Google's Android operating system could reap $1.3 billion in mobile advertising in 2012, an analyst predicted Feb. 8 using the search engine's own quoted figures.
Using Google's self-stated figure that its mobile ad business was operating at a $1 billion run rate through 2010, Piper Jaffray analyst Gene Munster said Google generated $850 million in mobile ads for the year.
Android, Munster said, accounted for $130 million of this total, good for $5.90 average revenue per user (ARPU). For perspective, Google's advertising totaled $25.77 ARPU, while its Web search engine accounted for $18.85 a head.
Looking forward, the analyst said Google could have an average of 133 million Android users by 2012, each generating $9.85 per year on advertising, meaning Android would kick in $1.3 billion to the company's ad revenues.
The number seems large but hardly unattainable, considering that they are flush with what outgoing Google CEO Eric Schmidt said last summer. Schmidt said he thought Android could grow to be a $10 billion business if the platform saw 1 billion users, at $10 ARPU.
With Munster's new math, it's not impossible. However, Google has a long way to go to get to 1 billion users, or the total number of users the company has reported for its search engine.
What will make this hypothetical thinking a reality? Google continues to see 300,000 Android devices activated each day, so that is certainly a factor, but tablets and the Android-based Google TV devices will help reach this goal.
Another magic bullet may be the recent changes to the Android Market geared to make it easier for users to download applications, therefore increasing monetization per user from in-application advertising.
Specifically, Google Feb. 2 launched the Android Market Webstore. This browser-based shop leverages users' Google accounts to let people download apps to any device at any time, and records a history of apps users install on all of their Android devices.
With mobile ads in mind, Google Feb. 10 is hosting a mobile ad rally at its New York office. Dubbed "ThinkMobile," the event will include Kleiner Perkins partner Mary Meeker, Google's Senior Vice President of Americas Operation Dennis Woodside and Jason Spero, Google's head of mobile for Americas.
The trio will "explore some of the most significant trends in mobile and explain why it's not too late for businesses to still be early in this space," Google's Global Head of Mobile Karim Temsamani said in a blog post.