Mary Meeker makes a math mistake

Morgan Stanley Internet analyst Mary Meeker has been caught in an embarrassingly basic math mistake — by Silicon Alley Insider's Henry Blodget, a former analyst (who, to be fair, made some mistakes of his own in the last boom). Meeker's estimate of the impact of YouTube's new "overlay" ads? She says they could boost Google's gross revenues by $4.8 billion next year. But her math, Blodget discovered, was off by a factor of a thousand. The error apparently stemmed from forgetting the meaning of CPM, or "cost per thousand," a commonly used term in advertising rate cards. Given Meeker's assumptions, the actual impact of YouTube's ads? A mere $4.8 million in gross revenue, and $720,000 in net revenue. In other words, a drop in the bucket, and nothing that comes close to justifying YouTube's $1.65 billion purchase price.