September 17, 2014

Each of us is $6 in Google's Pocket; $10 in 2012

We all know that Google doesn’t make Android out of the goodness of its heart; it’s trying to make some money on the deal. And since it’s not selling the OS, that money comes from mobile advertising. Now, an analyst has made a calculation of just how much ad revenue Google is getting from the average Android user, and made a prediction about how that will increase next year.

Analyst Gene Munster of Piper Jaffray figures that Google generated $133 million  from 22.5 million Android users in 2010, good for just under $6 per user per year. By the end of 2012, he’s predicting revenue will rise nearly tenfold to a heady $1.3 billion from six times as many users, which means the average revenue per user would rise to nearly $10.

One of the reasons he expects the revenue per user to rise is Google’s renewed focus on the Market:

“We expect Google’s revamped Android Market will enable users to download apps on Android more easily and could increase monetization per user from in-app advertising over the next two years.”

This is all still chump change compared to Google’s advertising as a whole, which generates $25 per user, and it’s likely that some portion of the growth of mobile ad revenue will be at the expense of non-mobile ad revenue. On the other hand, as smartphone use continues to take off, mobile activity is going to cannibalize non-mobile activity regardless, so it’s smart of Google to get what they can from that trend.

And the prospect of a billion dollars a year means Android users can be assured that Google will continue to put a lot of resources into the OS they “give away for free.”

Sources: Search Engine Land, The Smartphone Wars, Mobile Marketer

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