Google is a global technology leader, focused on improving the ways people connect with information. Through innovations in web search and advertising, Google is now a top Internet destination and possesses one of the most recognized brands in the world. Available to anyone with an Internet connection, Google maintains the world's largest online index of web sites and other content. A report from Hitslink, an analytics firm, states that Google has close to 80% of worldwide search traffic and market share. Those numbers indicate the importance of Google in the digital world.
In the late 1990’s many new search engines appeared, most of which are used today. These include Yahoo!, Excite, Inktomi, AltaVista, Google and others. Among these, Google occupies over a half of the entire search engine market. On a user level, the procedures of search engine operations are very simple. All the user has to do is to input necessary parameters of the search. In other words, the user says the search engine what he or she wants to get, e.g. “Happy Valley”, “flight to Hong Kong tonight” or “CCST 9003. However, how search engines decide which page match which query is a real science. Search engines have their own technologies, algorithms, and formulas, which are typically kept secret. Those criteria that the search engines use and are widely known include the occurrence of the search query term on the page text, the title, the meta tags, in the liking text inside the page, in the URL address (Uniform Resource Locator), the headings, as well as bold and italicized font (Nymark & Ramzan, 2008). It is important to note that all search engines are unique, and have their own formulas and algorithms, but they perform the same function; they fetch relevant results that match the user’s query. Google uses page rank to decide which site will come first in the search result.
In order to build up a huge database of the web-sites, Google uses its crawlers named “Googlebots”. Googlebots is an automated web-browser, which follows every link it sees. It visits a site and all its internal pages, gather them, and bring back to the server for index. Next Google processes these pages and creates an index, much like the index in the back of a book. The index is parceled into manageable sections and stored across a large network of computers around the world. When a person types a query into the Google search box, his query is sent to Google machines and compared with all the documents stored in Google’s index to identify the most relevant matches. In a split second, Google system prepares a list of the most relevant pages and also determines the relevant sections and bits of text, images, videos and more. What a person gets is a list of search results with relevant information excerpted beneath each result.(Google, 2010).
Since search engines are huge projects from technological point of view, they must have big capacity servers to operate normally. These servers, in turn, are expensive assets. What Google does to cover these expenses and to gain tremendous profits as well is that it provides context advertising. Google’s advertising program is named “AdWords”. AdWords is a separate vertical bar that returns text advertisements only for a certain keyword or phrase. For a search query of “Hong Kong tourism”, there will be 8-11 advertisements in the AdWords that appears on the right of the search result. These advertisements will be related to hotels in Hong Kong or other tourist facilities available in Hong Kong. This online advertising is very effective because it is targeted and covers very narrow segment of the market; the exact segment the advertiser wants. Google AdWords has received extremely high praise from advertisers who found it a very cost-effective and targeted advertising option, as it allows for easy display of ads to promote goods and services on both Google search results pages as well as collaborating sites. Considering the vast popularity of Google, it is easy to reach a wide audience there. It is also worth mentioning that Google generates most of its revenue through its advertisements program. Out of US$23.6 billion revenue of Google in 2009, US$22.9 billion came from advertising.
Google AdWords network operates by allowing advertisers to bid on an endless selection of keywords that they believe may be typed into the Google search engine in search of information. When an advertiser bids on a specific keyword, and they bid a high enough price, the result is that their ad will appear in a special segment of the search engine results pages for that keyword which is located both above the regular search engine results and along the right side of the page as well. If an advertiser does have an ad appear in one of these places, and a search user happens to click on the advertisement, traveling to the advertiser’s assigned page, then Google will charge the advertiser a certain amount, which is dependent upon the advertiser’s bid amount.
The Google Company has seen a continuous growth in its revenue, market share, profits and share value ever since it has been set up. Even the economic recession that caused many high performing companies to shut down could not impede the growth of Google Company. Google has positioned itself as the leader of search-related advertising. Google has been complemented by the fast growth in search-related ads sector. According to Piper Jaffray’s survey search related ads is the fastest growing sector of the online ad business. Furthermore, Google has almost twice as many search ad click-throughs as runner-up Yahoo. In December 2009, Google had 16.5 trillion ad click-through, compared with Yahoo's 9 trillion, according to Nielsen/Net Ratings. These figures show the dominance of Google in online advertisements market but it should be not be forgotten that too much dependence of a company on only one single revenue generation project can be detrimental for company’s stable future. It is also possible that in future, Yahoo and Microsoft may be able to create a technology that gives them a competitive edge over Google in online advertisements and suddenly Google will see a sharp decline in its revenue.
In the late 1990’s many new search engines appeared, most of which are used today. These include Yahoo!, Excite, Inktomi, AltaVista, Google and others. Among these, Google occupies over a half of the entire search engine market. On a user level, the procedures of search engine operations are very simple. All the user has to do is to input necessary parameters of the search. In other words, the user says the search engine what he or she wants to get, e.g. “Happy Valley”, “flight to Hong Kong tonight” or “CCST 9003. However, how search engines decide which page match which query is a real science. Search engines have their own technologies, algorithms, and formulas, which are typically kept secret. Those criteria that the search engines use and are widely known include the occurrence of the search query term on the page text, the title, the meta tags, in the liking text inside the page, in the URL address (Uniform Resource Locator), the headings, as well as bold and italicized font (Nymark & Ramzan, 2008). It is important to note that all search engines are unique, and have their own formulas and algorithms, but they perform the same function; they fetch relevant results that match the user’s query. Google uses page rank to decide which site will come first in the search result.
In order to build up a huge database of the web-sites, Google uses its crawlers named “Googlebots”. Googlebots is an automated web-browser, which follows every link it sees. It visits a site and all its internal pages, gather them, and bring back to the server for index. Next Google processes these pages and creates an index, much like the index in the back of a book. The index is parceled into manageable sections and stored across a large network of computers around the world. When a person types a query into the Google search box, his query is sent to Google machines and compared with all the documents stored in Google’s index to identify the most relevant matches. In a split second, Google system prepares a list of the most relevant pages and also determines the relevant sections and bits of text, images, videos and more. What a person gets is a list of search results with relevant information excerpted beneath each result.(Google, 2010).
Since search engines are huge projects from technological point of view, they must have big capacity servers to operate normally. These servers, in turn, are expensive assets. What Google does to cover these expenses and to gain tremendous profits as well is that it provides context advertising. Google’s advertising program is named “AdWords”. AdWords is a separate vertical bar that returns text advertisements only for a certain keyword or phrase. For a search query of “Hong Kong tourism”, there will be 8-11 advertisements in the AdWords that appears on the right of the search result. These advertisements will be related to hotels in Hong Kong or other tourist facilities available in Hong Kong. This online advertising is very effective because it is targeted and covers very narrow segment of the market; the exact segment the advertiser wants. Google AdWords has received extremely high praise from advertisers who found it a very cost-effective and targeted advertising option, as it allows for easy display of ads to promote goods and services on both Google search results pages as well as collaborating sites. Considering the vast popularity of Google, it is easy to reach a wide audience there. It is also worth mentioning that Google generates most of its revenue through its advertisements program. Out of US$23.6 billion revenue of Google in 2009, US$22.9 billion came from advertising.
Google AdWords network operates by allowing advertisers to bid on an endless selection of keywords that they believe may be typed into the Google search engine in search of information. When an advertiser bids on a specific keyword, and they bid a high enough price, the result is that their ad will appear in a special segment of the search engine results pages for that keyword which is located both above the regular search engine results and along the right side of the page as well. If an advertiser does have an ad appear in one of these places, and a search user happens to click on the advertisement, traveling to the advertiser’s assigned page, then Google will charge the advertiser a certain amount, which is dependent upon the advertiser’s bid amount.
The Google Company has seen a continuous growth in its revenue, market share, profits and share value ever since it has been set up. Even the economic recession that caused many high performing companies to shut down could not impede the growth of Google Company. Google has positioned itself as the leader of search-related advertising. Google has been complemented by the fast growth in search-related ads sector. According to Piper Jaffray’s survey search related ads is the fastest growing sector of the online ad business. Furthermore, Google has almost twice as many search ad click-throughs as runner-up Yahoo. In December 2009, Google had 16.5 trillion ad click-through, compared with Yahoo's 9 trillion, according to Nielsen/Net Ratings. These figures show the dominance of Google in online advertisements market but it should be not be forgotten that too much dependence of a company on only one single revenue generation project can be detrimental for company’s stable future. It is also possible that in future, Yahoo and Microsoft may be able to create a technology that gives them a competitive edge over Google in online advertisements and suddenly Google will see a sharp decline in its revenue.
Furthermore, while applauding the increase in revenue of Google we should bear in mind that Google’s traffic acquisition cost (TAC) has also increased considerably in last couple of years. TAC can be considered as a direct measure of how much it costs Google to drive visitors to its search site and other services from other Web sites, in order that it can then serve them advertising. Included in TAC is the amount of money that Google pays to other companies to ensure that Google is the default browser in their devices. An excellent example of TAC is the US$2 million per month that Google pays to Apple so that its search engine is the default choice for Mobile Safari on the iPhone. TAC could also be used as an indicator that Google's trying hard to keep its traffic up, and that the strategy appears to be working.(Google, 2010)
Nevertheless, there have been concerns from various quarters regarding the adverse impacts that Google has created in the business world. Google has a market share of close to 80% of worldwide search traffic and people believe that Google takes negative advantage of this situation. They believe that Google can be a dangerous monopoly. Through various acquisitions Google is strengthening its dominance over search and online advertisements markets. Google is fast becoming the “information gatekeeper”. Google's dominance gives it unprecedented control over information. If in the future Google's stock price declines, the company can seek to recoup dollars elsewhere by misusing the information collected. Marketers are hungry for demographic information, and they're willing to pay for it. Google provides the door, checks who's coming inside and can pass that information onto marketing paparazzi. The temptation to mine the information will be huge, and that temptation will increase as Google matures, its growth slows and its stock falls to earth.(Wilcox, 2010). The Google Company's core business is about search and advertising, which relies on the content of other people and businesses. People complain that Google doesn't own the information from which it makes nearly all its revenue, rather Google is the middleman of the information, which it takes for free.
It should also be noted that due to Google’s dominance of search engine markets, many search engines have experienced a drop in their revenue and some had to go out of the business. This may seem fair enough to an economist stating that the most efficient company has the right to stay in the business in the long run. But let us not forget that it takes a herculean effort to setup a search engine. A great amount of intellectual resource is put in by computer software engineers to develop a search engine. As stated before the algorithms and the formulae that conduct search are not available off the shelf. Rather they need to be ingeniously developed by software engineers. Google’s dominance has prevented the efforts of these engineers to be justly rewarded. The specialized dedicated resources of other search engines are not being utilized to their optimum level and these search engines are unable to collect high revenues.
Google is an excellent example of a company that has harnessed technological superiority to reap financial gains. Google dominates the search and online advertisements market not because it was the first firm in the industry, rather it was the technological superiority that enabled Google to outdo the big firms that were in the industry before. With surprising tact and tenacity Google has been able to dwarf giants such as Microsoft and Yahoo in revenue generation and market share. For Google to ensure its financial dominance it has to focus on its technological aspects. It needs to make its search engine more efficient so that people continue to prefer Google over other search engines. This will motivate businesses to compete for a place on AdWord advertisement and subsequently Google will continue to generate revenue. The key areas of technology where Google needs to focus to improve its search engine is relevance of the search, comprehensiveness of its stored data, freshness of data that is being crawled and the speed of the search. Furthermore, Google should also take into account the overall impact that it generates around the world. It should address the negativities that are being associated with it. Google should kick start a proper campaign to change its image as an “evil monopoly”. It should take steps to build trust amongst online users so that they use Google search engine without the fear being exploited.
References
- http://epubl.ltu.se/1402-1773/2008/286/LTU-CUPP-08286-SE.pdf
- http://www.google.com/corporate/tech.html
- http://www.wired.com/culture/culturereviews/magazine/17-06/nep_googlenomics?currentPage=1
- http://www.microsoft-watch.com/content/web_services_browser/why_google_succeeds_part_1.html
- http://static.googleusercontent.com/external_content/untrusted_dlcp/www.google.com/en//economicimpact/pdf/google_economicimpact.pdf
- http://www.1stpageprophets.com/pay-per-click/benefits-of-google-adwords-ppc.html
- http://www.tehrantimes.com/Index_view.asp?code=220257
- http://www.nybooks.com/articles/archives/2009/dec/17/google-and-the-new-digital-future/?page=1
- http://internetbusinessmodels.org/googlebusinessmodel/
- http://www.betanews.com/joewilcox/article/Google-is-a-dangerous-monopoly-more-than-Microsoft-ever-was/1266994170
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