Revenue Drivers and Overview of the Strategies at Google - Term Paper Example

Introduction Google, the worlds largest search engine, founded in 1998, in the hands of innovators Larry Page and Sergey Brin was conceived within the dorms of Stanford University. Google more popularly known as the ultimate answering machine makes information universally accessible by its high performance, cost effective systems that cater to the needs of millions of users. Google, a term coined in for 1 followed by 100 zeros is a reflection if the company's vision to create an organized form of access to immense information that is available. Google with it revenues reported at $3.21 billion for the quarter ending at December 31, 2006, an increase of 67% compared to the 4th quarter of 2005, this company is fast growing with its philosophy of delivering more than what is expected. Google on its expansion spree in the international front has led them to gain access to new partners and growing, thereby delivering targeted and measurable ads. They have focused research groups who cater to organizing complex information using ever expanding technology thus providing a seamless experience in finding information. Google USP In about half a second, every query returns relevant information after matching words from the index servers and snippets from the doc servers. Positioning helps a company create a perception in the minds of the target audience in the market amidst its competitors. Google s positioning comes across evidently in the philosophy of focusing on their end user by using simple interfaces protecting privacy of the individual and having advertising restricted only ones relevant to the search. The ability to customize Google in over 100 languages shows their continuous improvement in quality of service making Google more accessible for a variety of people. 1. Target Audience: Google is a high quality service which can be availed by anybody who is seeking information that can be accessed from anywhere. They now have broadened their target segment by introducing customized homepages in several languages. 2. Defining the service: The Company believes in providing its audience with an experience redefining the way individuals, businesses and technologists use the Internet. The service examines a whole host of web pages to return relevant information of one s search. From Images to phone numbers to airline flight info to categories in the Open Directory to a spell checker to translating web pages, Google makes a perfect search engine sometimes even categorizing adult content. 3. Target Audience perception: The millions of users now perceive 'life to be a Google query'. 4. Competitive positioning: Custom libraries created by Google help them cut down their cost by about 50% thus making them more productive than their closest competitors like Amazon, eBay, Microsoft, and Yahoo. As a result of its superior technology systems, competitors need to spend 4 times as much to catch up. 5. Value proposition: Google generates their revenue from, Google Search Appliance: A scalable technology which understands what you mean and returns what you want. Google Adwords: Google makes online advertising easier by optimizing campaigns by winnowing keywords and creative execution for effective reach to a qualified audience. Google Adsense: This service enables publishers to carry out searches with their own web page. 6. Position: Google positions itself as an innovation company which strives to maintain quality through its product development. 7. Innovations: PageRank Technology: The collective intelligence of the web has mechanism of determining the importance of a page and thus hierarchically displays content. Considering that there is no human involvement in fiddling with page ordering, users have less reasons to suspect the integrity of information made available. Hypertext-Matching Analysis: A thorough analysis of the content on every page is done and not just plain image based scanning which could be manipulated, thereby ensuring that results return relevant information. They also go through neighboring pages to double check results of a particular search. Revenue drivers at Google Google AdWords Google AdWords happens to be one of the most effective advertising vehicles conceiving cost efficient innovative marketing strategies. Priced on an auction basis of value, depending on the clicks determined by the assigned keyword, AdWords, makes sure that relevant ads are displayed at the right times in the right places. Sophisticated analysis by optimizing content to collaborate with other information on the page is done using algorithms enhancing performance of the advertiser. Advertised content appears as sponsored links giving more room to be noticed and clicked through. Either the advertiser manages his own account or service teams cater to the needs of the customer by monitoring metrics and click through rates. Google AdSense and Web Site Services Google AdSense serves relevant ads on search result and content pages. Technological innovation helps one to relate ads with content being searched for and display them where ever required. Customers her range from USATODAY.com, ABC.com, Forbes.com and 60% of the comScore Media Metrix top 100 sites, as well as thousands of other specialty content sites. Support is offered by publishers maintaining their own accounts or sales teams creating customized programs for the same. Google Search Services It enables publishers to provide Google web and site search on their own pages - results that can be used to generate revenue with the AdSense for Search program. Ad sense is predominantly an information retrieval engine which recalls customer specs and formatting. Constant updates are done to ensure that they program is in touch with its user providing him relevant information. It stores in its cache the Top keywords, queries and information searched thus maintaining reports of all activities creating a large index across the web. Customer here are the Washingtonpost.com, AOL/Netscape, Palm, Fujitsu NIFTY (Japan), NEC BIGLOBE (Japan), NetEase (China), Yam.com (Taiwan), Vodafone Global Platform and Internet Services Group (U.K.), Retivision (Spain), Sapo (Portugal), and Virgilio (Italy).Searches here can be made more specific my mentioning language and other formats. The Google Search Appliance It is a scalable and secure device that provides Google quality search across an individual website or intranet. The technology employed here returns relevant information with results customized to the specifications of the customer. Regular updates, password protected accounts, indexing and caching technology help maintaining the sub domain specific searches thus making it far superior when compared to its competitors. Google Wireless Services It delivers Google search results via PDAs, wireless phones and other mobile devices powered by many of the world's leading wireless service providers. As technology expands to new frontiers Google tries to extend its facilities to hand held devices thereby supporting HTML mobile internet standards. Revenue is basically generated from the target advertising searches that can be sold to the customer. Majority of their clients are Sprint, Cingular, Qwest, Nextel, Bell Mobility (Canada), Vizzavi, Sprint PCS, Nextel, Palm, Handspring and Omnisky. This area is an innovation of the future and is expected to throw open myriad opportunities. Overview of the Strategies at Google Strategic management is an action plan designed by companies which assesses from time to time the processes of the business, its current and potential competitors, business ventures that it could expand into, how to cope with changing circumstances, goals and strategies and most importantly sets a implementation plan to carry out the objectives. A situation analysis shows that Google is currently is in partnership with china mobile to provide Google mobile search, its most recent innovation. Opening gmail account with out an invitation, Google maps for mobiles, Flights SMS, Traffic info, software's, Library projects show a whole lot of use of extended technology on different fronts. Concurrent with this assessment Google needs to continuously keep a check on maintaining the quality of service offered. But how does one keep a check on quality For starters Google uses it cutting edge technology to prevent manipulation of tags, pop under and time bombs. And by taking a responsible eye to security and protecting privacy of its users, Google continuously maintains its standards. As they see the trend on internet security going from bad to worse, they propose ten principles which cover areas like installation, upfront disclosure, snooping and more. Most of the organizations feel that a rigid and straight organizational structure does not necessarily mean that efficiency comes to the fore front when organizing activities, so they have now moved towards a position of re-engineering where the process are now split and re-engineered to fit into certain strategic business units. A strategic business unit is a kind of separate entity inside an organization which functions partially on its own regarding certain core decisions and the remaining part of it is taken care by the organization. It is generally responsible for its budgets, products both new and old, recruitment and pricing strategy. This gives it the look and feel of a separate profit making centre and hence the responsibility to make its own business unit more profitable rests on the unit itself. Thus each unit is responsible for making its own business strategies and it should be in line with the organizations strategies to avoid conflict in principles and ethics and core values. In the case of Google they have actually adhered to this core strategic management principle by adopting this strategic business unit approach. The Google Ad words and the Google Ad Sense are separate units and they are buffered from the search engine services that Google offers to clients. So they have actually given these three units their own task of managing the revenues and the marketing strategies to make it a profitable center to run. The Ad Words is mainly aimed at advertisers to put up their advertisements in the Google recommended sites and in the search results in the side bar as a separate sponsored link. This has enabled them to project themselves in a much more transparent way. The Google Ad sense unit looks at the blogs and web pages hosted by the users. It actually pays them on a clicks per day rate which suits most users since they earn money without doing any work. The space in their websites is sold to these advertisers to market their products. So each unit works independently but also exhibits a lot of synergy. Strategic management principles and Google We will now analyze how Google fits into the various strategic alternatives that are followed in the positioning school of management and strategic management. The bottommost level or basic level of strategy is the operational strategy. It mainly looks into the day to day activities and the ability to adjust and recreate schedules according to the level of input materials etc. It is given a tight budget and has to operate within that. This branch of management is usually controlled by the corporate level strategies and them by the business strategies. It is nothing but the collection of all the operational strategies of that corporation or business unit which actually defines the way in which the company competes and conducts business in its own area of focus. Google stresses on operational strategy as a part of its overall strategy since the actual processes or services it offers depend on the efficient conduction of its operations. The algorithms they use for their search services etc all come under its operations. So it has an effective operational strategy to get the maximum relevant search results in the most minimum possible time. This is Google's core USP which it uses to differentiate from its competitors. Thus the operational strategy is the core strategy that Google stresses on in order to get ahead of its competition and improve its USP constantly. Corporate strategy is the all compassing strategy of the company or firm. It looks at the core questions which determine the existence and purpose of the firm in question. It will answer queries like which area of the business should the company focus on; why should the company get into this business at all What is the core advantage that we offer over other rival firms Etc. Google as we can see has a very unique corporate strategy that defines its company's direction and growth. Google has looked at search engines as the main source of income when it started out but as competition increased and the environment became more demanding it started diversifying into Mail Box management and started offering e-mail services with unusually large capacity which again set it apart from others. When the trend seemed to be to offer 100MB storage, Google offered a 2GB storage capacity. A clear indicator of its core strategy is that of differentiation. As firms moved towards simpler hierarchical structure and strategic structure Google went ahead and chose the most informal and friendly environment to work from. Though technical competence and superior technology marked Google's growth and strength it laid enough stress on knowledge management in its company and started to look at new avenues of growth. Perceptual Mapping concept and its application at Google This positioning technique is used to display visually the various perceptions about the product in the minds of the consumers. Usually the position of a service or product, product line, brand is comparatively displayed with respect to the competition. We will analyze an example where perception mapping has been done in an industry and compare it to the perceptual mapping of Google and its competitors for a better understanding of its application. The important part of the perceptual map is that it can have any number of dimensions but mostly only two are used. This is because it is visually challenging to draw more than two dimensions and also a chore to understand and interpret it. Given below are sample perception maps to understand the concept and apply the same in Google. We have taken a number of cars and used 4 main variables like classy, sporty, conservative and affordable. The cars have been placed in the map according to their ratings on each variable in the minds of the consumers. So a Plymouth would be considered a very conservative car which is also affordable whereas a Porsche would be considered sporty and classy. A similar Map can be drawn with Google and its competitors such as MSN, Yahoo, AltaVista and Ask Jeeves. The main parameters would be speed, relevance, volume of matches, and depth of match. In that case we would be having Google right on top with high speed and relevance of search results. It looks to be way ahead of its competitors and typically looks to garner customers using its main advantages of superior technology and algorithm. Consumer perceptions of related products is not the only point here, many maps also show the ideal points. That is basically talking about the most ideal combination of two parameters that a consumer sees and where it should be positioned in order that it moves as close to this ideal point as it can. When there are a cluster of ideal points at a particular place then it indicates that there is an excessive demand there and that demand still remains unfulfilled. As far as Google is concerned the excessive demand lay in the accuracy of the search results and the speed. Many engines were accurate but extremely slow or inaccurate but fast. Google used a lot of new architecture for its search processes and refined them to provide high speed as well as high accuracy. Google looked at actually utilizing the demand points in the customer's minds to succeed in its venture. When it started there was a huge void in accurate search engines. Most engines were not programmed to provide for human errors and turned out exact results of what the keyword query was. So Google looked at this density point of ideal points and then looked to leverage it for its own profit. A variation of the perception mapping system is to plot ideal vectors rather than the ideal points. A general description of the map would be the slopes of the ideal vectors being the main indicators of the preferred ratio of the two dimensions by the consumers. Consider the core points that come to mind when one thinks of Google. The first thing is that it is the largest and most widely used search engine. This gives a lot of credibility to its services and the quality it offers. It also has now established itself very well in the search engine industry with most of the world's users opting for Google as the most favored medium of looking up things on the internet. It also earns a lot of revenues by displaying sponsored links alongside its search results. Google as we can see successfully positioned itself as the most sought after web search engine with excellent search results and high accuracy. But the competitors were not far behind and the perceptible differences between search engines would sooner or later be covered and would become indiscernible. Google realized this fact and trend and hence started diversifying into related fields. The first of which was Google Ad sense and Google Ad Words. These two services targeted the advertisers and the users and convinced people of its efficacy very soon. Blogs, personal web pages, company websites soon started sporting Google Ads in their web pages and earned revenue for every click made by anyone who comes to their website. The advertisers on the other hand earned a lot of new exposure through famous and popular blogs and websites. Previously advertisers paid a lot of money to grab space in the leading websites and were akin to buying space in a magazine or newspaper. Google has re-invented this concept in the web and become a leader in that. Google again positioned itself as the most wanted associate for users as well as advertisers who got cheaper rates in scores of websites previously unavailable. The next to come was the Google Desktop which had a variety of various functional widgets and other tools that could be used on your desktop. It had a separate search engine to search for files inside your system. It also had a lot of utility tools like calculator, alarm clocks etc. Google has tried to position itself closer to the customer by bringing the Google desktop into the market. It has actually entered the region which was previously controlled by Microsoft. The content management and utility tools of a common desktop was completely controlled by Microsoft and Google silently entered this segment and made a decent market share in it. Hence Google is constantly evolving and foraying into different segments and is keen to position itself as the destination website or service provider in the World Wide Web. With utilities, search engines, desktop management tools, Google map and Google spreadsheets its slowly entering the area of documenting and online content management which is a total blue ocean where no other company has entered into. Positioning as we saw mainly involves the perception in the minds of the consumers about the service or product. 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