How would you estimate Google AdSense revenue?

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How would you estimate Google AdSense revenue?

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Prince Diwakar · Answer 1 · 2019-09-18T09:11:32+0000

This is the type of Google estimation question you can expect in a product manager interview. I'd tackle it like this...Assumptions

Google earns revenue on a sharing basis with publishers
Google Search Ads not counted
Ads displayed on other webpages generates revenue
Google takes 30% commission on each ad clicked

Main Equation

Google Adsense Revenue = #Internet Population x #Ads viewed per year x CTR x CPC x Google's Commission

#Internet Population

Almost 50% of the world's population is connected to the internet. Hence,

Internet Population = 3.5 Billion

----

#Ads viewed per year

Ads counted in AdSense = Ads we watch while viewing any webpage (except Google Search Results)

Power Users = 40% views 20 ads a day

Casual Users = 40% views 10 ads a day

Occasional Users = 20% views 2 ads a day

Avg. ads per day = 0.4x20 + 0.4x10+ 0.2x2 = ~10 ads

Avg ads per year = 350 x 10 = 3500 ads

-----

CTR = 10%

CPC = $0.1

Google's Commission = 30%

Google Adsense Revenue = #Internet Population x #Ads viewed per year x CTR x CPC x Google's Commission

Google Adsense Revenue = 3.5 Bn x 3500 x 0.1 x $0.1 x 0.30

Google Adsense Revenue = $37 Bn per year

Devashish Verma · Answer 2 · 2022-07-17T16:49:14+0000

Clarifying questions
1. Google adsense is used by publishers to promote ad on different websites
2. Are we looking at any specific geography → take for India
3. Should we look at any time period→ revenue per day/week
4. Adsense revenue → is it considered as CTR or views → lets assume→ CTR
5. Adsense revenue → Total number of ads seen daily* CTR* fixed value/ad
6. Can we assumed share of google as sense as 50% in total mkt share –Yes
What we know
1. Population of India → 1200 million
2. Internet penetration → 60%-->
3. We can assume that people use internet primarily on mobile or laptop
Make an equations
1. Internet users * average number of ad seen * CTR* revenue per ad* google’s commission
2. 1200* 60%= 720 million = we can segment these users into different segment
  1. Power users – 10% – > 10 ads a day
  2. Moderate – 30% – 5 ad per day
  3. Occasional – 30 % - 2 ads per day
  4. Rare users– 20% - 0.5 ads per day
3. CTR of 5%
4. Revenue per click – > 0.05 cents - 0.05 USD
Revenue - 720 *(10%*10+ 30%*5+ 30%*2+ 20%*0.5)*0.5= 720*(1+1.5+0.6+0.1)*0.05= 720*(3.2)*5*30%/100= 35 million per day
Using 50% market share = 17.5 million per day= 17.5*365 =6837 million = 6.8 billion ~ 7 billion

SuperUser14 · Answer 3 · 2022-03-23T03:25:16+0000

1. Clarify - Adsense is a service by Google, using Adsense website publishers can display ads to their viewers using Google Ads. Google adsense selects ads that are relevant to your website or viewers.

How does Google make money with Adsense? There is no cost for subscribing to this service so google won't make any money from subscription. When users click on ads, Google will make money. Our of that Google will pass on some amount to the website publisher who signed up for Adsense.

Scope - is this for US or global? I can calculate for US and extrapolate for global.

Timeframe - revenue in one year?

2. Equation

Google's Revenue from Adsense in one year = Revenue per add click * # of ads clicked in a year

3. Calculation

Revenue per ad click

Lets say everytime a user clicks a Google ad, Google makes $0.01. Out of this, Google pays 20% to the publisher on whose website the ad was displayed. So Google makes $0.008 per ad click

# of ads clicked in a year = # of ads clicked in a day per user * 365*# of daily users * revenue per ad

# of ads clicked in a day per user = # of ads displayed * CTR

Assume CTR = 0.5% for display ads

# of daily users = 130M

Population	320,000,000	% users who browse daily	Potential Users who browse daily	Users with Internet (70%)
0-12	48,000,000	0%	0	0
12-18	24,000,000	50%	12,000,000	8,400,000
18-65	188,000,000	80%	150,400,000	105,280,000
65-80	60,000,000	40%	24,000,000	16,800,000
	320,000,000			130,480,000

# of ads clicked in a day per user = 200*0.5% = 1Assume a user browses the internet 5 times a day and visits 10 webpages on average each time. That's 50 web pages. Lets say each webpage can display up to 4 ads, thats a total of 200 ads displayed in a day per user.

# of ads clicked per day ~110M assuming 4 ads per page

Frequency (per day)	Pages per visit	Total pages	Total displayed ads per day	Ads clicked per day (0.5%)

2	5	84,000,000	336,000,000	1,680,000
5	10	5,264,000,000	21,056,000,000	105,280,000
2	5	168,000,000	672,000,000	3,360,000
		5,516,000,000	22,064,000,000	110,320,000

Google's daily revenue from Adense in US ~$1.1 M assuming $0.01 per ad click, which is ~400M per year.

Google pays a percentage to the publishers, assuming that's 10%, Google's revenue from Adsense in US is ~390M per year

If US is ~45% to 50% of total revenue, then Google can make ~800M per year from Adsense

4. Sanity check

390M per year in US is ~$1 per use, this means the user clicks about 100 ads per year. Seems like a reasonable number to me

Rishabh Verma · Answer 4 · 2020-03-26T16:47:13+0000

Assumptions:

1. World Population: 7.5 Billion

2. Pop. Excluding China & Russia (Google is not used there): 5.5 Billion

3. Google's share in the advertisement market in relevant countries: 70%

4. Google's reach : 4 Billion

5. Average searches by a person on Google: 5 times a day = 5*30*12 = 1800 per year

Fermi Calculations:

1. Total average searches per year : 1800*4 Billion = 7200 Billion

2. CTR = 0.05

3. CPC = $ 0.1

4. Total Revenue by AdWords per year = 7,200 B * 0.05 * $ 0.1 = $ 36 B