Estimation question

How would you estimate Google AdSense revenue?

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What this question tests

Tests structured estimation of an ad-network revenue figure using publisher traffic, ad impressions, and CPM assumptions.

How to approach it

  1. State the goal: estimate Google AdSense's annual revenue, the network serving ads on third-party publisher sites.
  2. Estimate the ad-supported web audience: assume roughly 2 billion unique monthly visitors across AdSense-participating publisher sites globally.
  3. Estimate ad impressions per visitor: assume an average of 20 ad impressions per visitor per month across pageviews.
  4. Estimate average CPM: assume a blended global CPM of $2, accounting for wide variance by region and ad format.
  5. Compute: 2 billion visitors times 20 impressions divided by 1000 times $2, about $80 billion in gross ad spend flowing through the network annually.
  6. Apply AdSense's revenue share: Google typically keeps roughly a third as its own revenue, about $25 billion, then sanity-check against disclosed figures.

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