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VIDEO CASE 18
Google, Inc.: The Right Ads at the Right Time
ues to improve every day!
Video 18-6
THE COMPANY
Case
ads, not more ads; just the right ads at the right time.
Holden continues. The Google advertising model has
"So what we did, in essence, is we said advertising
revolutionized the advertising industry, and it contin-
should be useful to a consumer just as much as the
organic search results, and we
don't want people just to buy
Google Video
advertising and be able to
show an ad if it's irrelevant to
kerin.tv/13e/v18-6 the consumer's need,” says
Google began in 1996 as a research project for Stan
Richard Holden, director of
ford computer science students Larry Page and Sergey
product management at Google. To accomplish this,
Brin. They started with a simple
Google developed a "Quality
idea that a search engine based
Score" model to predict how ef-
fective an ad will be. The model
on the relationships between
uses many factors such as click-
websites would provide a better
through rates, advertiser history,
ranking than a search engine
and keyword performance to de-
based only on the number of
velop a score for each advertise-
times a key term appeared on a
ment. “Essentially, what we're © Justin Sullivan/Getty Images
website. The success of their
trying to do is predict ahead, be-
fore we actually show an ad, how a consumer will
model led to rapid growth, and
react to that ad, and our interest is in showing fewer
the founders moved the company from their dorm
room, to a friend's garage, to offices in Palo Alto.
Google
530
California, and eventually to its current location,
known as the Googleplex, in Mountain View, California.
of generating revenue. Its advertising model allowed
advertisers to bid on search words and pay for each
"click" by a search-engine user. The ads were required
to be simple and text-based so that the search result
pages remained uncluttered and the search time was
as fast as possible.
Rub” because their technique was based on relation-
ships, or backlinks, between websites. The name quickly
changed, however. The name "Google" is a misspelling
of the word "googol,” which is a mathematical term for
a l followed by 100 zeros. Page and Brin used the name
in the original domain, www.google.stanford.edu, to
reflect their interest in organizing the immense amount
of information available on the Web. The domain name,
from the search results or the content of a web page
and it never sells placement in the search results. This
approach ensures that Google website visitors always
know when someone has paid to put a message in front
of them. The advantage of online advertising is that it
is measurable and allows immediate assessment of its
effectiveness. As Gopi Kallayil, product marketing
manager, explains: “There is a very high degree of
measurability and trackability that you get through on-
Page and Brin's first search engine was called “Back-
line advertising.” In addition, he says, “With online
advertising you can actually track the value of every
single dollar that you spend, understand which particu-
lar customers the ad reached, and what they did after
they received the advertising message.
The online advertising market has grown from its
initial focus on simple text ads to a much larger set of
options. There are five key categories of online adver-
tising. They are:
of course, became www.google.com and eventually
Webster's dictionary added the verb "google" with the
Search: 47%
definition to use the Google search engine to obtain
Display: 35%
information on the Internet." The name has become so
• Classified: 10%
• Referral: 7%
familiar that Advertising Age recently reported that
Google is "the world's most powerful brand”!
• E-mail: 1%
Today, Google receives several hundred million in-
Google is the dominant provider of online search
quiries each day as it pursues its mission: to organize
requests and receives more than 60 percent of the
the world's information and make it universally acces- search advertising revenue. The fastest-growing ad-
sible and useful. The company generates more than vertising category, however, is display advertising,
$21 billion in annual revenue and has more than where Yahoo! and Microsoft are established provid-
20,000 employees. As Google has grown, it has devel- ers. Google believes that there is an opportunity to
oped 10 guidelines that represent the corporate phi- grow its display advertising sales by making the ads
losophy. They are:
useful information instead of visual clutter. According
to Google cofounder Sergey Brin, “It's like search-
1. Focus on the user and all else will follow.
matching people with information they want. It just
2. It's best to do one thing really, really well.
happens to be promotional."
3. Fast is better than slow.
Several improvements in technology and business
4. Democracy on the Web works.
practice tools contributed to Google's success. First,
5. You don't need to be at your desk to need
Google developed its patented PageRankTM algo-
rithm, which evaluates the entire link structure of the
6. You can make money without doing evil.
Web and uses the link structure to determine which
7. There's always more information out there.
pages are most important. Then the process uses hy-
8. The need for information crosses all borders.
pertext-matching analysis to determine which pages
9. You can be serious without a suit.
are relevant to a specific search. A combination of the
10. Great just isn't good enough.
importance and the relevance of web pages provides
Using these guidelines, Google strives to continu- the search results in just a fraction of a second. Sec-
ally improve its search engine. "The perfect search ond, Google developed two business practice tools
engine," explains Google cofounder Larry Page,
AdWords and AdSense—to help (1) advertisers create
would understand exactly what you mean and give
ads, and (2) content providers generate advertising
revenue. Both tools have become essential elements
of Google's advertising model.
CHAPTER 18 Advertising, Sales Promotion, and Public Relations
531
an answer.
back exactly what you want."
ONLINE ADVERTISING
AdWords
Google generates revenue by offering online advertis-
ing opportunities--next to search results or on specific
pages. The company always distinguishes ads
To help advertisers place ads on their search-engine
results, Google developed an online tool called
web
website.” Google also offers advertisers real-time
unless there's a definite lead being delivered to their
alytical services to allow assessment of and changes
an-
to any component of an advertising campaign.
AdSense
page
ers as a tool for placing ads next to their web
The AdSense program was designed for website own-
content rather than next to search results. Currently,
thousands of website managers use AdSense to place
ads on their sites and generate revenue. Google ap-
plies the same general philosophy to matching ads
with websites as it does to matching ads to search re-
quests. By delivering ads that precisely target the con-
tent on the site's pages, Google believes the
advertising enhances the experience for visitors to the
website. In this way advertisers, website publishers,
AdSense is one of the tools Google is using to
pursue its goal of increasing its display advertising
business. Yahoo! and Microsoft's Bing are leaders
AdWords. Advertisers can use AdWords to create ad
text, select target keywords, and manage their ac-
count. The process allows advertisers to reach tar-
geted audiences. Frederick Vallaeys, AdWords
evangelist, explains: “One of my favorite things about
AdWords is the fact that it really helps you find the
right customer at the right time and show them the
right message. With AdWords you can very specifi-
cally target your market because you're targeting
them at a time when they do a search on Google. At
that time they've told you a keyword, you know ex-
actly what they're looking for, and here is your op-
portunity as a marketer to give them the exact answer
to what they've just told you they wanted to find.”
Google has found that text ads that are relevant to the
person reading them have much higher response
("click-through”) rates than ads that are not targeted.
AdWords is also easy for any advertiser to use.
and information seekers all benefit.
Large or small businesses can simply open an account
with a credit card and have ads appear within minutes. .
“When AdWords rolled out their self-service product,
it really was one of the first times when it was very
in display advertising because they can put ads on
easy for a small business to put their ad up on the In-
their own websites such as Yahoo! Finance and
ternet on a search engine and compete on a level play-
MSN Money. To provide additional outlets for dis-
ing field alongside Fortune 1000 companies," says
play ads, Google recently purchased YouTube. In
Vallaeys. Google has an experienced sales and service
addition, Google purchased DoubleClick, an adver-
team available to help any advertiser select appropri-
ate keywords, generate ad copy, and monitor cam-
tising exchange where websites put space up for
paign performance. The team is dedicated to helping
auction and ad agencies bid to place ads for their
its advertisers improve click-through rates because
clients. Google is also trying to make it easy for
high click-through rates are an indication that ads are
anyone to create a display ad by introducing a new
relevant to a user's interests. Methods of improving
tool called Display Ad Builder. Some experts ob-
advertising performance include changing the key-
serve that because Google is so dominant at search
words and rewriting copy. Because there is no limit to
advertising, its future growth will depend on suc-
the number of keywords that an advertiser can select
cess in display advertising.
and each keyword can be matched with different ad
copy, the potential for many very customer-specific
options is high.
GOOGLE'S FUTURE STRATEGY
Another advantage of Google's AdWords program
is that it allows advertisers to easily control costs. The
How will Google continue its success? One possibil-
ads appear as a "Sponsored Link” next to search re-
ity is that it will begin to try to win advertising away
sults each time the Google search engine matches the
from the U.S. TV industry. While this is a new type
search request with the ad's keywords and Quality
of advertising requiring creative capabilities and re-
Score, although the advertiser is not charged unless
lationships with large advertising agencies, Google
someone "clicks” on the link. In a traditional advertis-
has dedicated many of its resources to becoming
competitive for television advertising expenditures.
(cost-per-thousand) approach, which charged for the
For example, Google recently helped Volvo develop
a campaign that included a YouTube ad and Twitter
ing model, advertisers were charged using a CPM
impressions made by an ad. According to Holden, the
Google model "transformed that to what we call a
CPC, or a cost-per-click model, and this is a model
that an advertiser, instead of paying for an impression,
only pays when somebody actually clicks on that ad
and is delivered to their website. So, in effect, they
may be getting the benefit from impressions being
updates. Google is also likely to develop new web-
sites, establish blogs, and build relationships with
existing sites.
Another opportunity for Google will be mobile
telephone advertising. There are currently more than
5.4 billion mobile phones in use, and 1.9 billion of
those are Internet-capable. Just as Google's search en-
shown, but we're not actually charging them anything gine provides a means to match relevant information
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with consumers, phones offer a chance to provide
real-time and location-specific information. Some of
the challenges in mobile advertising will be that the
networks are not fast and that the ad formats are not
standardized. Google believes its new phone and its
Android operating system will also help.
Finally, as Google pursues its mission it will con-
tinue to expand throughout the world. Search results
are already available in more than 40 languages, and
volunteers are helping with many others. It is obvious
that Google is determined to “organize the world's in-
formation” and make it "accessible and useful.”.78
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