companies operate this way, depending on repeat business for their profitability; this is why they work so hard to retain customers. In this case we have to look at Google "entity customers", not Google website visits. And, as we don't know how many of a given month's visitors also return the following month, in this particular exercise we need to make a best guess. Mine would be that most people who use google do so regularly (many on this forum now apparently excepted!), and so the monthly unique use would not be a particularly small proportion of the total unique use. So, I used a range, going from "one month's unique visitors closely reflects the total unique visitors", to Dave's original "every month's unique visitors are truly unique, and so the monthly figure is 1/12 of the annual figure". It's not a wild guess, just not very accurate - factor of nearly 10. But then, withoug true unique visitors, we can't be accurate, and the dreaded average doesn't mean much either. Don't forget, if 12 women are nursing, and each is married, those 24 parents have an average of one lactating breast each. I think I'd go broke creating a company based on a nursing uni-bra.

[crankydave]

Originally Posted by pemburung

Maybe I wasn't clear. Rumblepup's original question was " How much am I worth to Google?" Not, "how much is the average visit to Google's website worth to Google?" The former refers to a person, the latter to a visitor to a website, from a computer address. To get to the 90 million or so each month each address is counted only once regardless of how many actual visit there are from it, and the clock is started again each month, I assume. As I said, if it is interpreted as not starting again, then in 2005 at these figures approximately 1/6 of the world's entire population would click on Google; the year before, about the same; the year before, a little less. I don't believe that over the last three years half of the entire world's population has clicked on Google.

Rumblepup mentioned several time frames; I think what he is trying to get at (correct me if I am wrong, R), is the concept referred to as "the life of the client." DBurdon also took the meaning this way. This treats a customer as a unique entity, and the business looks at the profit from the entity, rather than the profit from a sale. Most catalog companies operate this way, depending on repeat business for their profitability; this is why they work so hard to retain customers. In this case we have to look at Google "entity customers", not Google website visits. And, as we don't know how many of a given month's visitors also return the following month, in this particular exercise we need to make a best guess. Mine would be that most people who use google do so regularly (many on this forum now apparently excepted!), and so the monthly unique use would not be a particularly small proportion of the total unique use. So, I used a range, going from "one month's unique visitors closely reflects the total unique visitors", to Dave's original "every month's unique visitors are truly unique, and so the monthly figure is 1/12 of the annual figure". It's not a wild guess, just not very accurate - factor of nearly 10. But then, withoug true unique visitors, we can't be accurate, and the dreaded average doesn't mean much either. Don't forget, if 12 women are nursing, and each is married, those 24 parents have an average of one lactating breast each. I think I'd go broke creating a company based on a nursing uni-bra.

A few problems with your reasononing...

• 1. You have no idea how Comsat and Nielson//NetRankings come up with unique visitors count. You have no idea what they factor in and factor out, or allow for in their count, if anything. You are only guessing.

• 2. The number of people using multiple locations (increasing unique visitors count) could be exactly offset by the number of different people clicking from the same location (decreasing unique visitors). Factoring anything plus or minus is a wild guess.

• 3. Your correllations to the averages and with the averages are flawed because you overlook that they are averages and treat them as exact counts as well as equating "unique" with "new". Two different concepts. As dburdon pointed out, people don't sign up so you can't know exactly how many different people. You extrapolate the averages from the knowns not the unknowns.

• 4. My use of 90M unique visitors was used as the average and I did not reason there were 90M new visitors every month for an entire year. This is part of your misuse of the averages. You can't simply add the numbers when the count is restarted every month. If you'll note, my math broke down profit to a 1 month average then divided it by one months unique visitors not the other way around.

I don't know how or if Google looks at a value per user. If they happen to be, my bet is on them looking at the value per known and not the unknown. P&L's don't make assumptions.

Dave

[pemburung]

P&Ls may not use assumptions, but projections do. And all business plans and business development are built on projections, which is also the topic of the original post. Which also used user, not unique visitor. Yes, it's easy to calculate some amount per unique visitor, the unique click. But as I said, I wasn't thinking this was what Rumblepup meant, nor DBurdon in his response. No, I don't know how the unique visitor was calculated, but if it is the same as the stats for my websites - which is what I think unique visitor derives from - then I do, as do others. We also used to use unique caller, but again was time frame dependent. Dave, in your response, your part 1 said I had no idea how they calculated unique visitors, then in part 2 you talk about a possible aspect of the calculation, where such aspect as presented by you supports your view. Seems a bit both ways to me.

However, that being said, this is supposed to be a forum, a place of discussion and learning, not an arena, although sometimes I wouldn't know that from the tenor and detail of some of the responses everywhere. So, until Rumblepup comes back and clarifies his question, then it's $15.38 or whatever the figure per unique visitor (click) per year, and probably in the range of $15 to $140 per year per actual human user, if we allow that one year is the most reasonable timespan calculable. If we use three years, it's different, perhaps a range of $45 to $50 per human user. Don't even ask how I got that figure.

[crankydave]

Originally Posted by pemburung

However, that being said, this is supposed to be a forum, a place of discussion and learning, not an arena, although sometimes I wouldn't know that from the tenor and detail of some of the responses everywhere.

You're right. So how exactly did you reach the 10.176M actual human users in one year? This would be the number needed for your top figure of $140 per actual human user.

Dave

[pemburung]

Originally Posted by pemburung

Most importantly, and most in line with reality, is that is could easily be that everyone who uses
Google does so every month, the statistical period used by Comscore it seems. If this were the case, then Google's total user base would be 90 million (the truth probably lies somewhere in between 90M and 1080M). In this case, the crude figure, with no allowance for multiple use of the same address, or single users using multiple addresses, would be closer to $140 per year. So, we have a range of $16 to $140 per year per person.

So, if every month the 90 million are the same as the year before, the annual income of:

"That would make each unique vistor worth $15.83 a year"

that is the revenue from 90 million people for an entire year, as they just repeat for the total clicks of 1080 million; if in fact the 90 million are truly unique, meaning an annual 1080 million unique visitors per year, then we have 12*15.83 = approx $184; I took a bit off as I figured in an overestimate based on multiple users of the same address; totally arbitrary I'll admit. Not allowing for this, the figure is the full $184 per year.

So that's the range; $15.83 to $184 depending on how many unique users there are in a year; 90 to 1080 million.

But as I also said, complicated by the fact that in the previous year(s) some of any current year's users originally popped up, or were carry-over from the year(s) before that.

So it just depends on which figure is the best guide for any given plan (as Rumblepup said in his original post) - life of user or unique click in any given month. Short term or long term sale? Low-cost-of-supply unit (high mark-up soda, black hat scaper site) or high-cost-of-supply (Dburdon's phone; content-rich ever-changing hand-written 500 page website, our actual phonelines that we use; Ford's idea of giving away his Model T if he could get a contract with the owner on parts and and labor for repairs and maintenance.)

[blinded]

average is not satisfied. couse 1 user use googgy one a month another 100 times per month. its a diff value.

[honarparvar]

[quote="pemburung"]... However, that would mean 1.08 billion unique visitors per year. One-sixth of the world's population. On-line on Google? Perhaps. But even if so, after less than 6 years at that rate(allowing for deaths) they would be relying on children less than 6 years old for new, unique visitors.

Hi, Sorry I know dave may have replied you before, but unique visitors won't die after once visiting google! they'd propably surf google and click the ads next months. you may find some coefficients for converting unique visitors per month to per year. but the co-efficient would be something less than 12! it depends on how many users surf google rarely (2 times in a year for example) if all of 90M surf google at least one time each month, the coefficient would be exactly 1.
regards,
Emad Honarparvar

+98 912 149 6126
emad[at]irxp.com
www.honarparvar.com

[crankydave]

Originally Posted by pemburung

So, if every month the 90 million are the same as the year before, the annual income of:

"That would make each unique vistor worth $15.83 a year"

that is the revenue from 90 million people for an entire year, as they just repeat for the total clicks of 1080 million; if in fact the 90 million are truly unique, meaning an annual 1080 million unique visitors per year, then we have 12*15.83 = approx $184; I took a bit off as I figured in an overestimate based on multiple users of the same address; totally arbitrary I'll admit. Not allowing for this, the figure is the full $184 per year.

So that's the range; $15.83 to $184 depending on how many unique users there are in a year; 90 to 1080 million.

But as I also said, complicated by the fact that in the previous year(s) some of any current year's users originally popped up, or were carry-over from the year(s) before that.

Your math is really messed up. More users means less money per user not more. Let's use your 1080M (1.08B) number. Replacing it in my equation above this is what you get...

$4.21B x 0.98 x 0.259 = $1.0686B

$1.0686B ÷ 9 ÷ 1080M = $0.1099 a month per unique visitor.

That would make each unique vistor worth $1.32 a year. (approximately)

Second, to determine an average, you add the monthly numbers together and then divide by the number of months. You're skipping the divide part and just adding. This is giving you a completely erroneous number because you're counting repeat users multiple times. If the 90M was an ongoing yearly count, the number would only change by the difference between new visitors using google and exisiting visitors not using google. This difference was 21.9% between January and November.

If Google happened to have 575M unique visitors in November instead of 90M, using your math, you'd come up with 6.9B unique visitors in one year. More unique visitors then there are people on the planet.

Let's take the January and November numbers I used...

90.899M + 70.998M ÷ 2 = 80.949M unique visitors per year (average and approximate) based upon the 2 month snapshot.

Using this number in my equation you get...

$4.21B x 0.98 x 0.259 = $1.0686B

$1.0686B ÷ 9 ÷ 80.949M = $1.4668 a month per unique visitor.

That would make each unique vistor worth $17.60 a year. (approximately)

Originally Posted by pemburung

So it just depends on which figure is the best guide for any given plan (as Rumblepup said in his original post) - life of user or unique click in any given month. Short term or long term sale? Low-cost-of-supply unit (high mark-up soda, black hat scaper site) or high-cost-of-supply (Dburdon's phone; content-rich ever-changing hand-written 500 page website, our actual phonelines that we use; Ford's idea of giving away his Model T if he could get a contract with the owner on parts and and labor for repairs and maintenance.)

This makes no sense at all when it comes to the discussion. None.

Dave

[pemburung]

Emad, the second of your points was just what I was saying - that perhaps the 90 million per month also equals the annual use, as most users use Google every month. As you say, a coefficient of one.

I'm not suggesting users die after using google (that's reserved for some websites), but if "unique visitor" is considered to be "unique user", then each month has to come up with an additional 90 million new users. So after one year, that's 1080 million users have been used up, of the world's population. That means that after 6 years, everyone in the world has already used google, so all that'a now available is people just being born. Ok, there are a few deaths along the way, and the births each year interferes with the numbers, but this was a "point of absurdity" development of the argument, and I was not concerned with accuracy as far as that aspect went. It was just to show that "unique visitors" are not really that, but are just unique visitors for that month, when the clock starts again. And, as you say, those visitors probably return the next month, meaning the true "unique visitors" - the actual user base - is closer to the 90 million figure, and hence the total 9-month profit should be divided by something closer to that, not the 9-month profit divided by 9 and then by 90 million.

[crankydave]

Originally Posted by pemburung

And, as you say, those visitors probably return the next month, meaning the true "unique visitors" - the actual user base - is closer to the 90 million figure, and hence the total 9-month profit should be divided by something closer to that, not the 9-month profit divided by 9 and then by 90 million.

Lets do this...

9 month net profit = $1.0686B

Let's divide that by 90M unique visitors.

$1.0686B ÷ 90M = $11.8733 per unique visitor for 9 months.

Now, how are we going to figure out how much per unique visitor for a year? How about if we divide the 9 month total by 9 to come up with a monthly figure...

$11.8733 ÷ 9 = $1.3193 per unique visitor per month.

Now, since there are 12 months in a year, if we multiply the monthly figure by 12, this will give us the yearly figure...

$1.3193 x 12 = $15.8316 per unique visitor per year.

Again, these figures are based upon averages, are approximate and rounded.

Dave

[pemburung]

Dave, that's right, I multiplied where I should have divided. Never do math late at night. However, the point is still the same - the range is now just reversed, from $1.32 per year to $15.83 per year, depending on the meaning of "unique visitor."

I think by now we're all pretty much agreed that the monthly unique visitor figure is a very rough approximation of the annual unique visitor figure, and a rough approximation of the life of user - the original question I believe - figure.

So, sorry Rumblepup, you're maybe worth even less.

However, it's a very useful thought. Each new user is worth $15 to Google, per year. How many new users would it take to justify, say, $10 million investment in wireless access? Approximately 2/3 million (Dave, pls check my math again!) That is, 2/3 million people would need to come on board purely due to the presence of wireless, just to break even if the life of the system was one year. If the life of the system was 10 years (I'm ignoring maintenance, tax breaks, etc here), then just 67,000. Probably a doable figure in a city of 2 million, but would those savvy enough to have both the equipment and desire to use wireless connectivitiy already be using Google?

So what does this tell us, again using R's thought about wireless? Possibly three things. Google considers competition from the other SEs significant enough that it needs to invest this to stay in front - there's no or little additional monetary benefit, but it's a stop loss program. Secondly, G has new product that it can deliver to new wireless users, which will flow over to other users, increasing the per user return. Thirdly, there isn't new product, but the increase in users will justify increases in current product charges to buyers, same as print circulation.

Or, of course, all three.

[honarparvar]

Originally Posted by pemburung

However, it's a very useful thought. Each new user is worth $15 to Google, per year. How many new users would it take to justify, say, $10 million investment in wireless access? Approximately 2/3 million (Dave, pls check my math again!) That is, 2/3 million people would need to come on board purely due to the presence of wireless, just to break even if the life of the system was one year. If the life of the system was 10 years (I'm ignoring maintenance, tax breaks, etc here), then just 67,000. Probably a doable figure in a city of 2 million, but would those savvy enough to have both the equipment and desire to use wireless connectivitiy already be using Google?

seems you're gonna agree on the matter! I think there's a point you have ignored, though you certainly know that. even for a visitor based company like google (in oposition to b2b businesses like verisign etc) the revenue model is not that simple to be analyze with number of customers. for example you have missed data mining advantages, branding or speculations. to be more clear, maybe google gains 10% more when uses larger font size in its text ads without any change in their visits, and may lose 5% of its incoming if stops orkut, though it
may include 2 or 3 million of its users (out of 10 million orkut users) and maybe cost of a service like orkut is more than this 5%! or data mining added value services: can't google tell nike or levi's where most of their fans live? even with their cell numbers he can! or which countries are more interested in TV programs, as a consultant to McDonalds so they can invest more on TV ads over the region. and these services are just feed with visitors but not directly.

thank you all, I've really enjoyed the forum :)
Emad Honarparvar

+98 912 149 6126
emad[at]irxp.com
www.honarparvar.com

[pemburung]

Agreed, Emad; the point about data mining and other b2b type product (which are also print techniques as well, of course) is valid, but sort of applies across the board to all increases in customer base; I just ignored the effects of simply more brand recognition, tectonic flow due to numbers etc other than saying G could charge more for services, a common result of greater reader base. However, the address thing is interesting, and very likely a hugely important aspect. So G will have not only clusters of geographic location, but also close-up photos of the houses. Can you imagine the powerpoint presentation to potential business customers: "Here's what the houses look like for this data group. See how they all like rose bushes? What about a directed campaign for rose fertilizer..... also, #3415 needs repainting, others are of the same age, time for a housepainter campaign"

[rumblepup]

I wanted to let this post run as far as it would go. 15 days of no new posts, I guess the subject wore out.

From what I gather. Users, as individuals or groups, represent a Marketing Number I like to call RPCA. Revenue Per Consumer Average.

Now, there's other numbers we have to gather, like COCA, Cost Of Customer Acquisition, and CRC, Customer Retention Costs, but ACRONYMS will eventually drive you batty.

But I think I got my answer. 1 user represents about 10 dollars per year to Google. If they can add new Qualified users, they will make 10-15 bucks per user for a year.

Soooooooo. If Google invests in the Free Wireless, giving away ACCESS for USERS, maybe that margin increases. AND, if that margin increases, what are other ways of increasing them.

Maybe, a small service fee for using a hosted office suite maybe? Or some other service that is really beneficial and the cost is minimal. Let's say, for a fee of 5 dollars every three months, people get to use their own Word Processing Program from anywhere in the world. 5 dollars is nothing, but on the scale of Google users, 90 Million, and maybe a third pay ONCE for it, thats

90M X .33 = 29700000

29700000 X 5.00 = 148,500,000

Hmmmm. Between 10 and 20 million dollars in investment to get 148 Million.

Wow.

See what I mean JellyBean?

[crankydave]

My thoughts briefly on wireless...

In the not too distant future, wireless will be simply another service provided by your city, village or town like garbage pick up. They will solicit bids from providers and whether or not you use it or how often you use it, you'll get the bill in the mail or be paying for it through tax revenues.

Dave

Hmmmmmmm... actually this might make for an interesting new topic and discussion. WWW = World Wide Wireless :)