Google Has The Business Model To Beat -- Sucking The Life Out of Competitors And Old Meda

Henry Blodget, a Wall Street analyst during the dot-com heyday who now runs Silicon Alley Insider, published a report Friday that examines Google's advertising growth in 2007 against those of 17 online and traditional media rivals, including Yahoo, Microsoft, Time Warner, Disney, Viacom, CBS, and Clear Channel.

From the story:

"The year-over-year growth of revenue (in 2007) on Google.com (U.S.)--approximately $2 billion--was more than twice as much the growth of ad revenue in all of the offline media companies in this sample combined. This is such an amazing fact that it bears repeating: A single media property, Google.com (US), grew by $2 billion. All the offline media properties owned by the 13 offline media companies above, meanwhile--all of them--grew by about $1 billion."

Here are the statistics on Google's growth

• Total US ad revenue across all 17 companies grew 9% from 2006 to 2007, from $53 billion to $58 billion

• Online ad revenue grew 28%, from $14 billion to $18 billion.

• Offline grew only 3%, from $39.5 billion to 40.6 billion. This was helped significantly by the inclusion of affiliate fees and (and global revenue) at CBS, Viacom, and News Corp.

• Online ad revenue grew by $4 billion.

• Offline ad revenue--in all other media--grew by $1 billion.

So advertising revenue is flowing online at a frantic rate. That's the whole story? No. Let's look at how that online revenue breaks down.

• Online ad revenue grew 28%, or $4 billion.

• Online ad revenue at Google grew 44%, or $2.7 billion.

• Online ad revenue at Yahoo, Microsoft, and AOL grew only 15%, or $1.3 billion.

• Google captured 2X as much revenue as its closest three competitors combined.

The confirms it, Google has got the business model to beat at this point. Because right now Google is sucking the life out of old media and greatly shifting ad spend towards its direction.