The Google Machine

Just in a creative mood, and I wrote this article about the marketing strategy of Google's advertising technologies.

This blog will outline the main components of Google’s business. Focusing on its core revenue-generating business, advertising technologies, the text will be comprised of competition identification and offering, Google’s target market, the AdWords product strategy, Google product dissemination through its concise product strategy, the communication strategy found across the Google platform, and the interesting pricing strategy with its advertisers.

Since its formation 1996, the corporate giant known today as Google has taken the world by storm. Google was originally formed by two Stanford University students and has added over 32,000 employees to its team in just 16 years of infancy. Generating a substantial $37.9 billion dollars in revenue each year is not happenstance, and the marketing minds behind Google’s advertising technologies are – quite simply – geniuses. In the following sections, I will detail just how Google makes internet advertising work.

Google specializes in three main areas (listed in order of consumer knowledge): internet searches, cloud computing, and advertising technologies. The first branch, internet searches, is nearly self explanatory. When a person needs to find something on the complex “internet machine,” they generally use a Google search to do so. In fact, Google processes over one billion search requests each day (Kuhn, 2010), which is nearly 12,000 searches each second. The second branch, cloud computing, is a relatively new introduction in the technology world. Cloud computing works on the premise that users should not need to know the location or details of the underlying infrastructure. More broadly known as PaaS (platform-as-a-service), Google makes heavy use of this technology. Its product Google Apps (which houses Gmail, and Calendar, for starters) is a prime example of Google’s largest cloud platform offering. Finally, Google focuses on advertising technologies. Little do most know, but Google’s revenue is funded (to the tune of ninety-nine percent) by its advertising programs. (Google Annual Report, 2008) The idea behind this product offering is simple, but the effects are quite astounding. Below, we’ll explore them in more detail.

Google is a world-wide company. Although the company was founded in California, over half of Google’s search results are delivered to people outside of the United States. Today, Google has offices in 60 countries and offer their products in more than 130 languages. (“Google,” 2011)

Fortunately for Google, there are only two main competitors: Yahoo! Search Marketing and Microsoft adCenter. In 2010, Yahoo! and Microsoft formed a partnership and merged their core advertising into Microsoft’s adCenter program. The services offered by adCenter are split into two markets: small and medium business and marketers and agencies. The prior allows advertisers to display advertisements on Microsoft’s Bing search engine and on Yahoo!’s search page. The later caters to multi-screen advertising, which is a ring Google hasn’t yet entered and probably never will. On its homepage, Microsoft Advertising for marketers and agencies solicits vendors to have their message heard on services such as Xbox, Bing, Windows Live, Hotmal, MSN, and MSN Messenger. Unlike the Google product offering, these services are distinctively separate and do not integrate with each other to form a sticky service. Because of this, Microsoft’s share of customers in these distinct product offerings is dropping as Google picks up the lost business.

As discussed above, Google was started in California and delivered results to the U.S. only. Since then, the horizontal growth and lightening product offering process has allowed Google to reach to the furthest corners of the world. The implementation took place somewhat organically, but Google gives much of the credit to its employees. By believing in and fostering an employee empowerment culture, Google has been able to disseminate through the complex wires and use them to venture around the globe. What keeps them global, however, is their product offering and excellent distribution strategy.

Google has its own Ten Commandments (although they call it the “ten things we know to be true”). By examining this list, we gain useful insight into their product strategy. The first core principle is the core of Google’s product strategy. “Focus on the user and all else will follow.”

Google’s products are digital. Although they do not follow a distribution strategy in the traditional sense of physical products to physical consumers, they do have a strategy to provide digital products to digital consumers. Customers can go somewhere else (to a competitor, for example) and achieve nearly the same search results. What keeps them coming back? Google’s product offering is a sticky service. Specifically, Google knows that “people want access to [their] information wherever they are.” (“Google,” 2011) When someone checks their Gmail account, they know it will be there. They’ve become comfortable with how it works, its reliability, and also with its integration with their calendar(s), contacts, and internet lifestyle. Every Google product is a sticky service, designed to keep customers coming back because they feel they have the best experience they can find.

To illustrate the importance of this point, let’s look at Blogger, Google’s blog software. Anyone, anywhere, anytime can create a blog, and there are hundreds (likely thousands) of starting points and services. How do the high-traffic blogs get that way? How did Google’s Blogger become so popular? Because Google links with services that people already have. Let’s assume Joe, our test dummy, has a Blogger Blog. Joe, with his blog, is already linked to his Gmail account. If Joe wants to post a blog, but he’s away from the computer, that’s no problem. Google has a mobile application for that. Joe wants to share his blog with the world? Joe can advertise it with the click of a button on Facebook. Joe wants to email his blog article to someone? The "Email This" button on his blog sends the link straight from his networked Gmail account. Joe’s feeling the urge to “tweet” his thoughts of grandeur? There’s a Twitter button. Joe’s really wanting to Buzz? You guessed it… there’s a Buzz button. Why would Joe choose to transfer my blog away from this sticky product offering to another blog provider? If he did, he would lose all of these cool, networked, sticky features. This strategy holds true for Google’s advertising products also.

In regards to Google’s advertising technologies, the way Google communicates with its customers is tied directly to their product strategy. Through AdWords, its big money maker, integration of revenue-generating advertisements into users’ search results happen seamlessly. Not only are the advertisements clearly marked as such when a visitor is viewing the page, the advertisement sections are relevant to the search query. In this sense, advertisement in results is not a hindrance or hassle; Google has transformed it into a positive experience that benefits their customers’ interests and the company’s profits.

In the same respect, its subsidiary company YouTube has begun placing advertisements in select videos. If the user finds the ad irrelevant or inconvenient, they can choose to skip it after five seconds. Alternatively, if they find the ad interesting, they can click on it. Again, thinking about the user experience surrounding the product’s strategy, the video pauses and the advertisement opens in a new window.

Amazingly enough, all of Google’s individual consumer products are free. This was an important decision in the pricing strategy because – as detailed earlier – customers are more than happy to shop around. Fortunately, nothing beats a price of free, and a free service that works reliably as described is even more amazing.

When a Google client wishes to advertise their product through Google’s Ad-Sense, they can do so in one of two ways. First, the advertiser can choose to pay a set price per number of impressions. For example, a car company could decide the best way to promote their product is through mass marketing. They could pay Google to show their banner to 1,000 viewers searching for new cars for a flat rate of $2.00. Alternatively, advertisers may want to target a specific market. In this case, the advertiser can choose to pay per click-through. For example, a shampoo company offering free trials could choose to display their banner to women under the age of 40 living in the San Francisco area until 100 people in that target market click on it. At that point, they might pay a flat rate of $2.00. Both options have distinct advantages and disadvantages, and Google allows the advertiser to not only choose the pricing scheme, but also to choose the target market right for their product.

Google’s product implementation in any one country is similar (if not identical) to the offerings in a different country. What is not similar, however, is the response of the native government. In China, for example, portions of Google’s services have been partially or fully blocked in the mainland. (Google Mainland China) Although Google does not explicitly state how this affects revenue from its advertising line, if search results are censored by the government, it can be safely assumed that advertising services are included.

Google’s product offering contains everything users need, including advertising solutions that provide various methods of flexibility for an advertiser and a seamless, non-intrusive user experience. This experience is based upon a solid foundation made of sticky services, forward-thinking product offerings, and a global familiarity known throughout the world. This winning marketing package is known as none other than Google.

References:

Google. “Annual Report”. February 15, 2008.
Google. "Google Mainland China service availability". Google. Retrieved February 3, 2012.
Google. “Our Philosophy”. (2011). Retrieved from http://www.google.com/about/company/tenthings.html
Kuhn, Eric (December 18, 2009). "CNN Politics – Political Ticker... Google unveils top political
searches of 2009". CNN. Retrieved February 2, 2012.
Schofield, Jack (April 17, 2008). "Google angles for business users with 'platform as a service'".
London: Guardian. Retrieved February 2, 2012.