Factors Enabling Google to Gain a Competitive Advantage over Yahoo - Essay Example

Google or Yahoo? Google or Yahoo Introduction The continuing expansion and progression of technology has broken all geographical barriers and has created the concept of global brands. The excessive supply of products and services has made global markets more competitive than ever since no organization can afford to have any compromises in their products and services. Any decreasing quality can result in brand shifts and loss of market shares. Google and Yahoo are two such global companies that are considered to be market giants in the field of web services like search engines, web email etc. According to Olsen (2005); global online search advertising business amounted to an approximate value of $8 billion in 2005 that was expected to hit $22 billion last year. Both the companies compete for the same web visitors and potential advertising clients to generate revenues. However, Google has been able to sustain a stronger position and retain greater number of web visitors due to the adoption of innovative strategies and effective decision making, as compared to Yahoo. This paper shall highlight some of the factors that have enabled Google to gain competitive advantage over his competitor, Yahoo. 2. Google or Yahoo? 2.1 Degree of Diversification According to official information from Yahoo! Media Relations (2005) and Google (n.d.), Yahoo was launched in 1994 and Google came two years later in 1996, respectively. Yahoo has always followed the approach of providing their clients with a diverse range of services and data. The strategy of over-diversification has even greatly harmed the services of Yahoo. Ong (2011) agreed with this factor by stating that the Yahoo! portal portrays an amalgamated look of online media services, web directory and search engine. In the beginning, the abundant supply of information, images and links was still being perfected by Yahoo when Google launched their search engine with simple features and layout. At the time of the launch of Google, Yahoo was relying on another company’s search technology and had not focused on the development of their search engine. The reason for this incapability was that they had diverted their attention to a wide range of services, whereas Google developed a consistent vision of developing the fastest and most efficient search engine. The following figure proves the above stated argument: Figure 1: Over-diversified features of Yahoo versus simple and focused features of Google (Ong, 2011) The lack of a consistent vision of Yahoo prevails even in the present times. Ray (2010) shared useful information regarding their frequent changes in the mission statement on their official website; the definition of their service has been changed into various things like internet navigational service, online media company etc in the past few years. The achievement of Google’s foremost business goal of maintaining the best search engine has been enough to steal the web visitors of Yahoo. Google’s simplicity and focused vision wins them the edge over the over-diversified aims of Yahoo. Google launched other web services like Gmail, Google Maps, Google Earth etc after they had perfected their core competency of search engine service. 2.2 Better Service and Storage Space of Webmail Service Google launched their webmail service in 2004 when they announced the Gmail service. At that time, Yahoo and other companies were already providing webmail services that offered free limited data storage of about 10MB; any greater amount of storage was charged. Google electrified the market with their first mover’s advantage of offering 1GB storage space. Along with the credit of first mover’s advantage, Biggs (2007) stated that Gmail is considered to be much faster than Yahoo mail. Yahoo has imitated the strategy of offering greater data storage to their clients but has failed to earn back the web users who migrated to Gmail. The following table highlights some valuable facts regarding the dominance of Gmail over Yahoo mail: Table 1: Comparison of features of Gmail and Yahoo Mail (Biggs, 2007) It can be seen from the above table that Gmail has accumulated twice the number of web users in the past 7 years due to their commendable search functions and speed. Currently, Yahoo mail offers 1GB of data storage that is still far lesser than what Gmail offers to their users. However, Yahoo continues to try to match the success of Gmail by changing their layouts, features and offering faster speed; Yahoo mail launched a new look of their webmail service in the current year that offers many new features and options as compared to their earlier versions. 2.3 Revenue Generation and Advertising Strategies Advertising is a major source of revenue for the search engines in the current times since it is vital for all businesses to have a strong web presence. Both, Google and Yahoo offer advertising services with the names Google Adwords and Yahoo Search Marketing, respectively. Advertising is counted among the major sources of revenue for search engines. According to Baker (2006), Google’s revenues amounted to $2.69 billion for the third quarter of 2006 while Yahoo’s revenues amounted to only $1.58 billion for the same time period. Google’s figures were said to be a 70% increase from the revenues in the third quarter of 2005 and Yahoo’s figures were said to be an only 19% increase. These figures highlight the level of recognition and acceptance that is possessed by Google as compared to Yahoo. Google Adwords has numerous features and options that gain the edge over Yahoo Search Marketing. Campbell (2005) stated that Google Adwords’ feature of customizing the marketing strategies with respect to specific regions is remarkable; Google Adwords offers customizability in a wider range of countries while Yahoo’s similar feature is limited to only 20 countries. Campbell (2005) also provided the information that some prominent countries like Russia, India and South Korea are also missing from the list in Yahoo Search Marketing. Strouchliak (2009) stated that Google offers extremely targeted marketing since the campaigns can be narrowed down to specific cities and zip codes. Traffic reporting is much simpler and efficient in Google Adwords since it provides the feature of customizing the reports and attaining any required information in a structured format. Campbell (2005) stated that Yahoo Search Marketing provides information but it is not as structured as the service by their competitor. Perrin (2011) provided figures for July 2011; Google Adwords occupies a 65.1 % share of the search engine market share whereas Yahoo occupies a 16.1 % share. The following figure highlights similar information: Figure 2: Pie chart to highlight the US search engine market share for July 2011 (Perrin, 2011) It is due to this reason that Google provides its user a greater coverage of web users around the world. Strouchliak (2009) also stated that Yahoo’s content network i.e. matching the content of the webpage with the relevance of the ad campaign is very poor; sometimes the ads are off track from the contents to such a great extent that it simply seems to be an endeavor to gain more revenue. On the other hand, Google offers effective content network which helps the companies to target the desired market segment and get maximum returns on their advertising investments. Google Adwords also offers the feature of blocking the websites on which the advertising campaigns are not desired to be shown. 3. Conclusion After conducting an extensive study of the prevailing market share, features and services of Yahoo and Google, it can be concluded that Google gains a competitive advantage over Yahoo. Google has been able to increase their products and services over an elongated period of time by perfecting each one of them before stepping into newer domains. On the contrary, over diversified efforts and lack of a consistent vision has caused Yahoo’s efforts to be diverted in a wide range of services. Gmail offers greater storage and speed performance as compared to Yahoo mail. Google Adwords is based on more reliable and rewarding marketing strategies that help their clients to gain greater return on their investments. Greater coverage of Google helps their clients to cover a greater segment of web users. References Baker, L. (2006), Google vs. Yahoo: Earnings Reports Comparison, Search Engine Journal, Retrieved from http://www.searchenginejournal.com/google-vs-yahoo-earnings- reports-comparison/3923/ Biggs, J. (2007), A Comparison of Live Hotmail, Gmail and Yahoo Mail, AOL Tech, Retrieved from http://techcrunch.com/2007/02/08/a-comparison-of-live-hotmail-gmail-and-yahoo- mail/ Campbell, S. (2005), Yahoo SM vs. Google AdWords, Search Engine Guide, Retrieved from http://www.searchengineguide.com/shawn-campbell/yahoo-sm-vs-google-adwords.php Google (n.d.), Google History, Retrieved from http://www.google.com/intl/en/about/corporate/company/history.html Olsen, S. (2005), Google vs. Yahoo: Clash of cultures, CNet News, Retrieved from http://news.cnet.com/Google-vs.-Yahoo-Clash-of-cultures---page-2/2100-1024_3- 5752928-2.html?tag=mncol Ong, Y. (2011), Yahoo! vs Google Case Study, Retrieved from http://www.entrepreneur- inspiration.com/2011/09/06/yahoo-vs-google-case-study/# Perrin, J. (2011), Search Engine Market Share Statistics – August 11, Koozai, Retrieved from http://www.koozai.com/blog/search-marketing/search-engine-market-share-statistics- %E2%80%93-august-11-715/ Ray, J. M. (2010, February 28), Yahoo! No mission, no vision!, Retrieved from http://www.paperblog.fr/2883514/yahoo-no-mission-no-vision/ Strouchliak, I. (2009), Google AdWords and Yahoo Search Marketing Guide, SEO Chat, Retrieved from http://www.seochat.com/c/a/Website-Promotion-Help/Google-AdWords- and-Yahoo-Search-Marketing-Guide/1/ Yahoo! Media Relations, (2005), The History of Yahoo! - How It All Started..., Retrieved from http://docs.yahoo.com/info/misc/history.html Read More