MI021 / CS021Computers in Management

Oct. 16, 2006 Search & Advertising:

Google Case

www.gallaugher.com

Topics Covered

• Online Advertising Spending/Growth

• Google– Firm background– Revenue streams– Weaknesses/challenges w/model– Areas for development

• Competitors– Yahoo, Microosft, & others– Exploitable resources

Google Growth

$440M

$1,466M

$3,189M

$6,139M

$0.45 $0.41

$1.46

$5.02

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2002 2003 2004 2005$0

$1

$2

$3

$4

$5

$6

RevenueEPS (diluted)

Revenue ($ Millions)

EPS(diluted)

Ad Spending: Comparisons & Growth

The U.S. Ad Market

$283B

Direct Mail$57.2B

Newspapers$49.6B

Broadcast TV$46.7B

Radio$21.0B

Cable TV$16.7B

YP$14.5B

Mags$13.0B

Internet$11.3B

Other$53.0B

Google Revenue StreamsAdWords AdSense

Google Enterprise ProductsLicensing

AdSense

• Coverage for advertisers beyond search targeting

– AdSense network covers nearly every topic imaginable

– Matches highly targeted advertising with niche content

• Broad reach for branding advertisers

– Site Targeting allows advertisers to reach their target audience

– Aggregates the long tail

The Power of the “Tail” 3.9 Million Daily Page Views on Hip Hop Related Sites

Top 10 Highest Paying Keywords

$54.33 mesothelioma lawyers$47.79 what is mesothelioma$47.72 peritoneal mesothelioma$47.25 consolidate loans$47.16 refinancing mortgage$45.55 tax attorney$41.22 mesothelioma$38.86 car accident lawyer$38.68 ameriquest mortgage$38.03 mortgage refinance

Source: San Jose Mercury News, March 2006

QuickTime™ and aTIFF (Uncompressed) decompressor

are needed to see this picture.

Despite Click Fraud, Advertisers are Spending More

Source: TNS-MI; 2005 and 2003 US online display advertising, excludes companies with online spend less than $400K in 2003

Ads In Local Search

17

Targeted Advertising

Ads In Google Earth

Targeted Advertising

Google - A Global Product= Engineering and PM offices

• Mountain View, CA• Kirkland, WA• Phoenix, AZ• Pittsburgh, PA• New York, NY• Santa Monica, CA

• Bangalore, India• Beijing, China• Belo Horizonte, Brazil• Hyderabad, India• London, U.K.• Munich, Germany• Tokyo, Japan• Trondheim, Norway• Waterloo, Canada• Zurich, Switzerland

Google Computing Center

An old Google server lined with cork. Velcro now connects the parts.

Urs Hölzle, senior vice president for operations at Google, says the company has considered designing chips