A Research Methodology Project On Final)

A Research Methodology Project on Marketing
Submitted in fulfilment of the requirement for the subject RESEARCH

METHODOLOGY.
SUBMITTED BY:
Tom George
UNDER THE GUIDANCE OF:

Mrs Leena James
DEPARTMENT OF MANAGEMENT STUDIES
CHRIST UNIVERSITY, BANGALORE
2009-2010
1
DECLARATION
I hereby declare that this RESEARCH METHODOLOGY PROJECT report on
THE ONLINE ADVERTISEMENT INDUSTRY submitted to Mrs Leena James
for the fulfilment of the requirement for the subject RESEARCH
METHODOLOGY is an original and independent work carried out by me.
Place: Bangalore
Date: 22th February 2010
Tom George
08D1656
2
GUIDE CERTIFICATE
This is to certify that Tom George (08D1656), student of 4 Semester BBA ‘B’ at
Christ University, Bangalore has completed this project on the topic titled “A study
on the impact of online advertisements like Google AdSense and Google AdWords
on Google’s revenue ” under my guidance and supervision.
This has not previously formed the basis of the award of any degree, diploma or
other similar title of recognition.
PLACE: BANGALORE MRS. Leena James

DATE: 18th February, 2010 Class COORDINATOR
4 BBA ‘A’
CHRIST UNIVERSITY
BANGALORE
SIGNATURE:
CHRIST UNIVERSITY
DEPARTMENT OF MANAGEMENT STUDIES
BANGALORE
3
ABSTRACT
Title: A study on the impact of online advertising tools in Google’s revenue
Author: Tom George
Supervisor: Mrs. Leena James
Department: Department of Management, Christ University
Subject: Research Methodology
Background and Problem Discussion: Online marketing has intensified and is
evident in nearly all aspects of daily life. Local regions or national boundaries no
longer restrict competitive forces. To be successful in today's global economy,
companies must be simultaneously responsive to local and global market
conditions. Hence, marketing through online websites and forums are an
important ingredient for every company, whether or not it is currently involved in
exporting activities.
Purpose: The purpose of this study is to identify (1) the primary contribution of
online advertising tools deployed by Google in becoming a successive revenue
model. (2) The factors affecting the advertising strategies of Google in the present
market. (3) Effectiveness and reliability of the management strategies (i.e. Google
AdWords and Google AdSense) employed by Google and how does it address the
needs of progress of the market. (4) Various strategies adopted by Google to
sustain their brand in the advertising market
Method: Data were collected, regarding online advertisement share of Google’s

advertisement tools. The data collected was mainly of secondary form.
Theory: An extensive review of the literature was completed relative to

determining what are the ingredients of online marketing. The literature provided
several organizational frameworks, which focused on general elements of online
marketing.
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TABLE OF CONTENTS
Declaration………………………………………………………………………………………………………………
………………2
Guide
Certificate………………………………………………………………………………………………………………
……….3
Abstract…………………………………………………………………………………………………………………
………………..4
Table of
Contents…………………………………………………………………………………………………………………
…..5
List of
Diagrams………………………………………………………………………………………………………………
……….7
CHAPTER ONE:
INTRODUCTION………………………………………………………………………………………………..8
1.1 Area and Title of

research……………………………………………………………………………………………………9
1.2 Objectives…………………………………………………………………………………………………………
……………..10
1.3 Limitations…………………………………………………………………………………………………………
……………..11
1.4 Scope………………………………………………………………………………………………………………
………………12
1.5 Introduction…………………………………………………………………………………………………………
……………13
1.6 Business
Description………………………………………………………………………………………………………….
13
1.7 Background…………………………………………………………………………………………………………
……………20
1.8 Statement of the
Problem…………………………………………………………………………………………………..21
CHAPTER TWO: INDUSTRY

PROFILE………………………………………………………………………………………..22
5
2.1 Global internet software and
services………………………………………………………………………………….23
2.2 Competitive
landscape……………………………………………………………………………………………………….28
2.3 Leading
companies…………………………………………………………………………………………………………….31
2.4 Company
Profile………………………………………………………………………………………………………………..34
2.5 Key
Facts……………………………………………………………………………………………………………………
……36
2.6
History…………………………………………………………………………………………………………………
………….37
2.5 Major Products and

Services………………………………………………………………………………………………43
2.6 Swot
Analysis…………………………………………………………………………………………………………………
…45
2.7 Top
Competitors……………………………………………………………………………………………………………...
.53
CHAPTER THREE: RESEARCH

DESIGN………………………………………………………………………………………54
3.1
Scope……………………………………………………………………………………………………………………
…………56
3.2 Statement of the

problem………………………………………………………………………………………………….57
3.3
Objectives………………………………………………………………………………………………………………
………..58
6
3.4 Data collection
methods……………………………………………………………………………………………………..59
3.5 Plan of
Analysis…………………………………………………………………………………………………………………
60
3.6
Limitations………………………………………………………………………………………………………………
………..61
3.7
Chapterization…………………………………………………………………………………………………………
………..62
3.8 Operational
Definition………………………………………………………………………………………………………..63
3.9 Research
Process………………………………………………………………………………………………………………64
3.10 Collection of
Data……………………………………………………………………………………………………………65
CHAPTER FOUR: DATA

INTERPRETATION…………………………………………………………………………………66
4.1 Search Engine

Optimization………………………………………………………………………………………………..67
4.2 Relationship with Search

Engines………………………………………………………………………………………..68
4.3
Methods…………………………………………………………………………………………………………………
…………69
4.4 Seven Principles of

Success………………………………………………………………………………………………..75
4.5 Graphical Analysis of

Data………………………………………………………………………………………………….76
4.6 Concluding
Interpretation…………………………………………………………………………………………………..82
CHAPTER FIVE: FINDINGS AND

CONCLUSION…………………………………………………………………………..83
7
5.1
Findings…………………………………………………………………………………………………………………
…………84
5.2 Articles and news from various reliable

sources…………………………………………………………………….85
5.2.1 How Google Gets from Chrome OS to YouTube

TVs…………………………………………………………..85
5.2.2 What makes Google a successful revenue model?..................................................................87
5.2.3 Google: Chrome OS Is About Driving Internet Use (Which Will Let Us Show More Ads)………….88
5.2.4 The Google Revenue Equation and Why Google’s Building Chrome OS…………………………………90
5.2
Conclusion………………………………………………………………………………………………………………
………..94
CHAPTER SIX:
BIBLIOGRAPHY…………………………………………………………………………………………………96
6.1
Websites…………………………………………………………………………………………………………………
………..97
6.2 Articles and

Financials………………………………………………………………………………………………………..98
6.3
Books……………………………………………………………………………………………………………………
………….99
LIST OF DIAGRAMS
1. Global Internet Software and Services Market Value

2. Global Internet Software and Services Market Volume
3. Global Internet Software and Services Market Segmentation
4. Global Internet Software and Services Market Share
5. Google 10th Quarter Filing
6. Nielson/Net Ratings - Search Engine Usage Statistics for February 2009
7. Search Engine Market Share
8. Google Revenue Trends for 3rd Quarter of 2008
9. Who is Lining Google’s Pockets Today
8
10. Google Share of all online and offline ads
9
Chapter 1
Introduction
10
Area of research: Marketing Management
Title of the research: A study on the impact of online

advertising tools in Google’s revenue
Industry: Information technology industry and Search
engine optimization
Company: Google Inc.
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Objectives
1. What is the primary contribution of online advertising tools deployed by

Google in becoming a successive revenue model?
2. What are the factors affecting the advertising strategies of Google in the
present market?
3. How effective and reliable is the management strategies (i.e. Google
AdWords and Google AdSense) employed by Google and how does it
address the needs of progress of the market?
4. What are the various strategies adopted by Google to sustain their brand in
the advertising market?
5. Based on the perception of the respondents, do the management
strategies (i.e. Google AdWords and Google AdSense) of Google have
significant effect to its progress?
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Limitations
1. The first and foremost difficulty posed in pursuing this research is the
inconsistency of data from various sources as reliable sources that provide
required information on this subject is just a handful of them
2. The strategies of a company’s advertising techniques can never be
predicted with maximum accurateness. This information is viable to
changes in the dynamic international market.
3. Time constraint is another determining factor in a research work like this
that usually require sufficient amount of time for collection and
interpretation of chunks of data let it be primary or secondary.
4. In this particular research where it was virtually impossible to gain primary
data, secondary data was the only option left to the researcher to have
access to information pertaining to the focus of the study.
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Scope
The information technology industry is growing at a great pace and the growth
rate is expected to double with every passing year. There are many new
developments in this sector, including the ingress of 4G broadband technology
that the Indian market is witnessing at present.
With the coming of more and more projects, the information technology industry
is going for high scale recruitments. There is a huge demand for software
engineers, system analysts, and hardware engineers for large-scale industry
requirement. Besides, there are many opportunities for marketing people whose
services are required to capture more and more customer base online and offline.
The new projects, setting up of new advertising portals, expansion of existing

network resources, network installations, etc. are providing more and more
employment opportunities in the information technology sector.
However, all these developments that are happening in the sector, it was Google
with along a few of its counterparts that could straightforwardly pass through the
recent harsh conditions of global economic slump. Such a withstanding was only
possible due to tenacious advertising strategies embraced by Google. Therefore,
an analysis brings pronounced information to the public.
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Introduction
Google is one of the leading internet technology and advertising companies in the
world. The company specializes in internet search engines and related advertising
services. It maintains a large index of web sites and other online content, which
are freely available through its search engine. The company generates revenue
primarily by delivering relevant, online advertising. It also offers advertising in
newspapers, radio and television. The company primarily operates in the US, the
UK and other countries. It is headquartered in Mountain View, California and
employs about 20,222 people.
The company recorded revenues of $21,795.6 million during the financial year
ended December 2008 (FY2008), an increase of 31.3% over 2007. The operating
profit of the company was $6632 million ($6632 million) in FY2008, an increase of
30.4% over 2007. Its net profit was $4226.9 million ($4226.9 million) in FY2008,
an increase of 0.6% over 2007.
Business Description
Google is a technology company focused on providing web search and
advertising. The company maintains a large index of web sites and other online
content, which are freely available through its search engine. The company
generates revenue primarily by delivering online advertisements. Its major
revenue sources are Google AdWords and AdSense. Google interface is available
in more than 120 languages. The company operates in the US, the UK and a large
number of other countries.
The company offers a broad portfolio of web-based products and services which
are classified into six categories: Google.com; applications; client; Google GEO;
Google Mobile and Android; Google Checkout; and Google Labs.
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1. Google.com is the company’s core offering. It includes products and
services that allow users to find relevant information. These products and
services include: Google web search, Google image search, Google book
search, Google scholar, Google finance, Google news, Google video, Google
blog search, iGoogle, Google product search, Google custom search, Google
base, and Google webmaster.
2. Google web search provides access to billions of web pages. It has

integrated special features, such as web page translation supporting 41
languages; integrated tools such as spell checker, calculator, dictionary and
currency and measurement converters; search by number; cached links;
and movie, music and weather information; among others.
3. Google image search is a searchable index of images found across the web.
Google book search displays pages containing bibliographic information
and several sentences of the search term in context, sample book pages, or
full text, depending on author and publisher permissions and book
copyright status.
4. Google scholar allows broad search for relevant scholarly literature

including peer-reviewed papers, theses, books, abstracts, and articles.
Content in Google scholar is sourced from academic publishers,
professional societies, preprint repositories, universities, and other
scholarly organizations. Google finance is an interface providing financial
information in an intuitive manner, including linking different data sources
such as correlating stock price movements to news events.
5. Google news gathers information from news sources worldwide and

presents news stories in a searchable format.
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6. Google video allows users to upload, find, view and share video content
worldwide. Google blog search enables users to search the blogging data
on a wide variety of subjects.
7. iGoogle is personalized Google page. iGoogle includes personalized search,

which gives users better search results based on what they have searched
in the past, making it easier to quickly find the information that is more
relevant to them.
8. Google product search allows users to find and compare products from
online stores across the web and directs users to where they can buy these
products.
9. Google custom search allows communities of users familiar with particular

topics to build customized search engines.
10.Google base lets content owners submit content that they want to share on
Google web sites.
11.Google webmaster tools provide information to webmasters, allowing

them to enhance their understanding of how their web sites interact with
the Google search engine. The company’s application tools allow users to
create, share and communicate user-generated information.
12.Some of Google’s products include Google Docs, Google Calendar, Gmail,

Google Groups, Google Reader, orkut, Blogger, Google Sites and YouTube.
Google Docs allows users to create, view and edit documents,
spreadsheets, and presentations using a browser.
13.Google Calendar is a free online shareable calendar service. It allows users

to keep track of the events, appointments and special occasions and share
this information.
17
14.Gmail is Google’s free webmail service with built-in Google search
technology.
15. Google Groups is a free service that allows groups of people to connect to
information and people.
16. Google Reader is a free service that allows users to subscribe to feeds and
receive updates from multiple web sites in a single interface.
17.Orkut is an online social networking site.
18. Blogger is a web-based publishing tool that allows people to publish to the
web using weblogs, or blogs.
19.Google Sites allows users to create, update and publish content online
without technical expertise, with control over who can see and update the
site.
20.YouTube is an online community that lets users upload, share, watch, rate,
and comment on videos. YouTube is also a video platform providing general
purpose video resources to the web community. YouTube videos are
embedded in blogs, social networks and web applications, and YouTube
programming interfaces are utilized by many registered developers to
create third-party products and services.
21.Google’s client applications include Google Toolbar, Google Chrome,

Google Pack, Picasa and Google Desktop. Google Toolbar is a free
application that adds a Google search box to web browsers. Google Chrome
is an open-source browser that combines a minimal design with
technologies to make the web faster, safer, and easier to navigate.
18
22.Google Pack is a free collection of safe, useful software programs from
Google and other companies that improve the user experience online and
on the desktop. Picasa is a free service that allows users to view, manage
and share their photos. Google Desktop is desktop search applications.
Google Desktop also includes a customizable Sidebar that includes modules
for weather, stock tickers and news.
23.Google GEO includes the company’s Google Earth, Google Maps and
Google Sketchup.
24.Google Earth provides detailed satellite and aerial images, 3D topography,

street maps and data points describing the location of businesses, schools,
parks and other points of interest. Google Earth includes Sky, an
astronomical imagery library with images of over 100 million stars and 200
million galaxies, and Ocean, with a detailed bathymetric map of the earth’s
ocean floors.
25.Google Maps provides navigation map information. It includes StreetView,

360-degree street-level imagery available in several regions around the
world, and Google Transit, which provides up-to-date information on local
transit options in many cities.
26.Google Sketchup is a free tool that enables users to model buildings in 3D.
It can also be used as a tool for populating Google Earth with architectural
content. The Pro version of this tool is offered to professional designers.
27.Google Mobile allows users to search and view both the mobile web,
consisting of pages created specifically for wireless devices, and the entire
Google index. It includes other Google offering on mobile including Google
Maps for Mobile; Blogger for Mobile; News and Personalized Home for
Mobile; and GOOG-411, a free, speech-enabled application-allowing search
for businesses by name or category.
19
28.Android is a free, open-source mobile software platform which allows
developers to create applications for mobile devices and for handset
manufacturers to install. Android is being developed with the Open
Handset Alliance, a group of more than 45 technology and mobile
companies, with the goal of providing consumers a less expensive, richer
and more powerful mobile offering.
29.Google Checkout is a service for users, advertisers and participating

merchants online shopping.
30.Google Labs works as a test bed for Google’s engineers and Google users.
On Google Labs, the company posts product prototypes and solicit
feedback on how the technology could be used or improved.
31.The company’s major revenue generating tools include Google AdWords

and Google AdSense. Google AdWords is an auction-based advertising
program that allows advertisers to offer relevant ads targeted to search
queries or web content across Google sites and Google Network websites.
Google Network encompasses different forms of online and offline media
as well as, includes content providers who use Google’s advertising
programs to offer ads in online video, television and radio broadcasts.
32.AdWords is accessible to advertisers in 41 different interface languages.

Advertisers use AdWords program to create text-based or display ads, bid
on the keywords that will trigger the display of their ads and set daily
spending budgets. Ads are ranked for display in AdWords based on a
combination of the maximum cost-per-click pricing set by the advertiser
and click-through rates and other factors used to determine the relevance
of the ads.
33.Google AdSense program enables web sites that are part of the Google
Network to deliver AdWords ads that are relevant to the search results or
content on their pages. It also allows offline media companies, such as
20
television and radio stations, to deliver ads and audio ads to the content
they provide. The program includes Google AdSense for Search for internet
companies targeting search audiences; Google AdSense for content
allowing web sites generates revenue from advertising by serving relevant
AdWords ads; Google AdSense for domains allows owners of undeveloped
domains that receive traffic to generate revenue from relevant advertising;
AdSense for feeds is a free program for publishers; Google Television Ads is
a product that allows advertisers to use their AdWords account to create
television campaigns; Google AdSense for Audio is an early-stage product
for radio broadcasters that automatically schedules and places advertising
into radio programs; and Google Audio Ads offers radio advertising for
small and large businesses by providing an online interface.
The technology behind Google’s operations combines techniques to determine

the importance of a web page independent of a particular search query and to
determine the relevance of that page to a particular search query. One of the
elements of Google’s for ranking web pages is called PageRank. PageRank is a
query-independent technique for determining the importance of web pages by
looking at the link structure of the web. PageRank treats a link from web page A
to web page B as a ‘vote’ by page A in favor of page B. The PageRank of a page is
the sum of the pages that link to it. The PageRank of a web page also depends on
the importance (or PageRank) of the other web pages casting the votes. Its
technology employs text-matching techniques that compare search queries with
the content of web pages to help determine relevance. Google provides products
and services using its own software and hardware infrastructure. It uses a
combination of off-the-shelf and custom software running on clusters of
commodity computers.
21
Background of the Study
The purpose of conducting a literature review for a new researcher is to
determine answers about what is known on a topic. In contrast, experienced
researchers review past research to develop sharper and most significant
questions about a topic (1994). Furthermore (1989) has suggested previous
literature could also be considered as a guide for defining the case and unit of
analysis. It is also mentioned that most researchers prefer to compare their
findings with previous research ( 1994). Therefore the aim of this part of the
proposal is to explore the various literature resources, which will enable the
researcher to understand the topic of research that has been published, which is
investigating the potential of mobile technologies to effectively support real time
business applications. This part of the paper will assist the researcher throughout
the investigation, as it will help develop the research questions, to define the case
and unit of analysis and most importantly to compare the findings with previous
studies conducted on the research topic.
Google is the largest web service company. Today Google has an impact in
almost all the spheres of anyone’s life. They have number of products and
services, which have become indispensable to individuals in different fields. A
company like Google to be taken for a research problem is quite a tedious task.
Here what is the objective to be done is a study on the effectiveness of Google’s
online advertising programs like Google Ad words and Google AdSense. These two
products return Google its major share of revenues. It is a fact that about 97% of
Google’s revenue comes from advertising. This was the major leading force
behind the study.
22
Statement of the Problem
This research paper seeks to investigate and evaluate the advertising
strategies (i.e. Google AdWords and Google AdSense) of Google as perceived by
their customers. Apparently, the discussion pertains to the satisfaction of the
customers as perceived by the critics and industry analysts.
Specifically, the following questions shall be answered:

present market?
23
Chapter 2
Industry Profile
24
Global Internet Software & Services
Market Analysis
The global internet software and services market has been growing strongly
over the past five years, a trend that looks set to continue over the forecast
period through to 2013. The global internet software and services market
generated total revenues of $819.2 billion in 2008, representing a compound
annual growth rate (CAGR) of 17.4% for the period spanning 2004-2008.
Market volumes increased with a CAGR of 13.7% between 2004-2008, to

reach a total of 1.7 billion users in 2008. The market's volume is expected to rise
to 2.4 billion users by the end of 2013, representing a CAGR of 8.7% for the 2008-
2013 period. The broadband segment was the most popular in 2008, with 1,011.8
million users, equivalent to 64.4% of the market's overall volume. The
narrowband segment had a volume of 560 million users in 2008, equating to the
remaining 35.6% of the market’s volume. The performance of the market is
forecast to decelerate, with an anticipated CAGR of 15.6% for the five-year period
2008-2013, which is expected to drive the market to a value of $1,688.5 billion by
the end of 2013.
25
Market Value
The global internet software and services market grew by 17.5% in 2008 to reach
a value of $819.2 billion. The compound annual growth rate of the market in the
period 2004-2008 was 17.4%.
Table 1: Global Internet Software & Services Market Value: $ billion,
2004-2008
Figure 1: Global Internet Software & Services Market Value: $ billion,
26
2004-2008
Market Volume
The global internet software and services market grew by 16.1% in 2008 to reach
a volume of 1,571.8 million users. The compound annual growth rate of the
market volume in the period 2004-2008 was 13.7%.
27
Market Segmentation
28
Broadband segment generated 64.4% of the global internet software and services
market's volume. In comparison, narrowband segment accounts for a further
35.6% of the market's volume.
Market Share
29
Google accounts for 2.7% of the global internet software and services market's
value. In comparison, France Telecom generates a further 2.2% of the market's
value.
Competitive Landscape
30
In order to analyse the Internet software and services market, market players will
be considered as companies developing and marketing Internet software and/or
providing Internet services including online databases and interactive services,
web address registration services, database construction and Internet services.
Buyers include individual consumers, right through to large businesses. Brand
awareness is high in this market, with companies such as Google Inc. being
recognized worldwide.
However, brand loyalty is unlikely to be a significant factor for commercial buyers,

with quality and specification likely to be of higher importance. Success in this
market requires skilled developers/programmers. Market players rely on the
continued service of qualified employees, which contributes to strong supplier
power. Entry to the market requires a high level of technical expertise and may
need significant investment in R&D activity. At present, the Internet software and
services market is fragmented with a large number of companies of different sizes
competing. However, there is a growing trend towards consolidation. Strong
market growth in recent years alleviates rivalry to an extent.
Buyers include individual consumers, right through to large businesses. A number

of market players, such as Google Inc., generate the majority of their revenue
from advertising. However, revenues from advertising are highly dependent on
the volume of people using software and services. Market players have a wide
variety of potential customers, weakening buyer power. Brand awareness is high
in this market, with companies such as already mentioned Google Inc. being
recognized worldwide. While businesses placing online advertising may not be
influenced directly by the Google brand, its popularity with Internet users will
make it a more attractive proposition than a less widely-known search engine as a
platform for advertising. Switching costs for buyers are dependent upon the
software or service being used.
For example, ISPs may supply Internet access through contracts of varying terms;
companies offering URL registrations might charge up front for a customer to own
the address for one year. Software and services offered by market players are
generally of medium to high importance to customers, and are critical for
customers such as online retailers, thus weakening buyer power. Overall, there is
a moderate degree of buyer power in this market.
31
The Internet software and services market requires various inputs including
employees, hardware such as servers, and software tools. Success in this market
requires skilled developers/programmers. Market players rely on the continued
service of qualified employees. High switching costs can consequently exist if staff
turnover is high: if players are unable to retain key employees, their ability to
develop and deliver successful products and services may be adversely affected.
Effective succession planning is also important to long-term success. Failure to

ensure effective transfer of knowledge and smooth transitions involving key
employees could hinder strategic planning and execution. Inputs such as
hardware components are often purchased from sole suppliers. Such suppliers
are often large companies offering differentiated products, resulting in significant
supplier power, strengthened by theirs significant negotiating power.
Furthermore, the quality (speed, reliability, energy efficiency) of hardware such as
servers is highly important to market players. Supplier power in this market is
strong overall. Internet software and services development is labour intensive,
since ultimately it depends on highly skilled employees. The strong growth of this
market in recent years (a trend that looks set to continue despite the difficult
economic conditions seen in many countries moving into 2009) offers an
attractive prospect to potential new entrants.
Moreover, the four leading companies comprise less than 10% of the market’s
overall revenue and demonstrate that this is one of the most fragmented areas of
the IT industry, with plenty of opportunity for new firms to make a name for
themselves. However, it is innovation that has contributed to the evolution and
growth of the Internet. In a market characterized by rapid technological change,
R&D investment is important. This can act as a barrier to potential new entrants.
Furthermore, ownership of key intellectual property is immensely important to
the success of companies. Overall there is a moderate likelihood of new entrants
to this market. Substitutes in this market include the more traditional forms of
media, such as print and TV. Companies operating in those markets also tend to
generate substantial revenues from sale of advertising space as well as from
consumers purchasing or subscribing to their products. However, Internet
software and services are to a great extent ‘substitutes’ themselves, and present
a threat to the incumbent media channels, rather than vice-versa. The threat of
substitutes is assessed as weak. At present the Internet software and services
32
market is fragmented, with a large number of companies of varying sizes
competing. However, there is a growing trend towards consolidation. For
example, in 2004, AOL and Google teamed up in strategic alliance to focus on the
European market.
Similarly, Yahoo! announced its acquisition of rising stars Kelkoo (online

marketing specialists) and Musicmatch (a music software company) in order to
strengthen the diversity of its current portfolio. Advances in technology mean
that products are continually being introduced to the market, enhancing rivalry as
players struggle to compete. A number of market players operate in a diverse
range of markets. Such diversification eases rivalry to an extent. Furthermore,
strong market growth in recent years serves to alleviate rivalry further. Overall
rivalry in this market is moderate.
33
Leading Companies
Google Inc.
Google is one of the world’s leading Internet search engines. It specializes in

Internet search engines and related advertising services. The company operates in
the US, the UK and a large number of other countries. Google offers its services
and products free of charge through Google.com and its 160 other international
domains, such as Google.ba, Google.dm, Google.nr, Google.co.jp and Google.ca.
The Google interface is available in more than 117 languages. The company
generates revenue primarily by delivering online advertisements. Businesses use
its AdWords program to promote their products and services with targeted
advertising. In addition, third-party website providers who are part of Google
Network use Google's AdSense program to deliver relevant advertisements that
generate revenue. Google AdWords enables advertisers to reach people when
they are searching for information related to what the advertiser has to offer.
France Telecom SA
France Telecom is one of the leading providers of telecommunication services,

providing fixed-line and mobile telephony, data transmission, Internet and
multimedia services and other value-added services. The French government
owned about 32.4% of France Telecom's capital during the fiscal year ended
December 2006. The group now operates through the Orange brand. It operates
through a number of subsidiaries. France Telecom serves more then 158 million
customers across the world.
The group operates through three business segments: personal communication

services (PCS), home communication services (HCS), and enterprise
communication services (ECS).
The PCS segment includes the mobile telecommunications services of the group in
France, the UK, Spain, Poland, and other parts the world. The segment operates
through all the Orange subsidiaries, France Telecom Espana in Spain, TP Group in
Poland (with its subsidiary PTK Centertel), and the other group companies
internationally. The group's Orange wholly owned subsidiaries include Orange
34
France, Orange UK, Orange Slovensko, Dominican and Orange Communications in
Switzerland. The segment also includes majority owned subsidiaries of Orange in
Romania, Botswana, Cameroon, Ivory Coast and Madagascar. The PCS segment
primarily offers voice and data transmission on digital networks using the global
system for mobile (GSM) standard. The segment has also deployed the general
packet radio services (GPRS) and GSM evolution (EDGE) technology in some of its
networks in Europe.
Yahoo! Inc.
Yahoo! (Yahoo) is one of the leading global Internet businesses, providing Internet
services to individuals and businesses worldwide. The company provides a range
of services including search services, local offerings such as yellow pages,
marketplace offerings such as shopping, information, entertainment and
communication. Yahoo generates revenues by providing marketing services to
businesses across its properties and establishing paying relationships with users
for premium services. The company provides services in more than 20 languages
in over 30 countries, regions and territories. Yahoo has offices in the US, Asia,
Australia, Canada, Europe and Latin America. Yahoo organizes its business into
geographical segments. Its offerings to users and businesses fall into five
categories: front doors; search; communications and communities; media; and
connected life.
Time Warner Inc.
Time Warner is a prominent global media and entertainment company with

businesses in filmed entertainment, interactive services, television networks,
cable systems and publishing. The company operates in North America, South
America, Europe, Asia Pacific and Middle East. The company organizes its
businesses across five divisions: AOL, cable, filmed entertainment, networks, and
publishing. The AOL division provides interactive consumer and advertising
services. The division provides these services through its Global Web Services
business, which also provides advertising services on third-party Internet sites.
The Global Web Services business provides advertising support web services
through the division's Platform-A business unit. Also, through its publishing unit,
this division develops and operates the AOL Network, a network of websites,
related applications and services. These include AOL.com, international versions
35
of the AOL portal, e-mail, AIM, MapQuest, Moviefone, ICQ and Truveo. It also
includes TMZ.com, a joint venture with Telepictures Productions, a subsidiary of
Warner Bros. Entertainment, and other co-branded websites owned by third
parties.
36
Company Profile
37
Google- Profile
Google is one of the leading internet technology and advertising companies
in the world. The company specializes in internet search engines and related
advertising services. It maintains a large index of web sites and other online
content, which are freely available through its search engine. The company
generates revenue primarily by delivering relevant, online advertising. It also
offers advertising in newspapers, radio and television. The company primarily
operates in the US, the UK and other countries. It is headquartered in Mountain
View, California and employs about 20,222 people. The company recorded
revenues of $21,795.6 million during the financial year ended December 2008
(FY2008), an increase of 31.3% over 2007. The operating profit of the company
was $6632 million ($6632 million) in FY2008, an increase of 30.4% over 2007. Its
net profit was $4226.9 million ($4226.9 million) in FY2008, an increase of 0.6%
over 2007.
38
KEY FACTS
Head Office Google Inc.
1600 Amphitheatre Parkway
Mountain View
California 94043
USA
Phone 1 650 253 0000
Fax 1 650 253 0001
Web Address http://www.google.com
Revenue / turnover 21,795.6 (USD Mn)
Financial Year End December
Employees 20,222
NASDAQ Ticker GOOG
39
History
The history of Google dates back to the mid-90s when Stanford University
graduate students, Sergey Brin and Larry Page, collaborated to develop a
technology for a search engine. Mr. Brin and Mr. Page began collaboration on a
search engine called BackRub, named for its unique ability to analyze the back
links pointing to a given website in 1996. Two years later, Mr. Brin and Mr. Page
raised $1 million in funding from private investors and venture firms to start
Google. Google was incorporated in 1998. It initially answered 10,000 search
queries per day. By the end of 1998, PC Magazine named Google one of its Top
100 websites and search engines for 1998. Google moved its headquarters to
University Avenue in Palo Alto, California in the beginning of 1999. By this time,
the company was answering 500,000 search queries per day. It received $25
million in equity funding from Sequoia Capital and Kleiner Perkins Caufield &
Byers. Also during this period, AOL/Netscape incorporated Google's search
technology into its Netcenter portal. Later that year, Google once again moved its
headquarters to Mountain View, California. Google was also chosen by Virgilio, a
major Italian online portal, to provide Google WebSearch services in Italy.
The Google site was awarded a Webby Award and a People's Voice Award
for technical achievement in 2000. Google also forged partnerships with Yahoo,
Chinese portal NetEase and NEC's Biglobe portal in Japan.To extend its keyword-
targeted advertising to smaller businesses, Google introduced AdWords, a self-
service ad program that could be activated online with a credit card. And in late
2000, to enhance users' power to search from anywhere on the web, Google
introduced the Google Toolbar. This browser plug-in made it possible to use
Google search without visiting the Google homepage. It facilitated search using
the toolbar's search box along with right-clicking on text within a web page, as
well as enabling the highlighting of keywords in search results. It also introduced
the first wireless search technology for WAP phones and handheld devices.
40
By late 2000, the company answered more than 60 million searches per
day. Its index comprised more than 1.3 billion web pages. Google acquired
Deja.com's Usenet archive in 2001. It also released a wireless search technology
specifically designed for i-mode mobile phones in Japan. An agreement with
Lycos, Korea brought Google search to a new group of Asian internet users.
Google formed a partnership with Universo Online, which made it Latin America's
premier search engine. New sales offices were also opened in Germany
(Hamburg) and Japan (Tokyo) to meet growing international interest in Google's
advertising programs. Later that year, country domains were made available in
the UK, Germany, France, Italy, Switzerland, Canada, Japan and Korea.
In the following year, the company launched Google Labs to develop new
products. Its work-in-progress projects ranged from Google Voice Search,
enabling users to search on Google with a simple telephone call, to Google Sets,
which generates complete sets (a list of gemstones, say) from a few examples
(topaz, ruby, opal), giving each member of the new set its own search link. Google
also launched its comparison online shopping service, Froogle, and news feeds,
Google News in 2002. The company acquired Pyra Labs in 2003, which helped
Google launch Blogger in the same year. Furthermore, the Google AdSense
program was launched in the same year.
Google announced plans to offer an e-mail service called Gmail in 2004.The

company also unveiled its plans for an initial public offering (IPO) of its stock
through an online auction to raise around $2.7 billion. The company's IPO on the
NASDAQ Stock Exchange took place in August 2004. Google acquired Picasa, a
California-based digital photo management company, in mid-2004. Google's
desktop search, a beta based web application, was launched later in 2004. At the
same time, AOL Europe and Google announced a multi-year alliance providing,
41
the UK, France and German users, access to Google's targeted advertisement.
Google subsequently acquired Keyhole, a digital and satellite mapping company.
Towards the end of 2004, the company launched Google Groups and Google
Print. It also announced agreements with the libraries of Harvard, Stanford, the
University of Michigan, the University of Oxford and The New York Public Library
to digitally scan books from their collections so that users worldwide can search
for them through Google.
The company launched several new offerings in the year 2005 including
Google Mini, a search appliance enabling small-to-medium businesses to access
and manage their information; Picasa 2, free photo management software;
Google Video; Google Maps; Google Web Accelerator; Google Earth, a satellite
imagery based mapping software; Google Sitemaps, Google Talk; Google Desktop;
Google Blog Search; and Google Base service, a service that allows users to post
content that can be searched and viewed online.
In the same year, Google acquired several companies including Urchin

Software, a web analytics company; SketchUp, a 3D drawing system; Writely, a
web-based collaborative word processor; and dMarc, an automated advertising
system for the radio industry. The company formed a strategic alliance with
America Online (AOL) and Time Warner, under which it invested $1 billion for a
5% stake in AOL. The deal also extended Google's search services on the AOL
platform making it one of the company’s key customers.
In 2006, Google continued to launch new products that included Google

Video Store, an open video marketplace for consumers to buy and rent a range of
video content; Google Checkout, a merchant payment solution that enables
online vendors to process customer purchases, Google Docs & Spreadsheets, a
web-based word-processing and spreadsheet product to create, manage, and
share documents and spreadsheets online. The company also expanded its
42
operations in Asia by establishing a presence in Delhi and Mumbai, India to
complement its existing centers in Bangalore and Hyderabad and launched
services in China.
Google also expanded its strategic relations in 2006 which included a multi-
year search technology and services agreement with News Corporation's Fox
Interactive Media to be the exclusive search and keyword targeted advertising
sales provider for Fox Interactive Media's growing network of web properties
including MySpace.com. It also entered into a multi-year agreement with eBay to
benefit both companies’ collective communities of users, merchants and
advertisers. Under the agreement, Google will become the exclusive text-based
advertising provider for eBay outside the US. Google and eBay also planned to
integrate and launch click-to-call advertising functionality within eBay's US and
international marketplaces and Google's search platform. Google completed the
acquisition of online video-sharing site, YouTube, for $1.6 billion in stock in 2006.
In 2007, China Mobile, one of the largest mobile telecommunications carrier and
Google, formed a partnership to provide mobile and internet search services in
China. Subsequently, Google began a limited beta test of pay-per-action
advertising, a new pricing model that allows advertisers to pay only when
predetermined actions are completed on their site. In the same year, the
company entered into a partnership agreement with EchoStar Communications to
introduce an automated system for buying, selling, delivering and measuring
television ads on EchoStar DISH Network's 125 national satellite-programming
networks. Google also entered into a multi-year agreement with Clear Channel
Radio to sell a guaranteed portion of 30-second advertising inventory available on
more than 675 of Clear Channel's AM/FM stations.
In the same year, Google acquired Postini, a global leader in on-demand

communications security and compliance solutions serving more than 35,000
businesses and 10 million users worldwide. This acquisition was valued at $625
million in cash, subject to adjustments. Subsequently, the Nielsen Company and
43
Google have established a multi-year, strategic relationship. The relationship will
leverage Nielsen’s experience in television audience measurement to bring
demographic data to the Google TV Ads advertising platform. In the same year,
Google along with an alliance of leading technology and wireless companies
including T-Mobile, HTC, Qualcomm, Motorola and others announced the
development of Android, a first complete, open, and free mobile platform.
In January 2008, Google introduced Google Sites, an application that makes

creating a team web site as easy as editing a document. In March 2008, Google
acquired DoubleClick, a company that offers online ad serving and management
technology to advertisers, web publishers and ad agencies, for $3.1 billion in cash
from San Francisco-based private equity firm Hellman & Friedman along with JMI
Equity and management. Subsequently, Yahoo!, MySpace, and Google entered
into an agreement to form the OpenSocial Foundation to ensure the neutrality
and longevity of OpenSocial as an open, community-governed specification for
building social applications across the web.
Google released a preview of Google App Engine, an application-hosting tool that

developers can use to build scalable web apps on top of Google's infrastructure,
in April 2008. The company’s goal in launching this service is to make it easier for
web developers to build and scale applications, instead of focusing on system
administration and maintenance.
In June 2008, Google entered into an agreement giving Yahoo! the ability to use
Google's search and contextual advertising technology through its AdSense for
Search and AdSense for Content advertising programs. In the next month, the
company entered into an agreement with Rambler Media to acquire ZAO Begun,
a Russian context advertising service.
44
Google launched Google Chrome, a new open source browser, in September
2008. Subsequently, the company completed the sale of the Performics search
marketing business to Publicis Groupe. In December 2008, Hallmark Channel and
Google entered into a strategic agreement allowing advertisers to use Google TV
Ads platform to place ads on both Hallmark Channel and Hallmark Movie Channel.
Google introduced, in January 2009, a program enabling technology solution

providers to sell Google Apps to businesses. In the next month, the company
launched Google Earth 5.0 with new features like ocean, a new feature that
enables users to dive beneath the water surface, explore 3D underwater terrain
and browse ocean-related content; Historical Imagery, a feature that enables
users to virtually travel back in time through archival satellite and aerial imagery,
and Google Mars 3D featuring hi-res imagery and terrain of the Mars planet.In
April 2009, Google introduced a new version of Google App Engine, furthering its
goal of making Google’s scalable infrastructure available to all developers.
45
Major products and services
Google is one of the leading internet technology and advertising companies in the
world. The company's key products and services include the following:
o Google.com—Search and Personalization:

o Google Web Search
o Google Image Search
o Google Book Search
o Google Scholar
o Google Finance
o Google News
o Google Video
o Google Blog Search
o iGoogle and Personalized Search
o Google Product Search
o Google Custom Search
o Google Base
o Google Webmaster Tools
o Applications:
o Google Docs
o Google Calendar
o Gmail
o Google Groups
o Google Reader
o orkut
o Blogger
o Google Sites
o YouTube
o Client applications:
o Google Toolbar
o Google Chrome (open-source browser)
46
o Google Pack (browse tool for speed and removes spyware and
viruses)
o Picasa (online photo organizer)
o Google Desktop (desktop search)
o Google GEO—Maps, Earth and Local:
o Google Earth
o Google Maps
o Google Sketchup and Sketchup Pro (model tool)
o Google Mobile and Android:
o Google Mobile (mobile web)
o Google Maps for Mobile
o Blogger for Mobile
o Google Gmail, News and Personalized Home for Mobile
o GOOG-411 speech-enabled search application
o Android (open-source mobile software platform)
o Search by Voice
o Google Checkout (online shopping tool)
47
Swot analysis
Google is one of the leading internet technologies and advertising companies in

the world. The company is one of the premier internet brands in the world and is
ranked among the top brands worldwide. Strong brand image provides a
competitive advantage to the company by enhancing its investors’ confidence, as
well as securing the loyalty of the employees and customers. However, increasing
competition from online services could affect the company’s operating
performance in the long term.
Strengths
a. Strong brand value

b. Robust market position
c. Significant infrastructure base
Weaknesses
a. Lack of product integration
48
Opportunities
a. Steady growth of internet domain names

b. Growing mobile advertising market Foreign exchange risk
c. Economic uncertainties effecting advertising spend
Threats
a. Intense competition
Strengths
Strong brand value
Google is one of the premier internet brands in the world. The company’s is
ranked among the top brands worldwide. Miillward Brown, a market research
firm, ranked Google for the third consecutive time as the world’s most valuable
global brands for 2009, overtaking Microsoft and some other well-established
49
brands like General Electric Company, Coca-Cola, Wal-Mart Stores and IBM.
Google’s brand was valued at $100 billion, making it the world’s first $100 billion
brand. Additionally, Interbrand, a brand consultancy, also ranked Google in 10th
position in 2008 up from the 20th position in 2007, in their Top 100 Global Brands
ranking. Interbrand valued Google brand at $25,590 million in 2008, compared to
$17,837 million in 2007 and $12,376 million in 2006. Strong brand image provides
a competitive advantage to the company by enhancing its investors’ confidence,
as well as loyalty of the employees and customers.
Robust market position
The company has a robust market position in the various markets it serves. It is
the leading search engine in the world. Google is the leading search engine in
Argentina, Australia, Belgium, Brazil, Canada, Denmark, France, Germany, India,
Italy, Mexico, Spain, Sweden, Switzerland, the UK and the US (based on total
number of unique visitors). At the end of year 2008, Google captured 62.9% of
search market share, compared with 16.8% for Yahoo, 9.8% for Microsoft, 4.1%
AOL, and 2% for Ask.com, according to Nielsen. Further, the company’s YouTube
online video services is a leading online media platform. It also has robust market
share in social networking segment with orkut, and webmail through Gmail.
Robust market share provides a base for company’s revenue growth.
Significant infrastructure base
Google has a strong infrastructure base comprising online, software and hardware
resources. The company’s infrastructure includes a strong portfolio of own web
sites which generate advertising revenues contributing to a significant portion of
its total revenues. Advertising revenues from Google web sites accounted for 66%
of its total revenues in FY2008, compared to 64% and 60%, respectively in 2007
and 2006. This represents a revenue contribution of $14,413.8 million, $10,624.7
million and $6,332.8 million, respectively, in FY2008, 2007 and 2006. Moreover,
Google web sites accounted for 68%, 65% and 60% of the company’s advertising
revenues in 2008, 2007 and 2006, respectively. Google’s products and services are
backed by homegrown software and hardware infrastructure, which provides
substantial computing resources at low cost. It uses a combination of off-the-shelf
50
and custom software running on clusters of commodity computers. The company
made considerable investment in developing this infrastructure, which simplifies
the storage and processing of large amounts of data, eases the deployment and
operation of large-scale global products and services, and automates much of the
administration of large-scale clusters of computers. Although most of Google’s
infrastructure is not directly visible to users, it is the base for providing innovative
products and services. At the end of FY2008, Google had IT assets base of
$3,573.5 million, compared to $2,734.9 million in 2007. Google’s significant
infrastructure base allows it to introduce innovative products and services to gain
competitive advantage.
Weaknesses
Lack of product integration
Google’s products lack integration with its other products. Google has focused
more on launching new products in recent years and less on integrating products
into a whole for delivering a holistic experience to the user. As a result, the
company now has a large number of new products, some of them innovative, but
which seemingly having little in common with each other. Product integration
allows internet companies to steer visitors from one service to another and retain
them on their site for a longer time. Product integration also enables internet
companies to gain acceptance for new products quickly. Furthermore, there have
been numerous instances where users have been unaware of its new products
because they are embedded so deeply within Google's sites. The fact that some
users have had to use the Google search engine to find new products highlights
51
the lack of integration between its new products. In contrast, Yahoo has built
better linkages between its various products by allowing users to choose from
most of its product available on the homepage. Lack of product integration puts
Google at a competitive disadvantage against more integrated rivals such as
Yahoo.
Opportunities
Steady growth of internet domain names
The internet domain name registrations reported steady growth during 2008.
Internet added 24 million new domain names in 2008 to reach 177 million domain
name registrations across all the top level domains. New registrations represent
16% growth over the previous year. The overall base of .com and .net domain
names grew to 90.4 million at the end of 2008, an increase of 12% over
2007.Google is a leading internet search engine and provider of online advertising
services. Moreover, Google search is integrated into several websites and used as
a tool for advertising. Growth of number of domain names would provide a base
for company’s growth in future.
Growing mobile advertising market
The mobile advertising market is forecast to record strong growth in coming

years. The growth of mobile advertising is being driven by increasing mobile
penetration rates and development in technological capabilities of mobile devices
to support higher bandwidths. For instance, the US mobile advertising market is
forecast to grow by over 30% in 2009. Moreover, this growth was lower than
previously forecast values due to the downward revisions owing to recession.
Further, in 2010, mobile advertising spend is forecast to record strong growth
following recovery of the US economy. Google offers mobile advertising through a
portfolio of mobile solutions. Google Mobile allows users search and view both
52
the mobile web, consisting of pages created specifically for wireless devices, and
the entire Google index. Google Mobile is available through many wireless and
mobile phone services worldwide. Further, Google also participated in developing
Android, a free, open-source mobile software platform which allows developers
to create applications for mobile devices and for handset manufacturers to install.
Android is being developed with the Open Handset Alliance, a group of more than
45 technology and mobile companies, with the goal of providing consumers a less
expensive, richer and more powerful mobile experience. Growing mobile
advertising market will contribute to the company’s top line growth in coming
years.
Threats
Intense competition
Google faces competition from companies that seek to connect people with
information on the web and provide them with relevant advertising. It competes
with internet advertising companies, particularly in the areas of pay-for-
performance and keyword-targeted internet advertising. Google also competes
with companies that sell products and services online. It also faces competition
from companies offering traditional media advertising. The company provides a
number of online products and services, including Google Checkout and YouTube.
Its communications tools such as Google Docs and Spreadsheets compete directly
with new and established companies that offer communication, information and
entertainment services integrated into their products or media properties.
Microsoft and Yahoo! are its key competitors. Microsoft has developed features
that make web search a more integrated part of its Windows operating system
and other desktop software products. Additionally, Microsoft announced its
intention to acquire Yahoo! in early 2008, which ended unsuccessfully in June
2008. However, the industry sources view that it could take some more time to
declare the end of the deal. Increasing competition from online services could
affect its operating performance in the long term.
53
Foreign exchange risk
Google is exposed to foreign exchange risk as it derives a major portion of its

revenues from international operations. Its international revenues accounted for
51% of the total revenues in 2008, compared to 48% in 2007. The proportion of
revenues derived from international markets increases the company’s exposure
to fluctuations in foreign currency to US dollar exchange rates. For example, in
the fourth quarter of 2008, the strengthening of the US dollar relative to other
foreign currencies, primarily the Euro and the British pound, had an unfavorable
impact on its international revenues. Additionally, the company’s average cost-
per-click paid by advertisers decreased in the first quarter of FY2009 primarily due
to the strengthening of the US dollar relative to foreign currencies.
The company has a foreign exchange hedging program that is designed to reduce
its exposure to fluctuations in foreign currencies, however this program will not
fully offset the effect of fluctuations on its revenues and earnings. The company’s
increasing international exposure will result in fluctuating operating performance
as foreign exchange rates continue to fluctuate.
Economic uncertainties effecting advertising spend
The worldwide economy is undergoing a challenging environment. Most of the

advanced economies are forecast to contract in 2009, compared to sluggish
growth rates in 2008. The GDP growth rate for the US is expected to further drop
in coming years, primarily due to the turmoil in the financial markets, very weak
housing market indicators and negative consumer sentiments. Consequently, the
GDP growth of the US in 2008 was down to 1.1%, and it is expected to contract by
2.8% in 2009.
The economy of Canada is also forecast to slowdown in 2009. The GDP growth of
Canada, which declined from 2.7% in 2007 to 0.6% in 2008, is expected to
54
contract by 2.5% in 2009. The European market (primarily comprising the Euro
region and the UK) is also forecast to slowdown. Euro region slowed down from
2.6% in 2007 to 1% in 2008, and is forecast to contract by 4.2% in 2009.The UK
economy is forecast to be weak in the coming years, with its GDP growth rate
declining from 3% in 2007 to 0.7% in 2008 and forecast to contract by 4.1% in
2009.
Economic slowdown affects the spending power of companies forcing them to

make discretionary advertising spend. Google depends on these markets for a
significant portion of its revenues. As a result, the company’s average cost-per-
click decrease as advertisers managed their advertising costs in response to the
general economic downturn, among other factors. Because of the general
economic downturn, advertisers have lowered their bids for keywords in
response to a decrease in the sales they are able to make per paid click. Economic
uncertainties affecting advertising spend would affect the company’s operating
performance in near term.
55
Top competitors
The following companies are the major competitors of Google Inc.
 Microsoft Corporation
 Yahoo! Inc.
 Time Warner Inc.
 IAC Search and Media
 LookSmart, Ltd.
 NetEase.com, Inc.
 SINA Corporation
 Baidu.com
 Sohu.com Inc
 eBay Inc.
 Answers Corp
56
Chapter 3
Research Design
57
Area of research: Marketing Management
Title of the research: A study on the impact of online

advertising tools in Google’s revenue
Industry: Information technology industry and Search
engine optimization
Company: Google Inc.
58
Scope
The information technology industry is growing at a great pace and the growth
rate is expected to double with every passing year. There are many new
developments in this sector, including the ingress of 4G broadband technology
that the Indian market is witnessing at present.
With the coming of more and more projects, the information technology industry
is going for high scale recruitments. There is a huge demand for software
engineers, system analysts, and hardware engineers for large-scale industry
requirement. Besides, there are many opportunities for marketing people whose
services are required to capture more and more customer base online and offline.
The new projects, setting up of new advertising portals, expansion of existing

network resources, network installations, etc. are providing more and more
employment opportunities in the information technology sector.
However, all these developments that are happening in the sector, it was Google
with along a few of its counterparts that could straightforwardly pass through the
recent harsh conditions of global economic slump. Such a withstanding was only
possible due to tenacious advertising strategies embraced by Google. Therefore,
an analysis brings pronounced information to the public.
59
Statement of the Problem
A study on the impact of online advertising toll namely Google AdWords & Google
AdSense on Google’s revenue and an analysis on the present market share and
competitive edge of Google in Search engine Optimization and online advertising
market
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Objectives
1. What is the primary contribution of online advertising tools deployed by

Google in becoming a successive revenue model?
present market?
61
Data collection methods
There are two different types of data collection methods
1. Primary data collection involves collecting data yourself using methods

such as interviews, questionnaires, observations and abstractions from medical
records. The key point is that the data collected is unique to you and your
research and, until you publish, no one else has access to it. The primary data,
which is generated by the above methods, may be qualitative in nature (usually in
the form of words) or quantitative (usually in the form of numbers or counts of
items assessed).
2. Secondary data is data that has already been collected and collated by
somebody for some reason other than the current study. It can be used to get a
new perspective on the current study, to supplement or compare the work or to
use parts of it, as another study may prove costly and time consuming e.g. the
census.
Secondary data can further be divided into two parts. Qualitative data includes
biographies, personal letters, diaries, records, documents, published material,
computer database, policy statements, etc. Quantitative data would have market
research, census, and Economic documents, planning documents or specimens.
In this study, secondary data collection was used mainly to obtain data. As in data
from websites, studies already conducted, books published, journals and other
related magazines
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Plan of Analysis
The brief outline of how to go about with the research is what that constitutes the
plan of analysis. This study conducted on Google had to done in a synchronized
way as the information related to the subject is exposed to a vigorous business
environment. So the plan that was outlined basically contained of acquiring data,
mainly secondary data from a variety of sources including Financial reports of
Google as such. These composed data was then succumbed to a rigorous analysis
using graphs, pie charts and diagrams for easy comprehension. All these analytical
findings were then consolidated in the findings.
63
Limitations
1. The first and foremost difficulty posed in pursuing this research is the
inconsistency of data from various sources as reliable sources that provide
required information on this subject is just a handful of them
2. The strategies of a company’s advertising techniques can never be
predicted with maximum accurateness. This information is viable to
changes in the dynamic international market.
3. Time constraint is another determining factor in a research work like this
that usually require sufficient amount of time for collection and
interpretation of chunks of data let it be primary or secondary.
4. In this particular research where it was virtually impossible to gain primary
data, secondary data was the only option left to the researcher to have
access to information pertaining to the focus of the study.
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Chapterization
Chapter 1- Introduction
Chapter 2- Industry Profile
Chapter 3- Research Design
Chapter 4- Data Interpretation
Chapter 5- Findings and Conclusion
Chapter 6- Bibliography
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Operational definition
1. S.E.O- Search engine optimization
Search engine optimization (SEO) is the process of improving the volume or

quality of traffic to a web site from search engines via "natural" or un-paid
("organic" or "algorithmic") search results as opposed to search engine marketing
(SEM) which deals with paid inclusion.
2. Pay per click
Pay per click (PPC) is an Internet advertising model used on websites, in which

advertisers pay their host only when their ad is clicked. With search engines,
advertisers typically bid on keyword phrases relevant to their target market.
Content sites commonly charge a fixed price per click rather than use a bidding
system.
3. Google Chrome
Google Chrome is a web browser developed by Google that uses

the WebKit layout engine and application framework.
4. Double Click
DoubleClick is a company that develops and provides Internet ad serving services.

Its clients include agencies, marketers (Universal McCann Interactive, AKQA etc.)
and publishers who serve customers like Microsoft, General Motors, Coca-
Cola, Motorola, L'Oréal, Palm, Inc., VisaUSA, Nike, Carlsberg among others.
DoubleClick's headquarters are in New York City, United States.
66
The research Process
The study conducted is primarily focused on analysing the effectiveness of

Google’s online advertising program namely Google AdWords and Google
AdSense. In this web enabled modern day society people rely almost a lot on
services provided by Google and other similar Search Engines. As the case with
common people, the advertising program that is being studied here also has
significant impacts on businesses as well. This method of search engine
optimization is used by various firms around the globe to have a better reach to
their clients.
So, a necessity of conducting a study on the effectiveness of Search Engine

optimization services was high when I was in the process of fixing an area for my
marketing research project. It is a matter of great concern among the common
people, how Google can give most of their services free while competitors
struggle to keep it free. All this led to the requirement of immediately focusing my
study on Google’s revenue source as well.
There is no physical place where the study is being held. The method that will be
used mainly to collect data will be web based secondary sources of information.
Survey to be conducted will be made possible through online email surveys
among the users of Google’s advertisement services as well as clients of
advertisements.
Since the data will be mostly in the form of digital charts and reports, these will
be available from peer-reviewed sources of marketing journals. Several sources of
secondary information will be useful during the study. Online research databases,
websites that archives previous research reports, blogs that provide information
regarding companies, and annual financial reports and company profiles of
Google and other competitors will also be used in the process of data collection.
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Techniques of data collection that may count up to three major types. Online
surveys, email questionnaires and direct interviews.
Collection of Data
The collection of data represents a prerequisite for carrying out a research and
can be derived from a number of different sources. These sources are classified
into secondary and primary data. McNeill pointed out that secondary data is
material that has been gathered previously, and primary data consists of new
material collected by the researcher for the purpose at hand by the use of
questionnaires, interviews, and participant observation.
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Chapter 4
Data interpretation
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Search engine optimization
Search engine optimization (SEO) is the process of improving the volume or
quality of traffic to a web site from search engines via "natural" or un-paid
("organic" or "algorithmic") search results as opposed to search engine marketing
(SEM) which deals with paid inclusion. Typically, the earlier (or higher) a site
appears in the search results list, the more visitors it will receive from the search
engine. SEO may target different kinds of search, including image search, local
search, video search and industry-specific vertical search engines. This gives a web
site web presence.
As an Internet marketing strategy, SEO considers how search engines work and
what people search for. Optimizing a website primarily involves editing its content
and HTML and associated coding to both increase its relevance to specific
keywords and to remove barriers to the indexing activities of search engines.
The acronym "SEO" can refer to "search engine optimizers," a term adopted by an
industry of consultants who carry out optimization projects on behalf of clients,
and by employees who perform SEO services in-house. Search engine optimizers
may offer SEO as a stand-alone service or as a part of a broader marketing
campaign. Because effective SEO may require changes to the HTML source code
of a site, SEO tactics may be incorporated into web site development and design.
The term "search engine friendly" may be used to describe web site designs,
menus, content management systems, images, videos, shopping carts, and other
elements that have been optimized for the purpose of search engine exposure.
Another class of techniques, known as black hat SEO or spamdexing, use methods
such as link farms, keyword stuffing and article spinning that degrade both the
relevance of search results and the user-experience of search engines. Search
engines look for sites that employ these techniques in order to remove them from
their indices.
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Relationship with search engines
By 1997 search engines recognized that webmasters were making efforts to rank
well in their search engines, and that some webmasters were even manipulating
their rankings in search results by stuffing pages with excessive or irrelevant
keywords. Early search engines, such as Infoseek, adjusted their algorithms in an
effort to prevent webmasters from manipulating rankings.
Due to the high marketing value of targeted search results, there is potential for
an adversarial relationship between search engines and SEOs. In 2005, an annual
conference, AIRWeb, Adversarial Information Retrieval on the Web, was created
to discuss and minimize the damaging effects of aggressive web content
providers.
SEO companies that employ overly aggressive techniques can get their client
websites banned from the search results. In 2005, the Wall Street Journal
reported on a company, Traffic Power, which allegedly used high-risk techniques
and failed to disclose those risks to its clients. Wired magazine reported that the
same company sued blogger and SEO Aaron Wall for writing about the ban.
Google's Matt Cutts later confirmed that Google did in fact ban Traffic Power and
some of its clients.
Some search engines have also reached out to the SEO industry, and are frequent
sponsors and guests at SEO conferences, chats, and seminars. In fact, with the
advent of paid inclusion, some search engines now have a stake in the health of
the optimization community. Major search engines provide information and
guidelines to help with site optimization. Google has a Sitemaps program to help
webmasters learn if Google is having any problems indexing their website and
also provides data on Google traffic to the website. Google guidelines are a list of
suggested practices Google has provided as guidance to webmasters. Yahoo! Site
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Explorer provides a way for webmasters to submit URLs, determine how many
pages are in the Yahoo! index and view link information.
Methods
Getting indexed
The leading search engines, such as Google and Yahoo!, use crawlers to find pages
for their algorithmic search results. Pages that are linked from other search
engine indexed pages do not need to be submitted because they are found
automatically. Some search engines, notably Yahoo!, operate a paid submission
service that guarantee crawling for either a set fee or cost per click. Such
programs usually guarantee inclusion in the database, but do not guarantee
specific ranking within the search results.
Two major directories, the Yahoo Directory and the Open Directory Project both
require manual submission and human editorial review. Google offers Google
Webmaster Tools, for which an XML Sitemap feed can be created and submitted
for free to ensure that all pages are found, especially pages that aren't
discoverable by automatically following links.
Search engine crawlers may look at a number of different factors when crawling a
site. Not every page is indexed by the search engines. Distance of pages from the
root directory of a site may also be a factor in whether or not pages get crawled.
Preventing crawling
To avoid undesirable content in the search indexes, webmasters can instruct
spiders not to crawl certain files or directories through the standard robots.txt file
in the root directory of the domain. Additionally, a page can be explicitly excluded
from a search engine's database by using a meta tag specific to robots. When a
search engine visits a site, the robots.txt located in the root directory is the first
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file crawled. The robots.txt file is then parsed, and will instruct the robot as to
which pages are not to be crawled. As a search engine crawler may keep a cached
copy of this file, it may on occasion crawl pages a webmaster does not wish
crawled. Pages typically prevented from being crawled include login specific pages
such as shopping carts and user-specific content such as search results from
internal searches. In March 2007, Google warned webmasters that they should
prevent indexing of internal search results because those pages are considered
search spam.
Increasing prominence
Varieties of other methods are employed to get a webpage shown up at the
searches results. These include:
 Cross linking between pages of the same website. Giving more links to main
pages of the website, to increase PageRank used by search engines. Linking
from other websites, including link farming and comment spam.
 Writing content that includes frequently searched keyword phrase, so as to
be relevant to a wide variety of search queries. Adding relevant keywords
to a web page meta tags, including keyword stuffing.
 URL normalization of web pages accessible via multiple urls, using the
"canonical" meta tag.
As a marketing strategy
Eye tracking studies have shown that searchers scan a search results page from
top to bottom and left to right (for left to right languages), looking for a relevant
result. Placement at or near the top of the rankings therefore increases the
number of searchers who will visit a site. However, more search engine referrals
does not guarantee more sales. SEO is not necessarily an appropriate strategy for
every website, and other Internet marketing strategies can be much more
effective, depending on the site operator's goals.
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A successful Internet marketing campaign may drive organic traffic to web pages,
but it also may involve the use of paid advertising on search engines and other
pages, building high quality web pages to engage and persuade, addressing
technical issues that may keep search engines from crawling and indexing those
sites, setting up analytics programs to enable site owners to measure their
successes, and improving a site's conversion rate.
SEO may generate a return on investment. However, search engines are not paid
for organic search traffic, their algorithms change, and there are no guarantees of
continued referrals. Due to this lack of guarantees and certainty, a business that
relies heavily on search engine traffic can suffer major losses if the search engines
stop sending visitors. It is considered wise business practice for website operators
to liberate themselves from dependence on search engine traffic. A top-ranked
SEO blog Seomoz.org has suggested, "Search marketers, in a twist of irony,
receive a very small share of their traffic from search engines." Instead, their main
sources of traffic are links from other websites.
Sufficient amount of secondary data from a variety of sources were used in the
analysis of customer behaviour. These resources primarily measure respondents’
use of the web, and search engines in particular, for researching and purchasing
Travel Products and Services, for researching and purchasing Movies, Music,
Games, Television, Media and Tickets. All these respondents have used the
AdWords and AdSense service at least once during their search.
Google is the most popular search engine for researching and/or purchasing
Entertainment products, services or information online – used by 83% of all
respondents
• The vast majority (89%) of Google users have used the web to learn more about
an Entertainment product, service, or information
• Google users are active in all entertainment categories, particularly Movies

(77%) and Music (68%)
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• For movie-related activities, Google users use search engines to help them read
reviews (74%), watch trailers (66%) and/or check movie times (61%)
• The vast majority (86%) of Google users who use websites to learn about
Movies, use a search engine to find those movie sites
• 79% Google users say search engines are very/somewhat important for
researching/purchasing movies and related info
• For music-related resources, Google users primarily use search engines to help
them listen to music samples (75%), read reviews (63%) and/or purchase CDs
online (53%)
• 84% of Google users who use websites to find music-related information, use a
search engine to help them find those music sites
• Most Google users (77%) think search engines are very/somewhat important for
researching/purchasing music related products
• For gaming products and information, Google users use search engines to help
them read game reviews (69%), purchase games online (49%) and obtain patches
(48%)
• 85% of Google users who use websites to learn about gaming products, use a
search engine to help them find those gaming sites
• The vast majority (86%) of Google users say search engines are very/somewhat
important for researching/purchasing gaming products
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Nearly three-quarters of the data collected shows us that people have used a
search engine when researching/purchasing travel products or services online
• Search engine usage: -Almost three-fourths (70%) of Google users report using a
search engine for more than half of their travel-related research-Most Google
users use a search engine to help them compare prices (81%)and/or conduct
research for travel products or services (80%)-A larger majority of Google users
access travel information using a search engine(85%) than by typing in a web
address(69%)
• The vast majority (82%) of these respondents use Google to search for these
products
• Three quarters (76%) of Google users say search engines are very/somewhat
important for making travel purchase decisions
• Across all resources –online and offline–search engines are the most popular
resource for Google users for researching/purchasing travel products, services
and information
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This data, from Google's latest 10-Q filing (page 25), had an interesting note at the
bottom: "Revenues realized through the Google Print Ads Program, Google Audio
Ads, Google TV Ads, Google Checkout, YouTube, Postini and DoubleClick were not
material in any of the periods presented." Google has its fingers in many pies, but
not a lot to show for it outside of search and AdWords.
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Google marketing - 7 principles of success
By anyone's analysis, the rise of Google has been truly astounding.

From search engine to advertising revenue, now a major threat to network, and
application providers in many different markets, Google has obviously figured out
a formula that works.
Therefore, these are some of the highly acclaimed principles followed by Google,
which has facilitated its rise towards the position of a technological giant in the
global IT scenario.
1. Results must be trackable: definitely true, if you are not tracking, you lose any
ability to improve or understand where to put your time and financial priorities
2. Promote Trial: Again, a sound principle, especially in the case of a service, high-
end product or continuity product (recurring payments are involved).
3. Let others speak for you: This is a big one. The power of word-of-mouth
marketing and how to build that into your online marketing campaigns- this the
one field where Google have proved its expertise and triumph..
4. Data, Not Hype. Without understanding the original intent of this one inside
Google, its tough to speculate exactly what they are referring to, but one would
have to assume that letting the product, service and results speak for themselves
is a far more powerful marketing strategy than hype.
5. Your Smart and Your Time Matters: This one speaks for itself, we've talked allot
about having empathy for your customers – Google has made empathy a main
principle of marketing – smart!!
6. We are Serious, Except When we are not. Talk to anyone senior and successful
in business, they will tell you a sense of humor is necessary to reach the top and
reach your customers.
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7. Big Ideas Move Us. Well, certainly no argument here – Google has been as good
as any company in history in cultivating and finding great ideas, clearing the way
of obstacles and quickly getting new ideas to market to test.
Graphical analysis of Data
A recent survey by Nielson company asked AdWords clients to rate all forms of
advertising they've used and/or are currently using. The results showed that
satisfaction with Google AdWords is up to 57% higher than all other marketing
media.
*Nielson/Net Ratings - Search Engine Usage Statistics for February 2009
Traditional media like print ads, TV/Radio spots or even flyers, require the client
to pay a hefty price for ad space upfront, regardless of whether the ad brings
results or not.
Google Adwords, on the other hand, allows clients to pay for results. Compared to
traditional media, we help our clients save as much as 75% on advertising costs,
while bringing in more business at the same time.
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Adwords is highly effective simply because it exposes your ad only to people who
are searching for what you have to offer.
Furthermore, you can even choose to expose your ad to local internet users, or
target internet users from 240 countries worldwide. For even more flexibility and
control, you can even schedule the timing that your ad will appear.
Why Google?
Google is the most widely used search engine on the internet today. More than
65% of internet searches done online is via Google.
Additionally, in a recent survey conducted by Vividence Corporation, people were

asked to rate their experience with select search engine sites. 89% of the
respondents reported a 'strongly positive' experience with Google, far surpassing
the competition.
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Google Now Controls 69% of Online
Advertising Market
Google’s acquisition of DoubleClick has turned the company into double the
online advertising juggernaut that it once was, with a total advertising market
share of 69% according to Attributor’s study.
Google enjoys a 35% share of advertising to unique users while DoubleClick enters
the Googleplex with its own 34%. Combined, the two forces serve advertising to
just about 2.2 billion unique users (that’s one third of the world’s population … if
we counted all of those users as unique people).
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More information from the study:
1. DoubleClick and Google dominate overall market share capturing 35% and
34% of unique users, respectively.
2. DoubleClick owns the head and Google owns the tail. For sites with over
1MM monthly unique users, Doubleclick has a 48% share, a 3x advantage
over 2nd place Yahoo. For sites with less than 100k monthly unique users,
Google has an 8x share advantage over 2nd place MSN.
3. Professionally produced content is widely proliferated across highly
trafficked, commercial sites, representing an untapped opportunity for
publishers to increase their revenue through content licensing, ad revenue
share or link-building.
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This self-explanatory pie diagram let out by www.techcrunch.com based on their
recent study shows where does Google’s major share of revenue come from.
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This confidential diagrammatic information released by Google shows the share of
Google in total ad revenue as well as online ad revenue when compared with its
competitors like Yahoo!, AOL, Microsoft, Newspapers etc.
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Concluding the interpretation
The company recorded revenues of $21,795.6 million during the financial year
ended December 2008 (FY2008), an increase of 31.3% over 2007. In FY2008, the
US, the company's largest geographic market, accounted for 48.8% of the total
revenues. Google generates most of its revenues through advertising business.
Revenues by Division
The company generated 98% of the total revenues in 2008 from advertising. It
derives most of the additional revenues from offering internet ad services and
management services to advertisers and ad agencies, the license of its web search
technology and the license of its search solutions to enterprises.
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Chapter 5
Findings and Conclusion
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Findings
 Google generated 98% of the total revenues in 2008 from advertising. It

derives most of the additional revenues from offering internet ad services
and management services to advertisers and ad agencies, the license of its
web search technology and the license of its search solutions to
enterprises.
 Google still is the market leader in the market for online services and
search engine optimization
 Google’s management strategies towards effective online customer

satisfaction are right to the point. They have succeeded in gaining a major
market share.
 A couple of new products like Google Chrome and Google Chrome OS are
instrumental in Google’s revenue earnings online.
 Google has a robust feedback and solution system through which they are
continually succeeding in settling customer complaints and grievances.
 After purchase of DoubleClick by Google there has been a substantial

increase in the revenue generated from interactive ads in the popular vide
sharing website YouTube
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Articles and news from various reliable
sources and industry experts support
findings from the study.
How Google Gets from Chrome OS to

YouTube TVs
11.20.09 (http://www.pcmag.com/)
By Mark Hachman
Google fired another shell at Microsoft's fundamental business model on

Thursday, when it released the code behind its Google Chrome OS. When it lands,
Microsoft's business model may be blown from the water.
But it's missing the point to compare the Chrome OS with Microsoft's operating
systems. The Chrome OS isn't an operating system at all. It's an advertising
medium.
And although its evolution may take years to advance, I think we can look forward
to Google using the Chrome OS to drive into entirely new markets (even YouTube-
branded TVs!), barring government intervention.
It's hard not to characterize Chrome OS as anything but a foundation. The early
version of the Google Chrome OS that executives showed off at its Mountain View headquarters
was minimalist, clean, straightforward, and very, very fast. It lacked the modern
bells and whistles of Windows 7, and deliberately so.
Although what Google presented showed obvious differences from the "leaked"
version of the Chrome OS that allegedly showed up weeks ago, Sundar Pichai, vice
president of product management at Google, did make one key point: internally,
Google engineers joke that the Google Chrome (browser) is the Chrome OS. Not
much of a joke, maybe, but the direction is clear: Google has produced a free,
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easy-to-use, efficient browser that pushes users to the Web, and Google's ads, as
quickly as possible.
As a Google spokesman put it: "[Chrome OS] is just a platform for the Web."
That's it. Google executives have made clear that an operating system is still
relevant and necessary; they just don't feel that it's the central focus of the PC.
Heck, they even tossed it onto the Internet with just an Creative Commons 3.0
Attribution license.
Under Google's Chrome OS business model, the operating system isn't a revenue-
generating product. It's barely a commodity. It's not even a service, as Microsoft's
Office Web apps try to be. Under Google, the OS is a medium, like television,
radio or the Internet. That's a revolutionary idea, and one that may shake the
software industry to its core.
And if there's one company that knows how to make money off of the Internet,
it's Google.
"Users love free; that's the primary…driver," said Shalini Govil-Pai, lead product
manager and strategist for Google's YouTube at a recent panel discussion at the
Streaming Media West show in San Jose. "Advertising is what Google does best,
and YouTube does best, and that has been our focus so far."
If this sounds somewhat familiar, it should: Apple, the other tech giant with both
a browser and an operating system to its name, has patented a means of embedding ads in
the operating system, even threatening to lock down components until the user
acknowledges it.
To my knowledge, Microsoft doesn't have an answer to Google Chrome OS. No,

not Windows XP or Windows 7 Starter. As of last quarter, that's $4.09 billion in
Microsoft Windows revenue staring down the barrel of the Chrome OS gun. And
by making Chrome OS open source, Google is encouraging its partners to
manufacture bullets.
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What makes Google a successful revenue
model?
5 November 2003, 11:48pm IST (http://timesofindia.indiatimes.com/)
If the ultimate measure of impact is to have one’s name become a new verb in
the world’s main languages, Google has reason to be proud.
When they founded the company five years ago, Sergey Brin and Larry Page,
friends at Stanford University, chose a word play on googol the number 1
followed by 100 zeros because their ambition was to organise the information
overload of the internet in a transparent and superior way.
These days, singles google suitors before agreeing to a date, housewives google
recipes before cooking, and patients google their ailments before visiting doctors.
As search engines go, in other words, Google has clearly been a runaway success.
Not only is its own site the most popular for search on the web, but it also powers
the search engines of major portals, such as Yahoo! and AOL. All told, 75 per cent
of referrals to websites now originate from Google’s algorithms. That is power.
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Google: Chrome OS Is About Driving
Internet Use (Which Will Let Us Show
More Ads)
By Jordan Golson | Thursday, July 16, 2009 | 4:48 PM PT | (http://gigaom.com/)
During Google’s quarterly earnings call today, a number of analysts

asked questions about the company’s new Chrome OS. The product is unique in
that it’s generated a massive amount of hype and coverage without anyone
having any idea what it will look like, when it will arrive, or what users will be able
to do with it. Much like Google Wave, the company hopes it can tout the Chrome
OS with words, rather than by having to actually show anything. One thing is for
sure, Chrome OS won’t be making Google any money. Not directly, anyway.
Google CEO Eric Schmidt, responding to an analyst’s question about monetizing

Chrome OS:
Because it’s open source, we do not plan to charge for it, in an open source form.
There may be other ways we can make money from it. The core operating system,
if you look at the blog post, we said it was an open source project and it should be
available for anyone else to use. We do this with a lot of products. For example
our Android product… There are many other pieces of technology that Google
builds [that we don't charge for].
The rough argument is we do things that are strategic because they get people to
ultimately use the Internet in a clever and new way. We know that if they use the
Internet more, they search more, watch more on YouTube, and we then know
that our advertising [will reach them]. We do not require each and every project
to be completely profitable or not profitable — we look at them in a strategic
context: are they making the Web a better place? By making the web a better
place, by getting more and more people online — especially on broadband
connections — we have lot of data that says this results in very, very strong
revenue growth from us because of targeted ads that we offer.
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When asked for more concrete details on the Chrome OS, Schmidt had this to say:
What we talked about when we did the announcement a week ago was that, we
are going to build an open source version of Chrome OS that would be available
to the PC community a year from now. We are, in fact, talking to PC hardware
manufacturers of both architectures, both ARM and Intel, to design products that
are very, very exciting, that really fulfill the vision of cloud computing. Other
aspects of our strategy are still to be worked out, based on feedback.
There will be a reference hardware spec with appropriate features and so forth.
Our primary focus for that product will be speed — in particular speed of boot
and speed of computation, and seamless use of all the web services that are the
promise of cloud computing. Will the software be generally available for
download? Will it run on existing hardware? Those things we will work out.
Because it’s open source, we won’t have the kind of restrictions that other people
have. It will be possible people to take it and do whatever they want to it; that’s
kind of the beauty of the Chrome OS.
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The Google Revenue Equation and Why
Google’s Building Chrome OS
July 11th, 2009 | by Ben Parr (http://mashable.com/)
It’s only been a few days, but it feels like weeks since Google announced
Google Chrome OS and stirred up the blogosphere and the imagination of
techies and Microsoft haters everywhere. The response, the analysis, and
the debate has been constant ever since. Can it beat Windows? Can it even
run Photoshop?
Two days ago, we profiled the ongoing battle between Microsoft and Google,
focusing on areas where the two companies compete. Almost everyone has
framed Google Chrome OS as a direct competitor to Microsoft Windows.
But I am about to argue that this is the wrong way to view Chrome OS.
Google’s goal is not to have the majority market share. The goal is to force
you on the web more and for longer. Why? It’s all part of Google’s simple
equation to monetize the world.
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It’s not about how Google makes money, it’s about where
What website doesn’t have a Google ad these days?
Google generated about $21 billion in revenue last year. The vast majority
of that revenue, well over 95%, comes from advertising via its search
engine and its AdSense program, which places ads on millions of websites,
including Mashable
You probably already knew that, though. The key to understanding why
Google is building an OS based on Chrome though isn’t about how it
generates revenue, it’s about where. The answer’s simple: anywhere on
the web.
View a YouTube video? That’s revenue for Google. Visit Mashable? Google
makes money. MySpace? Search? The New York Times? In almost every
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instance in which you spend time on the web, Google is able to generate
click revenue, impression revenue (primarily via DoubleClick), and is able to
collect data on your browsing activities to better target ads that will
interest you.
The Google Revenue Equation
Thus, while Google has a lot of complex algorithms that go towards

improving its revenue, it really has one overarching equation and
correlation that always holds true. I have faith that you’ve guessed it by
now. Here it is:
Revenue = Amount of Time on the Web
Since nearly every website holds a Google ad slot, every impression and
every second you spend on the web is revenue for Google. Every second
you’re playing a desktop game, using Microsoft Office, or using AOL Instant
Messenger, that’s unrealized potential revenue. The equation may be
obvious, but that doesn’t diminish its importance.
Its product releases are a clear indication of this trend. Nearly every Google
product is designed to get you on the web. Gmail is integrated with Gtalk
online, Google Docs exists in the cloud, and most of all, Google Chrome is
designed to get the world to rely on web-based applications more. The
video above explains why they built Chrome: faster load times, increased
use of web apps by users, and freeing up user time so they can browse the
web more.
Each and every one of those improvements means increased time on the
web, which, if you remember the Google Revenue Equation, means more
money.
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Chrome OS: Keeping you on the web
Google Chrome and Google Docs have not only increased web-based
use, but they have spurred their competitors to build products that bring
users onto the web more and for longer periods of time. In fact, it’s
rumored that Microsoft Office is coming to the Cloud very soon. Google Docs
changed the game, and Microsoft reacted.
Google hopes for the same reaction from Microsoft and Apple to Chrome
OS. Its biggest selling points, directly from Google, are that it will “get you
onto the web in a few seconds,” that “most of the user experience takes
place on the web,” and finally that “all web-based applications will
automatically work and new applications can be written using your favorite
web technologies.”
This doesn’t sound at all like Google’s trying to build a competitor that
users will choose over Microsoft. Instead, it sounds like its goal is to get
people onto the web faster and for longer. Getting you to spend more time on
the web is why Google based its OS on Chrome. You can expect that Microsoft
and Apple will incorporate the best features of Chrome OS in their future
iterations. That’s exactly what Google wants (and by the way, since Chrome
OS is open-source, Google’s making it easy).
As long as you’re on the web, Google wins. So we need to stop framing the
Google-Microsoft battle in the context of “Chrome OS vs. Windows,”
because Google will not win a straight up battle. And guess what? That’s not
Google’s goal. We need to frame it in the larger context of the Google
Revenue Equation and how much time we spend on the web.
Chrome OS is just another step in getting us online, both directly and

indirectly. If you view the battle with this in mind, then you realize that
Google will almost certainly succeed. Google will have won once again.
Conclusion
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Google’s mission statement says “…to organize the world's information and make
it universally accessible and useful.”In addition, largely they have succeeded in
accomplishing their mission. Google continues the saga by giving huge surprises
to its customers and clients. Google’s philosophy of starting everything from
people has made it one of the most admired firms all over the world.
99% of Google's revenue is derived from its advertising programs. For the 2006
fiscal year, the company reported $10.492 billion in total advertising revenues
and only $112 million in licensing and other revenues. Google is able to precisely
track users' interests across affiliated sites using DoubleClick technology and
Google Analytics. Google's advertisements carry a lower price tag when their
human ad-rating team working around the world believes the ads improve the
company's user experience.
Google AdWords allows Web advertisers to display advertisements in Google's

search results and the Google Content Network, through either a cost-per-click or
cost-per-view scheme. Google AdSense website owners can also display adverts
on their own site, and earn money every time ads are clicked. Google began in
March 2009 to use behavioral targeting based on users' interests.
Google has also been criticized by advertisers regarding its inability to combat
click fraud, when a person or automated script is used to generate a charge on an
advertisement without really having an interest in the product. Industry reports in
2006 claim that approximately 14 to 20 percent of clicks were in fact fraudulent
or invalid.
In June 2008, Google reached an advertising agreement with Yahoo!, which would
have allowed Yahoo! to feature Google advertisements on their web pages. The
alliance between the two companies was never completely realized due to
antitrust concerns by the U.S. Department of Justice. As a result, Google pulled
out of the deal in November, 2008.
Particularly in the field of online advertising and marketing Google is the best and
continues to be the leader of the market for a prolonged period. This they have
achieved solely by the timely execution of effective strategies and plans that
97
outperformed in the global market. In addition, Google’s simplicity and
unclutteredness makes it hit among the users. Apt and striking ads through
AdWords and AdSense have played a very important role in earning sustained
revenue for even during these crisis times.
Right now Google can be attributed the position of an undisputed web giant that
has a presence in almost all parts of life of anyone connected to the world wide
web by any means. Google ads are lifelines of businesses throughout the world in
reaching out to their customers. Google’s ad placement strategies that have well
played in the recent years have helped Google’s clients achieve huge profits
through opening themselves for a wider array of customers. These firms that are
the clients of Google could have never imagined a better way of marketing
themselves in a surprisingly low cost.
Thus concluding the study on Google- online advertising effectiveness brings me

to the point that Google’s products have done their best so far in online
advertisements and marketing and are continuing their success epic.
98
Chapter 6
Bibliography
Websites
99
 http://en.wikipedia.org/wiki/Google
 http://en.wikipedia.org/wiki/Search_engine_optimization.htm
 http://www.google.com/intl/en/about.html
 http://www.datamonitor.com/google.html
 http://www.search.ebscohost.com/google-revenuemodel.html
 http://www.investor.google.com/fin_data.html
 http://www.pcmag.com/article2/0,2817,2356154,00.asp
 http://timesofindia.indiatimes.com/articleshow/msid-267233,flstry-1.cms
 http://gigaom.com/2009/07/16/google-chrome-os-is-about-driving-
internet-use-which-will-let-us-show-more-ads/
 http://mashable.com/2009/07/11/google-equation/
 http://www.searchenginejournal.com/google-now-controls-69-of-online-
advertising-market/6632/
100
Articles and Financials
 FINANCIAL TABLES FOR THE QUARTER ENDED JUNE 30, 2009
 Free Adsense Secrets -Everything You Need To Know About AdSense…
Without Spending a DIME!-By Kimberly Wallace
http://www.freeadsensesecrets.com
 Everything you always wanted to know about Google…
 Google Adsense Profits Mixed In With Affiliate Marketing
 100% Google AdSense: Tools, Tips and Resources-By Glen Stansberry and
Smashing Magazine Editorial Team
 Unleash the full revenue potential of your website with Google AdSense
 QUARTERLY REPORT (Q 10) PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 ANNUAL REPORT- GOOGLE INC 2008
101
Books
 AARON MATTHEW WALL -Search Engine Optimization Book
 Randall Stross (2008-09-18). Planet Google: One Company's Audacious Plan
To Organize Everything We Know. Free Press (publisher). ISBN 1-41654-691-
X.
 Ken Auletta (2009-11-03). Googled: The End of the World As We Know It.
Penguin Press. ISBN 1-59420-235-4.
 David Vise and Mark Malseed (2005-11-15). The Google Story. Delacorte
Press. ISBN 0-553-80457-X.
102

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A Research Methodology Project on Marketing

Submitted in fulfilment of the requirement for the subject RESEARCH

UNDER THE GUIDANCE OF:

DEPARTMENT OF MANAGEMENT STUDIES

CHRIST UNIVERSITY, BANGALORE

Date: 22th February 2010

PLACE: BANGALORE MRS. Leena James

Method: Data were collected, regarding online advertisement share of Google’s

Theory: An extensive review of the literature was completed relative to

1.1 Area and Title of

CHAPTER TWO: INDUSTRY

2.5 Major Products and

CHAPTER THREE: RESEARCH

3.2 Statement of the

CHAPTER FOUR: DATA

4.1 Search Engine

4.2 Relationship with Search

4.4 Seven Principles of

4.5 Graphical Analysis of

CHAPTER FIVE: FINDINGS AND

5.2 Articles and news from various reliable

5.2.1 How Google Gets from Chrome OS to YouTube

5.2.2 What makes Google a successful revenue model?..................................................................87

6.2 Articles and

1. Global Internet Software and Services Market Value

Title of the research: A study on the impact of online

1. What is the primary contribution of online advertising tools deployed by

The new projects, setting up of new advertising portals, expansion of existing

2. Google web search provides access to billions of web pages. It has

4. Google scholar allows broad search for relevant scholarly literature

5. Google news gathers information from news sources worldwide and

7. iGoogle is personalized Google page. iGoogle includes personalized search,

9. Google custom search allows communities of users familiar with particular

11.Google webmaster tools provide information to webmasters, allowing

12.Some of Google’s products include Google Docs, Google Calendar, Gmail,

13.Google Calendar is a free online shareable calendar service. It allows users

17.Orkut is an online social networking site.

21.Google’s client applications include Google Toolbar, Google Chrome,

24.Google Earth provides detailed satellite and aerial images, 3D topography,

25.Google Maps provides navigation map information. It includes StreetView,

29.Google Checkout is a service for users, advertisers and participating

31.The company’s major revenue generating tools include Google AdWords

32.AdWords is accessible to advertisers in 41 different interface languages.

The technology behind Google’s operations combines techniques to determine

Specifically, the following questions shall be answered:

Market volumes increased with a CAGR of 13.7% between 2004-2008, to

However, brand loyalty is unlikely to be a significant factor for commercial buyers,

Buyers include individual consumers, right through to large businesses. A number

Effective succession planning is also important to long-term success. Failure to

Similarly, Yahoo! announced its acquisition of rising stars Kelkoo (online

Google is one of the world’s leading Internet search engines. It specializes in

France Telecom is one of the leading providers of telecommunication services,

The group operates through three business segments: personal communication

Time Warner Inc.

Time Warner is a prominent global media and entertainment company with

1600 Amphitheatre Parkway

Phone 1 650 253 0000

Fax 1 650 253 0001

Web Address http://www.google.com

Revenue / turnover 21,795.6 (USD Mn)

Financial Year End December

NASDAQ Ticker GOOG