GOOGLE’S STRATEGY IN 2008

Case Study

CASE SITUATION Since 1994, the number of people worldwide

accessingInternet has grown considerably (360 M in 2000 to

1,5 B in 2008). To read news, conduct researches, buy online…

This growth allowed internet advertising to become the

2nd most common form used in the U.S. (search-based

ads, video ads on YouTube and mobile search are among

the largest portion of Internet ads)

COMPANY OVERVIEW

Type: Public Industry: Internet, Computer software Founded: in Menlo Park, California, U.S.

(September 4, 1998) Founder: Larry Page, Sergey Brin Headquarters: Googleplex, Mountain View,

California, United States Area served: Worldwide Employees: 53,546 (2012) Subsidiaries: AdMob, DoubleClick, Motorola

Mobility, On2Technologies, Picnik, YouTube…..

GOOGLE HISTORY

GOOGLE HISTORY

Google was developed in January 1996, by Stanford university computer science graduate students Larry Page and Sergey Brin.

Google was named “BackRub” relating to its ability to rate websites for the relevancy by examining the number of back links pointing to the site.

Later, the two founders renamed BackRub to Google (which means “googol” a mathematical term of the number 1 followed by 100 zeros) reflecting the mission to organize infinite amount of information on the Internet.

In August 1998, a Stanford professor arranged for Brin and Page to meet with co-founder of Sun Micro Systems, to demonstrate the search engine. He gave them a $100,000 Check.

By the end of September 1998, the two friends raized a total of $1M capital from family, friends and other angel investors, in order to set up Google Inc.

GOOGLE HISTORY

USERS TRUST BECAUSE…

Consumers are loyal to the search engine which is the worldwide leader in Internet and Mobile search ads.

Google is capable to retrieve highly relevant search results in a fraction of seconds.

USERS TRUST BECAUSE…

Many of them find Google’s search results more relevant than those generated by competing search engines.( yahoo, ask..)

The search terms-matching of Google is highly precise.

The objectivity of the company.

POSITIVE RESULTS FOR GOOGLE

Internet users preference for Google’s boosted the company’s net income, revenues and profits.

In 2008, Google control the search-based ads market .

GOOGLE BUSINESS MODEL

GOOGLE’S BUSINESS MODEL

Its business model is successful since the net income of 2007 was 40 times greater than in 2003.

Google business model generates revenue by providing advertisers with an opportunity to deliver online advertising, directly matched by keyword to a user’s search query.

Google targets its ads to specific users using the user’s browsing history.

THE THREE COMPONENTS OF GOOGLE’S BUSINESS MODEL

Search ApplianceSearch technology integrated into a third party’s Web page or intranet. It delivers accurate search results throug a number of documents.

Google MiniSearch Appliance is designed for small business.

AdWordsit’s Google's advertising product and main source of revenue. AdWords offers pay-per-click advertising, and site-targeted advertising for both text and banner ads.

AdSenseAdSense is used by website owners who wish to make money by displaying ads on their websites. When user click on ad displayed on a Web page, the advertiser pays Google and Google give percentage of that amount to the web page owners.

GOOGLE ACQUISITION STRATEGYSince 2001, Google has acquired many

companies, mainly focusing on small venture capital companies.

In 2006; it used some proceeds of its IPO to acquire dMark for radio spot ads and Wrintley for web based spreadsheets software.

Attracted many users by acquiring YouTube (2006)

Acquired in 2008 DoubleClick, diversify from search ads and to generate revenues from banner ads.

THE 10 PRINCIPLES OF GOOGLE PHILOSOPHY

1)It's best to do one thing, and do it well: “search”

2)Focus on the user and all else will follow: it does its best to provide the most relevant and useful search results possible, with simple interface, independent from financial incentives.

3)Fast is better than slow: it’s the only company in the world who want its users to leave its website as quickly as possible.

4)You don't need to be at your desk to need an answer: Google encourages users to use wireless phones to seek information

5)There's always more information out there: Google indexed more of the Internet pages than any other search engine.

6)Make money without doing evil: Google Provide only “sponsored link” ads. “We will do our best to provide the most relevant and useful advertising, without any annoying interruption”.

THE 10 PRINCIPLES OF GOOGLE PHILOSOPHY (CONT.)

7)The need for information crosses all borders: The mission of Google is to faciliate the access to information to the entire world.

8)You can be serious without a suit: foster fun challenge and highly communicative work environment

9)Great just isn't good enough: always deliver more than is excpected.

10)Democracy on the web works: Google rely on individuals posting websites to rank and give a value to other sites.

THE 10 PRINCIPLES OF GOOGLE PHILOSOPHY (CONT.)

GOOGLE STRATEGY AND COMPETITIVE POSITION IN 2008

COMPETITIVE ADVANTAGES

Speed, Accuracy, Objectivity and Ease of use. Fit between their technology and the consumer

behavior. Page Rank technology – social network Orkut

merged Positioned as a “Fastest Crawling Technique” Trade off between “Speed” & “Compression” Best asset utilization (Efficient storage space) R&D innovation ( Android)

SWOT ANALYSIS

STRENGHTS WEAKNESSES• Corporate Reputation & Brand Trust • Highly skilled employees• The speed and simplicity of its search engine • Huge cash reserves• Profitable business model

• Increasing costs compared to sales• Dependence on advertising business• No other cash flow source than advertising

OPPORTUNITIES THREATS• New internet devices• New advertising platforms• Increase in worldwide internet penetration increase the total user base

• Increased competition in the search engine market• Privacy concerns• Business model imitators

Since its IPO in 2004, Google acquisition strategy and R&D activities increased the company’s dominance in the Internet advertising.

The addition of new features (Google Maps, Gmail, Book, Search, Blogger, Weather, Airline travel information…) increased traffic to the site and gave opportunity to serve ads to Internet users.

STRATEGY TO DOMINATE INTERNET ADVETISING

Strategy of the company to dominate search-based advertising on Mobile devices had been successful (Google accounted for 63% of searches made on Internet-enabled phones)

The company’s introduction of the Android O.S. for mobile phones allowed to increase the share of mobile search & expand the market to new Internet ads types.

STRATEGY TO DOMINATE INTERNET ADVERTISING

Google Chrome browser was launched in 2008 in order to accommodate cloud computing applications.

The cloud computing allowed lower software acquisition and computing support costs, and better collaboration among employees.

Chrome allowed Google to defense against Microsoft’s moves to make it more difficult for Google to deliver relevant search-based ads.

STRATEGIC OFFENSIVE TO CONTROL THE DESKTOP

GOOGLE’S INTERNET RIVALS

The reason why Google was able to sustain its competitive advantage is its ability to maintain strong relationships with Internet users, advertisers and web sites.

Google primary competitors are Microsoft and Yahoo.

THANK YOU VERY MUCH…