Google top executives believe the online advertising market will grow to $100 billion in the near future. This is a significant increase in the online display advertising market, which is currently estimated as a $20 billion industry. Google believes its YouTube site will contribute greatly to this growth. YouTube is currently monetizing two billion views per week. Advertisers and marketing departments have grown fond of Google’s “cost per view”, which appears to be an economically efficient way of reaching consumers.
What does this mean for Google shares? Google (GOOG) stock has been hovering in the $600-$625 dollar range for the past couple months. I believe the estimated growth in the online advertising market will significantly increase earnings for Google. Google’s price earnings ratio of 23.31 is rather low compared to the rest of the industry. Chinese counterpart Baidu has a price earnings ratio of 78.88. Due to the low price earnings ratio Google possesses, in addition to the anticipated growth in online advertising, I believe Google stock has a promising future.
Sources: Morrison, Scott. “The Wall Street Journal Online”. 1 March 2011 http://online.wsj.com/article/SB10001424052748704615504576172570604131668.html?mod=WSJ_Tech_LEFTTopNews
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