Larry Page: Display Advertising Is A $5 Billion Business

The engine of Google’s business is search advertising, but its display advertising business is becoming a very large business. During today’s earnings call, CEO Larry Page that Google’s display advertising business is at an “annualized run rate of $5 billion.” That doesn’t mean that $5 billion of Google’s $38 billion in revenues in 2011 came from display advertising. It means that if you annualize the display advertising revenues in the fourth quarter, you would get $5 billion.

When you back it out, that implies that Google’s display advertising revenues in the fourth quarter was $1.25 billion ($5 billion divided by 4). To put that in perspective, total revenues for the quarter was $10.6 billion. So  about 12 percent of Google’s revenues now comes from display advertising instead of search.

How fast is display growing for Google? In the third quarter of 2010, or five quarters ago, it reported a $2.5 billion run rate for display ad revenues. So it doubled in a little more than a year.

These display ad revenues include YouTube, mobile, and graphical display ads. Everything else is text search ads.