Google’s strategy in 2008 22Presentation Transcript
CASE SITUATION Since 1994, the number of people worldwide accessingInternet has grown considerably (360 M in 2000 to 1,5 Bin 2008). To read news, conduct researches, buy online… This growth allowed internet advertising to become the2nd most common form used in the U.S. (search-basedads, video ads on YouTube and mobile search are amongthe largest portion of Internet ads)
COMPANY OVERVIEW Type: Public Industry: Internet, Computer software Founded: in Menlo Park, California, U.S. (September 4, 1998) Founder: Larry Page, Sergey Brin Headquarters: Googleplex, Mountain View, California, United States Area served: Worldwide Employees: 53,546 (2012) Subsidiaries: AdMob, DoubleClick, Motorola Mobility, On2Technologies, Picnik, YouTube…..
GOOGLE HISTORY Google was developed in January 1996, by Stanford university computer science graduate students Larry Page and Sergey Brin. Google was named “BackRub” relating to its ability to rate websites for the relevancy by examining the number of back links pointing to the site. Later, the two founders renamed BackRub to Google (which means “googol” a mathematical term of the number 1 followed by 100 zeros) reflecting the mission to organize infinite amount of information on the Internet.
GOOGLE HISTORY In August 1998, a Stanford professor arranged for Brin and Page to meet with co-founder of Sun Micro Systems, to demonstrate the search engine. He gave them a $100,000 Check. By the end of September 1998, the two friends raized a total of $1M capital from family, friends and other angel investors, in order to set up Google Inc.
USERS TRUST BECAUSE… Consumers are loyal to the search engine which is the worldwide leader in Internet and Mobile search ads. Google is capable to retrieve highly relevant search results in a fraction of seconds.
USERS TRUST BECAUSE… Manyof them find Google’s search results more relevant than those generated by competing search engines.( yahoo, ask..) The search terms-matching of Google is highly precise. The objectivity of the company.
POSITIVE RESULTS FOR GOOGLE Internet users preference for Google’s boosted the company’s net income, revenues and profits. In 2008, Google control the search-based ads market .
GOOGLE BUSINESS MODEL
GOOGLE’S BUSINESS MODEL Its business model is successful since the net income of 2007 was 40 times greater than in 2003. Google business model generates revenue by providing advertisers with an opportunity to deliver online advertising, directly matched by keyword to a user’s search query. Google targets its ads to specific users using the user’s browsing history.
THE THREE COMPONENTS OF GOOGLE’S BUSINESS MODELSearch Appliance Search technology integrated into a third party’s Web page or intranet. It delivers accurate search results throug a number of documents.Google MiniSearch Appliance is designed for small business. AdWords it’s Googles advertising product and main source of revenue. AdWords offers pay-per-click advertising, and site-targeted advertising for both text and banner ads. AdSense AdSense is used by website owners who wish to make money by displaying ads on their websites. When user click on ad displayed on a Web page, the advertiser pays Google and Google give percentage of that amount to the web page owners.
GOOGLE ACQUISITION STRATEGY Since 2001, Google has acquired many companies, mainly focusing on small venture capital companies. In 2006; it used some proceeds of its IPO to acquire dMark for radio spot ads and Wrintley for web based spreadsheets software. Attracted many users by acquiring YouTube (2006) Acquired in 2008 DoubleClick, diversify from search ads and to generate revenues from banner ads.
THE 10 PRINCIPLES OF GOOGLEPHILOSOPHY 1)Its best to do one thing, and do it well: “search” 2)Focus on the user and all else will follow: it does its best to provide the most relevant and useful search results possible, with simple interface, independent from financial incentives. 3)Fast is better than slow: it’s the only company in the world who want its users to leave its website as quickly as possible.
THE 10 PRINCIPLES OF GOOGLEPHILOSOPHY (CONT.) 4)You dont need to be at your desk to need an answer: Google encourages users to use wireless phones to seek information 5)Theres always more information out there: Google indexed more of the Internet pages than any other search engine. 6)Make money without doing evil: Google Provide only “sponsored link” ads. “We will do our best to provide the most relevant and useful advertising, without any annoying interruption”.
THE 10 PRINCIPLES OF GOOGLEPHILOSOPHY (CONT.) 7)Theneed for information crosses all borders: The mission of Google is to faciliate the access to information to the entire world. 8)You can be serious without a suit: foster fun challenge and highly communicative work environment 9)Great just isnt good enough: always deliver more than is excpected. 10)Democracy on the web works: Google rely on individuals posting websites to rank and give a value to other sites.
GOOGLE STRATEGY AND COMPETITIVE POSITION IN 2008
COMPETITIVE ADVANTAGES Speed, Accuracy, Objectivity and Ease of use. Fit between their technology and the consumer behavior. Page Rank technology – social network Orkut merged Positioned as a “Fastest Crawling Technique” Trade off between “Speed” & “Compression” Best asset utilization (Efficient storage space) R&D innovation ( Android)
SWOT ANALYSIS STRENGHTS WEAKNESSES• Corporate Reputation & • Increasing costs compared toBrand Trust sales• Highly skilled employees • Dependence on advertising• The speed and simplicity of businessits search engine • No other cash flow source• Huge cash reserves than advertising• Profitable business model OPPORTUNITIES THREATS• New internet devices • Increased competition in the• New advertising platforms search engine market• Increase in worldwide • Privacy concernsinternet penetration increase • Business model imitatorsthe total user base
STRATEGY TO DOMINATE INTERNET ADVETISING Since its IPO in 2004, Google acquisition strategy and R&D activities increased the company’s dominance in the Internet advertising. The addition of new features (Google Maps, Gmail, Book, Search, Blogger, Weather, Airline travel information…) increased traffic to the site and gave opportunity to serve ads to Internet users.
STRATEGY TO DOMINATE INTERNET ADVERTISING Strategy of the company to dominate search- based advertising on Mobile devices had been successful (Google accounted for 63% of searches made on Internet-enabled phones) The company’s introduction of the Android O.S. for mobile phones allowed to increase the share of mobile search & expand the market to new Internet ads types.
STRATEGIC OFFENSIVE TO CONTROL THE DESKTOP Google Chrome browser was launched in 2008 in order to accommodate cloud computing applications. The cloud computing allowed lower software acquisition and computing support costs, and better collaboration among employees. Chrome allowed Google to defense against Microsoft’s moves to make it more difficult for Google to deliver relevant search-based ads.
GOOGLE’S INTERNET RIVALS The reason why Google was able to sustain its competitive advantage is its ability to maintain strong relationships with Internet users, advertisers and web sites. Google primary competitors are Microsoft and Yahoo.