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Presentation on Google given to Dr. Hughes' Advanced Professional Selling class on 3/3/08.

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  1. 1. quot;Half the money I spend on advertising is wasted… the trouble is I don't know which half.quot; -John Wanamaker
  2. 2. Advertising Industry: $528 billion in total revenues Waste: $112 billion a year in America $220 billion worldwide (or just over half of their total spending) Source: ZenithOptimedia
  3. 3. An independent firm, such as Nielsen Media Research, estimates how many television sets are tuned to a given channel at a given time. Advertisers then pay a rate, called CPM (cost per thousand), for the right to expose the implied audience to their spot.
  4. 4. Regular activities engaged in by viewers during TV commercials: 41.2% channel-surf 33.5% talk with others or on the phone 30.2% mentally tune out 5.5% regularly fully attend to commercials
  5. 5. Background Founded in 1998, Google Inc. is one of the fastest growing companies in US history. With nearly 17,000 employees and a $147 billion market cap, it is considered the largest media company in the world and the largest advertising agency in the world.
  6. 6. Search As of December 2007, Google controls 57% of the search engine market. Its two closest competitors are Yahoo! at 17% and MSN 14%, respectively.
  7. 7. Flagship products and main sources of revenue Revenue is on a ‘pay-per-click’ basis The goal: To cut down that 50% waste AdWords and AdSense: $6.1 billion in revenues
  8. 8. Cost Per Action (CPA) – “Affiliate Marketing”
  9. 9. In its simplest form, this involves querying a search engine with keywords (“used cars”, say), then scanning the search results as well as the sponsored links from advertisers, and then clicking on one such link. In effect, the consumer has expressed an intention twice (first with his query, then with his click). The average cost to an advertiser from one such combination is 50 cents, which corresponds to a CPM of $500; by contrast, the average CPM in traditional (“exposure”) media is $20.
  10. 10. A consumer’s action is 25 times as valuable as his exposure.
  11. 11. Goodbye Pareto Curve, Hello Long Tail!
  12. 12. Pareto Curve: “The 80/20 Rule” • The top 20% items result in 80% of sales • More attention is given to the ‘head’ • Expensive to promote low selling items Long Tail: Everything can be profitable • Sell Everything! • No additional marginal cost • Ads are self-service, cheap, and performance based (pay-per-click), which all combine to dramatically lower the barrier to entry.
  13. 13. “We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday” -A former salesperson
  14. 14. Room To Grow: Web advertising in US is only 6% of total advertising expenditures, though consumers spend 23% of their media time online. Source: The Online Publishers Association
  15. 15. quot;The surprising thing about The Long Tail is just how long the tail is, and how many businesses haven't been served by traditional advertising sales.quot; -Eric Schmidt, CEO Google Google now has revenues of more than $1 billion a quarter, a least half of which is made up of Long Tail advertisers by this definition. This is, needless to say, just a glimpse of what's still to come.
  16. 16. Thank You! Questions? Comments? Google It!