Tuesday Jan 24, 2012 by Larry Kim - Founder and CTO, WordStream
On the heels of Google’s “disappointing” earnings announcement last Thursday – they generated a whopping $37.9 billion in revenues in 2011 – we conducted our own analysis to determine the top 10 industries that spent the most money on Google advertising last year. The results are summarized in our Google revenues infographic, also shown below (click the image to enlarge).
We think that the results of our analysis reveal some surprising insights into the current state of the US economy – read on for more commentary.
Advertising revenues from these 10 industries accounted for 60% of Google’s 2011 revenues. The remaining $14.4 billion in advertiser revenues came from other industries. (Just 4% of Google’s revenues came from non-advertising-related sources.)
Because everyone uses Google, and 3 million businesses advertise on Google, we can learn a lot about the state of the US economy from these results. Here are some of my conclusions.
Despite the recent financial meltdown, the finance and insurance industries were the biggest spenders of the year – and rest assured, finance companies wouldn’t be spending billions on Google advertising if they weren’t turning a profit from it. Insurance and loan companies were especially keen to acquire new customers through PPC – that’s because these industries make a killing off each new client.
Despite a weak economy and high unemployment, Americans are still splurging on vacations and buying lots and lots of stuff (and we’re willing to refinance our homes and apply for new credit cards, despite bad credit, in order to get it). Amazon alone spent over $55 million on PPC ads in 2011, and that’s just what they spent on AdWords.
Unemployment hovered around 9% in 2011. Lots of people took this opportunity to seek out more education, and online degree programs are reaping the benefits. The University of Phoenix spent even more on AdWords than State Farm, the biggest spender in the Finance & Insurance industry.
A housing recovery is nowhere to be seen in Google’s 2011 revenues. Americans overwhelmingly spent more on fixing up the house or apartment they already owned rather than buying up.
Business and industrial spending was soft compared to other industries and relative to its overall share of the GDP. It seems that corporations are sitting on a lot of cash right now and are slow to invest.
Overall, from what I can see, a billion people are doing a billion searches on Google every day, looking to buy stuff, financial products, or to improve their skills. So while I’m no economist, my own prediction is that the US economy will be OK in 2012.
I compiled these revenue estimates by using our own trillion-keyword database and the Google Keyword Tool to determine the top 10 million most popular search queries in 2011, as well as their average cost per click prices as paid by advertisers. I used WordStream PPC technologies to categorize the huge keyword list by industry, such as "Finance & Insurance," then applied a model that weighed the relative percentages of each industry’s revenue (keyword volume * average cost per click) to Google’s 2011 revenues, excluding non-advertising revenues. The top five advertisers in each industry and their estimated spend was obtained by using data from SpyFu.com, then applying the same categorization analysis.
If your business operates in any of these industries, there’s enormous potential for you here. Pay-per-click advertising is especially effective for businesses that:
2012 will be huge for Google advertising. Look for particular growth in areas including:
If you’re already advertising on Google and would like to do better, get a free, instant audit of your AdWords account with the AdWords Performance Grader. It evaluates how well your account adheres to best practices and compares your performance to other advertisers with similar budgets.
What do you think about our data? Any surprises?
Larry Kim is the Founder & CTO of WordStream in Boston, MA. You can find this post, as well as additional content on WordStream's blog located here. You can also follow Larry on Twitter (@larrykim) by clicking here.