[Foundation-l] Left on the Table

[Robert Rohde]

On Fri, Nov 5, 2010 at 4:53 PM, Marcus Buck <me at marcusbuck.org> wrote:
> An'n 05.11.2010 23:44, hett Fred Bauder schreven:
>> How many billions in potential advertising revenue do we leave on the
>> table each year?
>>
>> Fred
>
> According to alexa.com Facebook has a 3-month global pageview share of
> 4.74010%. Wikipedia has 0.52984%. That's about 1/9th. According to
> Wikipedia Facebook made US$800 million in revenue in 2009. 1/9th is
> US$89 million. Of course that's not a realistic number. Just an
> extremely vague approximation of an theoretically possible value.
> Wikipedia has the advantage that our content has very defined topics and
> ads matching the article's topic should be much more relevant and
> interesting to the user than Facebook's ads. But on the other hand
> Wikipedia is much more limited and cannot use prominent and intrusive
> ads, which will limit the possible revenue. And of course Facebook has
> (again according to Wikipedia) 1700+ employees while Wikimedia has just
> a small fraction of that. It's hardly possible to create similar revenue
> as Facebook without additional employees.

Facebook isn't the greatest analog.  One of the limitations is that
Facebook isn't really an information site.  Content rich sites tend to
do better at generating advertising dollars because ads can be
targeted to things that people are already searching for.

Let's consider a different rough approximation.

About.com

About.com is part of the About Group, a wholly owned subsidiary of the
NY Times.  According to their annual report [1], the About Group unit
of the NYTimes had an annual revenues of $121 million in 2009.  The
About Group includes About.com, ConsumerSearch.com,
UCompareHealthCare.com, Caloriecount.com and various minor sites (but
it appears that more than 90% of their traffic goes through
About.com).

According to Alexa, these sites collectively accounted for 0.043% of
global pageviews.  (Compare to 0.53% for Wikipedia, 4.7% for Facebook,
and 5.2% for Google).

So scaling About.com's revenue to Wikipedia's traffic share would
estimate $1.5 billion / year.

Like the Facebook estimate, this is also a very rough approximation.
An astute observer would note there is a very large range between the
$90 M suggested by Marcus's look at Facebook and $1500 M suggested by
this look at About.com.  Personally, I believe the truth would
probably be closer to the high end than the low end, largely because
About would seem to be a better analog of what we do than Facebook is.
 But I also think it would be interesting to look at other
comparisons.

-Robert Rohde

[1] http://www.nytco.com/pdf/annual_2009/2009NYTannual.pdf