Thursday, January 18, 2007

Google Doodle...

Google (NASDAQ: GOOG), formed in 1999, went public in August 2004. 1999 Turnover = $220,000, 2005 Turnover = $6.1 Billion. IPO priced at $85/share, trading today at $497. Market Capitalisation - $152.2 Billion. (GE = 391.5B, AOL Time Warner = $91.4, Microsoft = $305.7B). This is a HUGE rate of growth.

This company is 7 years old, has a similar turnover to Starbucks but has a much bigger brand awareness. According to Business Week Google appeared at #24 in a listing of the top 100 global brands, just below Nescafe(?!?!?!) but above Dell, Sony, Budweiser, Oracle, Ford and Nike.

I've just finished reading 'The Google Story' by David Vise. Not as in depth as I would have liked but interesting all the same. A fascinating insight into the company, it's executives and it's culture. I'm just astounded by it's growth. From a small business created in an office at Standford to a multi billion dollar corporation that accounts for 60% of all searches in the US.

What does it do? The assumption is that it's just a search engine and that's true, but a search engine with a different approach. It doesn't just index the Internet but ranks pages. In essence they are ranked by how many other site link to them and the importance of the linking site. For example a link to your site by the New York Times would rank higher than a link by a random blog such as this. For a really detailed explanation check out Wikipedia.

But how does it make money? Advertising, pure and simple. Not only are there adverts on their site but they provide advertising for such Internet giants as AOL and Amazon. If you look at the top and right hand sides of the Google search results you will see adverts or as Google refer to them 'sponsored links'. Each click may generate $.10 to $20 dollars. Not a lot of money...now multiply that by hundreds of millions of searches per day and then say every 60th search involves a click on an advert. Fantastic model but can leave them open to problems. There have been reports of click fraud. Where people are clicking on competitors adverts to raise their costs. Google appear to be addressing the issue but I'm not sure if the motivation is there.

Interestingly Googles advertising model is based upon customers paying to 'link' to specific keywords. For example if you are a car manufacturer you can advertise when a users searches not only for 'cars' but also competitors products. If you compete with the BMW 3 Series you can bid on that particular keyword. The higher the bid the higher your placing. See Google AdWords for details.

There are also some great fan sites out there, especially in honour of the logo. Click here for the official Google logo home page.

2 comments:

S Page said...

Fantastic insight into the world of google. I'm sure everyone will be interested.

B Gates said...

Google sucks