Google and Internet Advertising

Agenda | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Products and Services • The Future Todd Gardner http://eajournal.wordpress.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Platforms | Social Networking Bringing people together around content and relationships Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services

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

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

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

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

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

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

Google Advertising | Long Tail of Content Display Ads Traffic Internet Pages Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services

Google Advertising | Long Tail of Content Todd Gardner http://eajournal.wordpress.com Google and Internet Advertising > Products and Services

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

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

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

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

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

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

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

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

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

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

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

Summary | Google and Internet Advertising • The Internet Ad Market • Google Corporation • Products and Services • The Future Todd Gardner http://eajournal.wordpress.com

Google and Internet Advertising

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