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The Google Dependency Index: A List of Public Internet Companies That Must Kiss Google's, er, Ring

Wall Street has lots of stock indexes.  Everyone knows the NASDAQ and Dow Jones Industrials, but there are hundreds of other indexes for almost every sector and capitalization.  With that in mind, I offer the Google Dependency Index, which is composed of a list of public companies that essentially find themselves completely at the mercy of Google.  I put this list together mostly as an exercise to quantify just how important Google was to the direct financial performance of other public Internet companies and I have to say that after going through the exercise it has convinced me that Google A) is actually even more powerful than people perceive it to be B) there will inevitably be a backlash against this power.

I should note that this is not an exhaustive list because to a certain degree almost every public Internet company is dependent on Google to some extent, but this list contains examples of companies that arguably have the most significant exposure to Google.  So without further ado here is the Google Dependency Index:

Sub-Sector: Direct Dependents  (Companies that actually get cash from Google)

America Online (AOL):  Ever wonder how much Google pays AOL to be its default search engine?  Well in 2009, Google paid AOL $556M or 17% of its total revenues for the privilege.  Given that this referral revenue comes with very little costs, it’s a safe bet to assume that the share of AOL profits attributable to Google are probably are least 30% and perhaps higher. (ANSW):  Question: How much money you could make if you started a wildly popular web site and only monetized it only using Google Adsense?  Answer: you would make about $21M in gross revenues, or at least that’s what did in 2009.  Answers, according to Quantcast, is the 15th most visited site in United States with 55M monthly unique visitors, most than craigslist or Bing or MySpace.  In 2009, Google generated 89% of’s traffic and 88% of its revenues.

Infospace (INSP):  Infospace has a collection of “meta-search” web sites, the most prominent of which is  These meta-search sites split any ad revenues from click-throughs with the search sites.  95% of Infospace’s $207M in 2009 revenues came from either Google or Yahoo in return for search traffic and while Infospace doesn’t disclose the split between the two, it’s a safe bet that with Google’s ever increasing market share, Google accounts for an ever increasing share of that 95%.

Incredimail (MAIL): Incredimail is a software developer that used to make it’s money by selling share-ware applications such as a POP3 e-mail client and a universal chat client.  It still makes those programs, only now it primarily monetizes those programs not through license fees, but by replacing people’s default search provider with Google and by integrating Google search into its programs.  The results?  Fully 70% of its $21.9M in revenues during the first 9 months of 2009 came from Google and that percentage is increasing quickly.

Vertro (VTRO): Vertro has a similar model to Incredimail in that they develop a software program which generates revenues by directing search queries back to Google.  In Vertro’s case they have a “universal toolbar” called ALOT.  The search box on this toolbar points to Google.  As a result, fully 90% of Vetro’s $19.6M of revenues in first nine months of 2009 came from Google.

Sub-Sector Indirect Dependents (Companies that depend on Google for traffic, but not direct revenues):

As mentioned before, almost every Internet company is an indirect dependent of Google to some extent given how important search traffic is to revenue generation, but here a few examples of companies that are particularly dependent:

E-Health (EHTH):  Quick question:  Who has the #1 organic search position on Google for “health insurance” and the #1 paid search position?  Why eHealth does.  #1 Organic results for high value ecommerce transactions are worth a fortune and these days you can literally build a company on top of them.  eHealth doesn’t disclose just how much of its new business is referred to it by Google, but it does note “We depend upon Internet search engines to attract a significant portion of the consumers who visit our web site” in its 10K.

Internet Brands (INET):  Internet brands runs a collection of web sites, many of them ecommerce lead gen sites, such as  Internet Brands doesn’t publicly disclose how much of their traffic is referred by Google, but it’s enough that their lawyers forced them to include a risk factor which says that search providers drive a “significant amount” of their traffic. (LOCM):  During the first nine months of 2009, spent $19M on paid search, $13M of that on Google, and that spending generated 56% of its overall traffic.’s traffic arbitrage expenses account for almost 45% of its total expenses.

ShutterFly (SFLY): Shutterfly maintains high organic search rankings for its key products including photo printing and photo cards.  These high organic results most likely drive a huge amount of its traffic.

US Auto parts (PRTS):  US Auto parts runs a large network of auto part supply web sites.  One of the expressed goals of this “network” is to have multiple PRTS owned sites show up on the front page of organic search results and thereby increase the probability that PRTS will get a click-through one way or another.  PRTS doesn’t disclose how important Google’s organic and paid search traffic is to its business, but it is the 2nd risk factor listed in their 10K.

So there you have it, there are at least 10 public companies that basically owe their continued good fortune to Google one way or another and thus clearly belong in the Google Dependency Index.  This dependency not only underscores just how important Google is to the overall Internet economy, but it sets the stage for the inevitable backlash against Google because some of these companies will inevitably cry foul should they lose a significant portion of their much prized Google traffic.

Google’s response to such cries will likely be, “You can’t blame us for the changes, our unbiased algorithm did it”, but as I will outline in my next post, Google’s algorithm is rapidly and inevitably becoming anything but unbiased and this transformation will ultimately make Google more evil than good in most companies’ minds.

If you have a suggestion for other public Internet companies that should be included in the index, leave a comment with the ticker and an explanation as I'd be interested to see what nominations other people have.

This is not investment advice, just some observations about how damn powerful Google has really become.  Please read my disclaimer at the bottom of this page.  

March 15, 2010 in Internet, Stocks | Permalink


Legal Disclaimer

The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.