How Google Became a $2 Billion Advertiser
Google this: The titan of search last year doubled its global ad and promotion spending to $1.5 billion. Factor in 2011 ad spending for just-acquired Motorola Mobility Holdings, and Google is now a $2.1 billion global advertiser.
Estimated U.S. ad spending for Google and Motorola topped $1 billion in 2011, placing the combined company No. 34 on Ad Age 's ranking of the 100 Leading National Advertisers. This marks Google's debut on the list.
Google is a big ad seller; advertising accounted for 96% of 2011's $38 billion worldwide revenue. (That percentage will fall with the May 2012 acquisition of $13-billion-revenue Motorola Mobility, which makes mobile devices and other products.)
Google is also a big ad buyer. Google's stated worldwide advertising and promotion spending doubled in 2010 and doubled again in 2011. Ad and promo spending as a percentage of revenue reached 4.1% in 2011, up from 2.6% in 2010 and 1.5% in 2009.
Advertising and promotion represents a growing portion of Google's sales and marketing expenses.
Google's 10-K filing for the year ended December 2011 noted: "We expect that sales and marketing expenses will increase in dollar amount and may increase as a percentage of revenues in 2012 and future periods as we expand our business globally, increase advertising and promotional expenditures in connection with new and existing products, and increase the level of service we provide to our advertisers ... and other partners."
Motorola Mobility, too, has pumped up ad spending, boosting its global ad costs to $560 million (4.3% of revenue) in 2011 from $393 million (3.4% of revenue) in 2010 and $264 million (2.4% of revenue) in 2009.
Combined pro forma 2011 worldwide ad and promotion spending for Google including Motorola Mobility: $2.104 billion, including an estimated $1.005 billion in the U.S.
Google is one of four internet-based companies to make this year's 100 LNA ranking. The other three:
Amazon, whose stated worldwide ad and promotion spending surged 57% to $1.4 billion in 2011, up from $890 million in 2010 and $593 million in 2009. Estimated 2011 U.S. ad spending for the online retailer and marketer of Kindle devices jumped 60% to $778 million.
EBay, which increased its reported worldwide ad spending 21% to $977 million in 2011, up from $808 million in 2010 and $800 million in 2009. Estimated 2011 U.S. ad spending for the e-commerce company rose 24% to $460 million.
Expedia, whose stated worldwide ad spending increased 15% to $796 million in 2011, up from $694 million in 2010 and $622 million in 2009. Estimated 2011 ad spending for the online travel-services company jumped 27% to $461 million. Expedia made its 100 LNA debut in this year's report.