An interesting report missed my notice today with a bunch of other stuff going on.
Piper Jaffray’s Gene Munster writes that conventional desktop Web searching, at least among U.S. Internet users, has reached maturity, with the growth in the number of search “queries” topping out at 10% annually, citing data this year from comScore.
However, there’s a lot of room for Google (GOOG) to make more money, he thinks, as the company increases the rate of monetization. Currently, only 10% to 12% of Google searches make money, he points out.
Munster, who rates Google shares Overweight, thinks that low double-digit growth in the U.S. can be maintained by Google for the next few years. With 25% to 35% query growth globally, and with improved monetization, “we believe meaningful growth remains ahead of Google as the company enters the final stage of paid search maturity: increasing the percentage of ad clicks.”
In particular, comScore data suggest, writes Munster, that even though Google only makes money on a tenth of searchs, in fact about 40% to 45% of all searches using Google are “commercial,” he writes, meaning that they have the potential to be monetized.
Munster notes that Google’s been doing things such as adding pictures to search results and adding ratings of merchants, in the case of shopping searches.
If Google can double its current rate of monetization over the next five years, Munster figures that would add $11 billion to Google’s annual revenue.
Google shares today rose $6.82, or 1%, to $590.49.
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