Google and Internet Advertising




Todd Gardner
Technology Architecture Journal
http://eajournal.wordpress.com/

        ...
Agenda | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation

• Products and Services

• The Fu...
Agenda | Google and Internet Advertising
• The Internet Ad Market                      • Growth
                          ...
Growth | Market Size
             $7,000

             $6,000

             $5,000
$ Millions




             $4,000

   ...
Growth | Push and Pull Marketing
                                               -60% -40% -20% 0%                         ...
Growth | Ad Conversion Efficiency
 Advertising           Share of                Spending                 Cost per  Conver...
Growth | Ad Conversion Efficiency
                                     Spending Share        Ratio of Conversions

       ...
Agenda | Google and Internet Advertising
• The Internet Ad Market                      • Growth
                          ...
Supply and Demand | Demand
      $11,310,000,000 US spend per Year on Internet Ads
                                     En...
Supply and Demand | Supply
                                                                                        AOL Adb...
Agenda | Google and Internet Advertising
• The Internet Ad Market                      • Growth
                          ...
Segmentation
                                                                             Sponsorship               Email
...
Agenda | Google and Internet Advertising
• The Internet Ad Market
                                              •   Histor...
History | Stanford Backrub
                • Larry Page and Sergey Brin Meet
   1995

                • Search Engine Back...
History | Start-up Venture
                                                     • $100,000 in initial
                    ...
History | Acquisitions
                               54 Acquisitions since 2001
• These acquisitions provide:
     – Data...
Agenda | Google and Internet Advertising
• The Internet Ad Market
                                              •   Histor...
Strategy
      Mission: Organize the world's information and
              make it universally accessible
           Princ...
Agenda | Google and Internet Advertising
• The Internet Ad Market
                                              •   Histor...
Financials | Revenue and Net Income
              25,000

              20,000
                                           ...
Financials | Employee Performance
 1200                                                              25000           Endin...
Agenda | Google and Internet Advertising
• The Internet Ad Market
                                              •   Histor...
Strengths and Weaknesses
               Strengths                                Weaknesses
• The Google Brand            ...
Agenda | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation                          • Google ...
Platforms | Index and Search
      Mission: Organize the world's information and
               make it universally access...
Platforms | Geospatial
        Index and Search of Geospatial information
       combined with direct relevant content cre...
Platforms | Creation and Communication
Personal web-enabled solutions to create and share
                     content.


...
Platforms | Social Networking
       Bringing people together around content and
                        relationships



...
Agenda | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation                          • Google ...
Network Concepts | Search Engine
                                                           • Links build the Web
        ...
Network Concepts | PageRank
                                                       [                                      ...
Network Concepts | SEO and SEM
SEO
• No Cost
                                              SEM
• Slow
• Hard to Measure
SE...
Agenda | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation                          • Google ...
Google Advertising | AdWords
                                   Search Results                                   Store
  I...
Google Advertising | Google Quality Score
• Ad Relevance Function                                             Keyword
    ...
Google Advertising | AdSense
                                       Content                                               ...
Google Advertising | Long Tail of Content

             Display Ads
   Traffic




                                       ...
Google Advertising | Long Tail of Content




Todd Gardner http://eajournal.wordpress.com   Google and Internet Advertisin...
Google Advertising | Long Tail of Ads

                        Display Ads
   Advertising Budget




                     ...
Google Advertising | DoubleClick
                                                    Unique                   < 100K     1...
Google Advertising | Advantages
• Relevancy                                   • Scalability
     – The user has shown inte...
Agenda | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation

• Products and Services
         ...
Opportunities | Mobile
• Android
• Intent and Information
     – Urgency
     – Location
     – Previous Locations
• Ad Sp...
Opportunities | YouTube Premium
• Premium content coming to
  YouTube (NBC, MGM)
• Video overlay ads
     – Can this be mo...
Opportunities | Google Television
• Google refers to itself as a “Media
  Company”
• Established Content Channels
• Establ...
Opportunities | Social Networks
• Not yet successfully
  monetized
• Publicity and Brand
  Awareness
     – The Whopper Sa...
Agenda | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation

• Products and Services
         ...
Threats | Copyright
• Google Indexes Content
• Content has Copyright
     – Lawsuits?
     – Fair Use?
• Is Google Liable ...
Threats | Privacy
• Growing Fear of Google
• Does Relevancy Sacrifice
  Privacy?
• Targeted Ads requires
  information
• G...
Agenda | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation

• Products and Services
         ...
Next Steps
• YouTube Premium                             • Tivo – Google
     – Full-length content on                   –...
Summary | Google and Internet Advertising
• The Internet Ad Market

• Google Corporation

• Products and Services

• The F...
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Google and Internet Advertising

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Google's mission is to organize the world's information and make it universally accessible and useful. From its early days at Stanford University, the Google search engine has proven to return the most relevant results. Google has monetized search, being able to deliver advertisements that are relevant to the pages they are displayed on. Beyond search, Google offers many free services including Gmail, Google Maps, and YouTube. These services add to Google’s platform, and provide content for Google’s advertising. Google has not been successful in monetizing all of its products and services.

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  • great Presentation! please send a copy to me: dupedarabidan@gmail.com

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  • Very informative presentation, great work. Even though it's from 3 years ago, understanding this data and monitoring these trends will certainly be very helpful to the small advertising company where I work.
    -Bruce Jeffers, Austin, Texas; University of Texas
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  • harshil.3107@gmail.com
    pliz send..
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  • Very nice presentation! Can I have a PDF of it? Many thanks in advance.
    s.calamai@gmail.com
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Google and Internet Advertising

  1. 1. Google and Internet Advertising Todd Gardner Technology Architecture Journal http://eajournal.wordpress.com/ Copyright © 2009 Todd Gardner All Rights Reserved
  2. 2. Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Products and Services • The Future Todd Gardner http://eajournal.wordpress.com
  3. 3. Agenda | Google and Internet Advertising • The Internet Ad Market • Growth • Supply and Demand • Google Corporation • Segmentation • Products and Services • The Future Todd Gardner http://eajournal.wordpress.com
  4. 4. Growth | Market Size $7,000 $6,000 $5,000 $ Millions $4,000 $3,000 $2,000 $1,000 Global Internet Advertising Revenue, By Quarter $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: IAB Internet Advertising Revenue Report 2008 Q2, October 2008 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Internet Advertising Market
  5. 5. Growth | Push and Pull Marketing -60% -40% -20% 0% 20% 40% 60% 80% 100% Internet Marketing Mobile Pull PR Events Direct Mail Push Marketing TV Print Out of Home Radio Source: booz&co. Marketing and Media Ecosystem 2010, October 2008 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Internet Advertising Market
  6. 6. Growth | Ad Conversion Efficiency Advertising Share of Spending Cost per Conversions Ratio of Channel Spending (Millions) Conversion (Millions) Conversions Internet 7.59% $11,310 $6 1885 17% Radio 7.17% $10,690 $7 1527 14% All TV 43.24% $64,430 $18 3579 33% Magazines 20.36% $30,330 $11 2757 25% Newspapers 18.94% $28,220 $26 1085 10% Other 2.70% $4,020 Total $149,000 10834 Source: Ad Age, How 2007 US Ad Spending was split by Medium, Jun 2008 Source: Wiki-Invest 2006 CPM Rates Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Internet Advertising Market
  7. 7. Growth | Ad Conversion Efficiency Spending Share Ratio of Conversions 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Internet Radio All TV Magazines Newspapers Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Internet Advertising Market
  8. 8. Agenda | Google and Internet Advertising • The Internet Ad Market • Growth • Supply and Demand • Google Corporation • Segmentation • Products and Services • The Future Todd Gardner http://eajournal.wordpress.com
  9. 9. Supply and Demand | Demand $11,310,000,000 US spend per Year on Internet Ads Entertainment Consumer Goods Retail Media Leisure Travel Telecom Financial Services Automotive Computing Source: IAB Internet Advertising Revenue Report 2008 Q2, October 2008 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Internet Advertising Market
  10. 10. Supply and Demand | Supply AOL Adbrite MSN Unique Users per Server Month Share Google Google 1,107,489,739 35.87% DoubleClick 1,079,203,140 34.95% Yahoo Yahoo 362,201,931 11.73% MSN 309,290,121 10.02% AOL 156,109,326 5.06% Adbrite 73,446,676 2.38% Total 3,087,740,933 DoubleClick Source: Attributor Market Survey, March 2008 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Internet Advertising Market
  11. 11. Agenda | Google and Internet Advertising • The Internet Ad Market • Growth • Supply and Demand • Google Corporation • Segmentation • Products and Services • The Future Todd Gardner http://eajournal.wordpress.com
  12. 12. Segmentation Sponsorship Email Digital Video Format Share Rich Media Search 44% Lead Display Ads 21% Generation Classifieds 14% Search Lead Generation 7% Rich Media 7% Classifieds Digital Video 3% Sponsorship 2% Email 2% Display Ads Source: IAB Internet Advertising Revenue Report 2008 Q2, October 2008 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Internet Advertising Market
  13. 13. Agenda | Google and Internet Advertising • The Internet Ad Market • History • Google Corporation • Strategy • Financial Performance • Products and Services • Strengths/Weaknesses • The Future Todd Gardner http://eajournal.wordpress.com
  14. 14. History | Stanford Backrub • Larry Page and Sergey Brin Meet 1995 • Search Engine Backrub Launches • Introduction of PageRank 1996 • Google is born • 10,000 searches per day 1997 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Google Corporation
  15. 15. History | Start-up Venture • $100,000 in initial funding 1998 • Began selling search keywords 2000 • Offered at $85 per share • 22,351,900 shares traded 2004 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Google Corporation
  16. 16. History | Acquisitions 54 Acquisitions since 2001 • These acquisitions provide: – Data (content) – Users (customers) – Technology (software) – Developers (employees) Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Google Corporation
  17. 17. Agenda | Google and Internet Advertising • The Internet Ad Market • History • Google Corporation • Strategy • Financial Performance • Products and Services • Strengths/Weaknesses • The Future Todd Gardner http://eajournal.wordpress.com
  18. 18. Strategy Mission: Organize the world's information and make it universally accessible Principles: • Focus on the user • You can make money without being evil • Provide the most relevant results possible Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Google Corporation
  19. 19. Agenda | Google and Internet Advertising • The Internet Ad Market • History • Google Corporation • Strategy • Financial Performance • Products and Services • Strengths/Weaknesses • The Future Todd Gardner http://eajournal.wordpress.com
  20. 20. Financials | Revenue and Net Income 25,000 20,000 21,796 $ Millions 15,000 16,594 10,000 10,605 5,000 6,139 4,227 4,204 3,077 1,465 0 2001 2002 2003 2004 2005 2006 2007 2008 Source: Google SEC Filings Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Google Corporation
  21. 21. Financials | Employee Performance 1200 25000 Ending Revenue Per Employee Permanent Net Income Per Employee 1000 Headcount 20,222 20000 800 16,805 15000 $ Thousands 600 10,674 10000 400 5,680 5000 200 3,021 284 6821,628 0 0 20012002 2003 2004 2005 2006 2007 2008 Source: Google SEC Filings Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Google Corporation
  22. 22. Agenda | Google and Internet Advertising • The Internet Ad Market • History • Google Corporation • Strategy • Financial Performance • Products and Services • Strengths/Weaknesses • The Future Todd Gardner http://eajournal.wordpress.com
  23. 23. Strengths and Weaknesses Strengths Weaknesses • The Google Brand • Non-promotional Model • Search Relevancy • Ad Click Fraud • Innovation • The Altruistic Mission • The Altruistic Mission Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Google Corporation
  24. 24. Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Google Platforms • Network Concepts • Products and Services • Google Advertising • The Future Todd Gardner http://eajournal.wordpress.com
  25. 25. Platforms | Index and Search Mission: Organize the world's information and make it universally accessible Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  26. 26. Platforms | Geospatial Index and Search of Geospatial information combined with direct relevant content creation Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  27. 27. Platforms | Creation and Communication Personal web-enabled solutions to create and share content. Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  28. 28. Platforms | Social Networking Bringing people together around content and relationships Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  29. 29. Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Google Platforms • Network Concepts • Products and Services • Google Advertising • The Future Todd Gardner http://eajournal.wordpress.com
  30. 30. Network Concepts | Search Engine • Links build the Web • Spiders crawl the Web • Simulate a crawl with TouchGraph Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  31. 31. Network Concepts | PageRank [ ] PageRank(T1) PageRank(TN) PageRank(A) = (1-d) + d +…+ LinkCount(T1) LinkCount(TN) Where: 2 6 – TN are all the pages that link to A – d is the damping factor 2 2 Source: Ian Rogers, Google PageRank White Paper, 2002 Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  32. 32. Network Concepts | SEO and SEM SEO • No Cost SEM • Slow • Hard to Measure SEM SEM SEO • Recurring Cost • Fast • Real-time metrics Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  33. 33. Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Google Platforms • Network Concepts • Products and Services • Google Advertising • The Future Todd Gardner http://eajournal.wordpress.com
  34. 34. Google Advertising | AdWords Search Results Store Internet Users $ Pay-Per-Click Relevant Store Ads Manager Intent & Information $ Keyword Bid f(x) Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  35. 35. Google Advertising | Google Quality Score • Ad Relevance Function Keyword Relevance • Calculated based on Search Query Keyword Ad Relevance Bid • Provides Real-Time Quality Score metrics to advertisers Landing Historical Performance Page Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  36. 36. Google Advertising | AdSense Content Store Internet Users Content $ Pay-Per-Click Store Owner Relevant Ads Information Manager $ Pay-Per-Click $ Keyword Bid Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  37. 37. Google Advertising | Long Tail of Content Display Ads Traffic Internet Pages Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  38. 38. Google Advertising | Long Tail of Content Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  39. 39. Google Advertising | Long Tail of Ads Display Ads Advertising Budget Number of Advertisers Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  40. 40. Google Advertising | DoubleClick Unique < 100K 100K - 1M >1M Server Monthly Unique Users Market Share Market Share Domains Visitors Visitors Visitors Google 1,107,489,739 35.30% 91,462 77.28% 71.40% 41.60% 15.80% DoubleClick 1,079,203,140 34.39% 6,748 5.70% 9.10% 29.90% 48% Yahoo 362,201,931 11.54% 5,147 4.35% 4.7% 7.3% 16.5% MSN 309,290,121 9.86% 8,099 6.84% 6.6% 6.3% 12.8% AOL 156,109,326 4.98% 1,976 1.67% 1.9% 6.5% 5.7% Adbrite 73,446,676 2.34% 3,575 3.02% 4.1% 7.9% 0.5% Google Acquired DoubleClick in 2007 for $3.1 Billion Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  41. 41. Google Advertising | Advantages • Relevancy • Scalability – The user has shown intent – Creation work is done by the Advertiser – The user has provided – Placement is automatic information • Network Size • Measurability – Large potential for – Advertiser has instant placement metrics on performance – Google places ad partially on performance Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services
  42. 42. Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Products and Services • Opportunities • The Future • Threats • Next Steps Todd Gardner http://eajournal.wordpress.com
  43. 43. Opportunities | Mobile • Android • Intent and Information – Urgency – Location – Previous Locations • Ad Sponsored Phones – Dunn Brothers Example • Open-Access Spectrum Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > The Future
  44. 44. Opportunities | YouTube Premium • Premium content coming to YouTube (NBC, MGM) • Video overlay ads – Can this be more relevant for premium content? (buy the DVD) • Video Content AdSense – Content producers get paid for advertising on their video. • Purchase Content Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > The Future
  45. 45. Opportunities | Google Television • Google refers to itself as a “Media Company” • Established Content Channels • Established advertising relationships (Google TV Ads) • Open-Access Spectrum • High customer demand for alternatives to Cable and Satellite Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > The Future
  46. 46. Opportunities | Social Networks • Not yet successfully monetized • Publicity and Brand Awareness – The Whopper Sacrifice • Trusted Network of referrals and reviews Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > The Future
  47. 47. Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Products and Services • Opportunities • The Future • Threats • Next Steps Todd Gardner http://eajournal.wordpress.com
  48. 48. Threats | Copyright • Google Indexes Content • Content has Copyright – Lawsuits? – Fair Use? • Is Google Liable for other’s infringements when indexed? • Multi-media Copyright Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > The Future
  49. 49. Threats | Privacy • Growing Fear of Google • Does Relevancy Sacrifice Privacy? • Targeted Ads requires information • Generational Change in Privacy Expectations Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > The Future
  50. 50. Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Products and Services • Opportunities • The Future • Threats • Next Steps Todd Gardner http://eajournal.wordpress.com
  51. 51. Next Steps • YouTube Premium • Tivo – Google – Full-length content on – Partnership/Acquisition to YouTube Network get Google TV foothold – Relevant overlay ads (buy – Experiment with Relevant the DVD) TV Advertising • Mobile Investments • Social Network Tests – Capital Equipment for – Ad experiments on Orkut Open-Access – Plan for acquisition of – Carrier Partnerships Facebook Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > The Future
  52. 52. Summary | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Products and Services • The Future Todd Gardner http://eajournal.wordpress.com

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