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Story of Google

Googol (10100) or approximately 70! Started in 1998 by Sergey Brin and Larry Page Went public in 2004 at US$85/share, and the current price is around $600

Larry Page

Sergey Brin

Search Engine

Before Google, most search engines merely count how many times a search term appear on a given Web page Google uses a mathematical formula known as PageRank in which it ranks the number of web pages that link to that particular page

[PageRank patent is owned by Stanford which will expire in 2017, license with Larry Page and Sergey Brin will expire in 2011]

It also gives weight to incoming links from important web sites

Search Engine Market Share*

*http://marketshare.hitslink.com/search-engine-market-share.aspx?qprid=4&qptimeframe=M&qpsp=131&qpct=3&qpmr=5

*Report generated January 26, 2010

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Search Engine US Market Share*

*Jan 2011 (www.comScore.com

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Advertising Programs
For Advertisers: Google AdWords Reach people when they are actively looking for information about your products and services online, and send targeted visitors directly to what you are offering. With AdWords costper-click pricing. Its easy to control costs and you only pay when people click on your ad. For Web Publishers: Google AdSense Earn more revenue from your website, while providing visitors with a more rewarding online experience. Google AdSense automatically delivers text and image ads that are precisely targeted to your site and your site content ads so well-matched, in fact, that your readers will actually find them useful. And when you add Google WebSearch to your site. AdSense delivers targeted ads to your search results pages too. With AdSense you earn more and revenue with minimal effort and no additional cost. 6

How do they make money (I) ?

AdWords self service ad server that uses relevanceranking algorithms Advertiser pre-paid to buy pertinent keyword Google matches users search terms with the keywords and displays the ads [note: clickthrough-rate is also factor in an advertisers ranking] When surfers click on the banner near the search results, Google subtracts the cost-per-click from the advertisers prepaid account

Keyword Advertising

AdWords Payment

How do they make money (II)?

AdSense is an affiliate program and more

one-to-one targeting Web site owners (Webmasters or publishers) earn commission by placing ads of Googles advertisers on their web sites Using contextual matching, the ad will automatically deliver to each affiliate site based on website content, the user's geographical location, and other factors
http://www.nytimes.com/2009/02/17/science/17obfish.html

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Advantages of AdSense

Web publishers can earn more revenue from their website, while providing visitors with a more rewarding online experience. Google AdSense automatically delivers text and image ads that are precisely targeted to the site and site content ads so well-matched. In fact, that readers will actually find them useful. When the web publishers add Google WebSearch to their site, AdSense delivers targeted ads to their search results pages too. With AdSense the web publishers earn more ad revenue with minimal effort and no additional cost.
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Click Fraud

Internet crime that occurs in pay per click online advertising when an automated script clicking on an ad too generate a charge per click Competitors of advertisers and competitors of web site publishers could be probable culprits but difficult to prove Google usually identify which clicks are most likely fraudulent and not charge the account of the advertiser Click fraud invisibly profits Google

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Google WebSearch

Enable your online visitors to search the web with Google WebSearch. Google indexes billions of pages, images, and documents in hundreds of le types to help people nd what they want. And with Google WebSearch, they can nd what they want from your website.
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Google Mobile Search

Search the Web

At the supermarket and need to nd the ingredients for thai curry? Just query thai curry ingredients on your phones Web browser to search through more than 8 billion pages for the recipe that will wow your taste buds

Search Images

Is that an oak tree or an ash tree? Search more than 2 billion images and get the one you need on your phone with Google Image Search. Access the mobile web which is made up of sites that are specically designed to t your phone screen.

Search the Mobile Web

Bought mobile advertising platform AdMob for $750 million in 2010

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Googles Business Model

Value proposition: Google's customers report exponential growth in their sales after they started advertising with Google Revenue Model: 90% revenue from advertising. Other sources: selling search tool to corporations. Market Opportunity: Google has almost all large companies as advertisers, web site publishers, and partners. Lot of them are small businesses
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Googles Business Model Competitive Advantage

Search

Quality, popularity, overwhelming awareness of name and what the company is and does. "Google" is now a verb in Webster's dictionary. 2003 Most recognized brand of the year.

Brand equity

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Googles Business Model: Market Strategy

Nearly everything the company does, including building big data centers, buying optical fiber, promoting free Wi-Fi access, fighting copyright restrictions, supporting open source software, and giving away Web services and data, is aimed at reducing the cost and expanding the scope of Internet use. Google wants information to be free

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Traditional Value Creation

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Network Value Creation

Relies on traffic

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Googles mission

organize the worlds information and make it universally accessible and useful

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Google puts the user in the center

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Googles Business Model: Organizational Development and Management Team

Google "people" and environment/culture

People have to be extremely intelligent and usually have doctorates; people come into Google with forward thinking, innovative and "out-of-the box" strategies.

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Google Aptitude Test

Consider a function which, for a given whole number, returns the number of ones required when writing out all numbers between 0 and n. For example, f(13) = 6. Notice that f(1) = 1 What is the next largest n such that f(n) = n?

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Obstacles ahead

Social search Facebook fight for web point of entry

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Books

The search : how Google and its rivals rewrote the rules of business and transformed our culture / John Battelle [HD9696.8.U64 G663 2005] The Google story / David A. Vise and Mark Malseed [TK5105.885.G66 V57 2008]

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Insight on Technology: Search, Ads, and Apps: The Future For Google (and Microsoft) Class Discussion How many of you use Google, Yahoo, or MSN search engines? Does the class differ from the overall Web population? Why do you use a particular search engine? Why are search engines so profitable? Why do people stay longer at Yahoo and MSN.com when compared to Google? Does this give them an advantage?

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Can Bing Bong Google?

Class Discussion

How many of you use Google versus Yahoo or Bing? Does the class differ from the overall Web population? Why do you use a particular search engine? Why is Google moving beyond search and advertising into applications? How does Bing try to distinguish itself from Google? Do you think this strategy works?

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Click Fraud - Who Gets Hurt?

Click fraud is not a victimless crime. Victims of click fraud include the search engine marketer, the advertiser, the consumer, and ultimately the search engine or pay-per-click network. The Search Engine Marketer Search engine marketers who are victims of click fraud see their rate of return on marketing programs diminished by these activities. It needlessly consumes budgets and decreases results. As a result, search engine marketing organizations may be delivering results at a sub-optimal level jeopardizing their client relationships. Click fraud can become a difficult topic of discussion if it has been ongoing for a prolonged period of time and left undetected. The Advertiser What business can afford to pay more for advertising dollars needlessly? Whether an organization is large or small, return on ad dollars is under paramount scrutiny. One of the benefits of online and eCommerce business models is the ability to close the loop on advertising dollars. By marketing through search engines and selling online, there is an unprecedented opportunity to track and report return on investment from search engine marketing dollars down to the keyword! The growing prevalence of click fraud contributes to diminishing performance industry wide for online marketing campaigns directly impacting all advertiser's. In addition, if click fraud continues unchecked, there may be the possibility of an industry shakeout where less credible companies will be forced out of the market resulting in fewer search engine/pay-perclick network operators allowing those remaining to be under less scrutiny for raising minimums and increasing online ad fees. The Customer Because organic search engine listings can be complicated and competitive, many companies rely on sponsored listings to ensure that they are highly ranked in search engines. Customers have come to rely on sponsored listings to find what they are looking for on the web. Should click fraud undermine the pay-per-click business model, advertisers will find its cost prohibitive to place sponsored listings. In turn, customers will find it more difficult to find what they are looking for on the web.

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Furthermore, there is the possibility of higher cost of goods and services. If marketing budgets are increased due to click fraud and associated customer acquisition costs, marketers may elect to pass on the increased costs to the consumer in higher prices for goods and services The Search Engine/Pay-Per-Click Network Ultimately, if click fraud reduces results to a point where it is no longer economically feasible to sponsor listings, advertisers will stop spending and the search engines will suffer accordingly. While it seems that they benefit in the short run by erroneous clicks (they get paid anyway dont they), these engines compete to deliver top results. Letting click fraud run rampant on their networks is not in their best interests and they know it. It should be noted that many of the more respected networks have acknowledged the click fraid problem and are actively reviewing suspicious activity on their networks. When it has been uncovered, the networks are beginning to automatically credit back advertisers for the suspicious click activity. However there are many unscrupulous or just plain lazy networks out there with no intention of taking on the burden of policing their own networks. In cases like these, their business practices of today will come back to haunt them as their future livelihood and longevity depends in part with their industry participation in detecting click fraud.

EXPOSING CLICK FRAUD

Net Applications 65 Enterprise Aliso Viejo, CA 92656 949-330-7910 netapplications.com 02.05