Can Google Offer Free Calling?
Source: smithonvoip.com
Can Google Change the Communications Dynamic
Pal Moshe Maier has a post today about the prospects of Google offering free calling through their Google phone. While I respect Moshe’s point that Google has the might and long standing success with an advertising supported business model, I still don’t believe that any communications company can survive on the ad supported model. It has less to do with them as a company, but more with the metrics of the ad supported model.
The Clicks Don’t Add Up
According to Google CEO Eric Schmidt, mobile ads are twice as profitable as their standard search result ads. With estimates that tag the overall average revenue per click from a standard search result ad at $.25, that means an average mobile ad might fetch $.50. Given my experience with cellular carriers, their ARPU is typically over $40 per month.
This would mean Google phone users would have to click on an average of 80 ads per month to generate revenues similar to that of traditional cellular carriers. Now that does not seem like much until you consider that the average cellular phone user makes/takes 200 calls per month. That means that almost 50% of the time the user is about to make a call or just after disconnecting they would have to click an ad. I just do not see that happening.
No some will say that user will also use the phone for Internet connectivity, etc, but the truth is that most people do not use this functionality enough to generate the click volume necessary to profitably operate on the ad supported model. While I would love to have free calls, I just don’t see it happening through a carrier with ad supporting calling, even if that carrier is Google.
