When Google announced last week that its video Web site YouTube would begin incorporating video ads, analysts calculated how much revenue the venture might bring in. And one analyst inadvertently revealed the fluid nature of assumptions underlying this kind of math.
Morgan Stanley analyst Mary Meeker initially projected that the YouTube ads would bring in $720 million next year. But there was one big problem with her calculation: She took the price of the ads, which was reported in several news articles as “$20 CPM,” to mean the price per ad impression, not per thousand ad impressions, which is what CPM means. After Henry Blodget — the former stock analyst who, like Ms. Meeker, was a cheerleader for Internet stocks during the dot-com boom — called out the math mistake on Silicon Alley Insider, Ms. Meeker acknowledged the error.
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