Danny Tran, CSUCI

Company Background

• Co-founded by Larry Page and Sergey Brin while they were Ph.D students at Stanford University. Started out as a research project.

• Founded 1998. Went public in 2004.

• Headquartered in Mountain View, CA.

• Company is focused on innovations.

• $59.82 billion company.

• 49,829 employees

Search Market Share, Year End 2008, and Change in Market Share ’07-’08 (Data Source: Hitwise)

Products

• Web-base Products– Search tools– Advertising services (money

maker)– Communication and publishing

tools– Development tools

• Operating systems– Android, Chrome OS

• Desktop applications– Google Chrome, Picasa

• Mobile applications– Youtube

• Hardware– Google Glass, Google Phone

• Services– Google Ideas (think tank)

http://sumtips.com/2011/02/googles-periodic-table-apis-products.html

Article 1: Searching for Value

• Google is well known for providing a unique work environment for employees that provides plenty of benefits.

• These benefits are expensive. Are they worth?

http://commons.wikimedia.org/wiki/File:Googleplex_solar_power.jpg

Article 1: Cost of Employee Benefits

• Costs:– Google’s operating costs exceed $1.5 billion per quarter (Kafka 2009).

Payroll-related benefits account for about 50% of revenue– Food expenses alone exceed $63 million just for Us operation (Sridharan,

2008). – Spent $37,000 per child for day care service(Young, 2008).

• Benefits:– Satisfied employees equates to satisfied customers which enhance firm

profitability and market share– Google had $209,624 in profit per employee in 2008, beating all other

large tech companies in the sector like Microsoft, Apple, Intel and IBM, and competitor Yahoo! (at $31K per employee) (Pingdom 2009).

Article 2: Google’s Business

• UNDERSTANDING THE INCREASE IN ONLINE AD SPENDING• SEARCH ADVERTISING• How Much Do Advertisers Pay Per Click?

– IP Addresses and Geotargeting

• AD NETWORKS – DISTRIBUTION BEYOND SEARCH– Ad Networks and Competitive Advantage

• MORE AD FORMATS AND PAYMENT SCHEMES• CUSTOMER PROFILING AND BEHAVIORAL TARGETING• PROFILING AND PRIVACY• SEARCH ENGINES, AD NETWORKS, AND FRAUD• THE BATTLE UNFOLDS

– Strategic Issues– More Ads, More Places, More Formats– YouTube– Apps and Innovation

Google’s Search Engine Technology

High Level Google Architecturehttp://infolab.stanford.edu/~backrub/google.html

• Web crawling: Uses a software called web crawler to navigate the web. Sorting the pages by content and other factors

• Indexing the documents: keeping track

• Algorithms: gets to work looking for clues to better understand what you mean and based on these clues they pull the relevant documents from the index

• Ranking the results

Understanding Search Advertising

http://faculty.csuci.edu/minder.chen/mba550/

• Is an online advertising service that places advertising copy at the top or bottom of, or beside, the list of results Google displays for a particular search query.

• The choice and placement of the ads is based in part on a proprietary determination of the relevance of the search query to the advertising copy.

• Is Google's main source of revenue. Google's total advertising revenues were USD $42.5 billion in 2012.

• Offers cost-per-click (CPC), cost-per-thousand-impressions

• Allows publishers in the Google Network of content sites to serve automatic text, image, video, or interactive media advertisements that are targeted to site content and audience.

• $9.71 billion annual revenues

• These advertisements are administered, sorted, and maintained by Google.

• They can generate revenue on either a cost per-click or cost per-impression basis.

Google Business Model

http://bmimatters.com/2012/03/29/understanding-google-business-model/

Google’s Competitive Edge

• Company has developed an strong infrastructure base that guarantees a fast and efficient search engine.

• Because of the incredible speed, a user is less inclined to switch to a competitor.

• Spent around $7 billion on their infrastructure in 2013.

• Strong brand

• Financially stable

http://www.datacenterknowledge.com/archives/2014/02/03/google-spent-7-3-billion-data-centers-2013/

Challenge for The Future

• In the next few years, paid search is expected to grow by only 13% annually, whereas mobile advertising is expected to grow by more than 200% in total by 2016. Social network advertising is expected to grow by nearly 30% annually.

• Lack of real engagement with the Google+ network.

• Lack of product integration.

Google’s Strategy for the Future

• Earn: Focus on search advertising business.

• Entice & Defend: Enticing people to use services that can either deliver ads or collect data to improve targeting.

• Expand The Pie: Seek to increase internet usage among people.

• Experiment: letting employees experiment with new projects.

Quiz

1. Which product is Google’s biggest source of Revenues?A. AdWordsB. AdSenseC. Doubleclick

2. Identify the correct order on how search engine works:A. Web crawling->Indexing->page rankingB. Indexing->page ranking->web crawlingC. Page ranking->web crawling-> indexing

3. Who are Google’s main competitors in the search engine business?A. Facebook and TwitterB. Yahoo and MicrosoftC. Intel and Dell

Reference

• http://edgar.secdatabase.com/1404/119312513028362/filing-main.htm• Kafka, P. (2009, April 16). Google revenue slumps but cost cutting pays off. The Wall Street Journal Digital Network: http://

mediamemo.allthingsd.com/20090416/googles-revenueslumps- but-cost-cutting-pays-off/• Sridharan, V. (2008, April 23). Google's Ginormous Free Food Budget: $7,530 Per Googler, $72 Million A Year*. The Business

Insider: http://www.businessinsider.com/2008/4/googles-ginormous-food-budget-7530-pergoogler• Young, C. (2008, July 30). Are Killer Benefits Poised to Kill Employee Morale and Your Bottom Line? Retrieved from HR

Resource: http://www.hrresource.com/blog/view.php?blog_id=448• http://www.linkedin.com/today/post/article/20130628195308-4802093-google-s-strategy-explained• http://infolab.stanford.edu/~backrub/google.html• http

://www.forbes.com/sites/tomiogeron/2013/03/10/googles-4-biggest-technical-challenges-according-to-search-guru-amit-singhal-sxsw/

• http://www.fool.com/investing/general/2014/04/19/3-threats-to-googles-future.aspx