Class 21 - Google

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7/27/2019 Class 21 - Google

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GOOGLE

MIS 301INTRODUCTION TO

INFORMATION TECHNOLOGY MANAGEMENT

Most Valuable Global Brands 2006?

Google ranked 24th in 2006

Apple ranked 49th

…and just 5 years later in 2011?

Google = Miracle• Founded in September 4, 1998

• IPO (initial public offering) on August19, 2004

• Market Cap yesterday: $188.87Billion

• Sergey Brin & Larry Page, each withpersonal wealth $19.8 billion as of 2011 (both ranked #24 in the ForbesWorld’s Billionaire List)

Mission: “to organize the world's

information and make it universallyaccessible and useful”

(unofficial) Motto: Don’t be evil

U.S. Advertising Spending(by selected media)

Online Adsrepresents the onlyadvertising category

trending with positivegrowth _____________________________

Ranked 2nd overall inspending

4th 2nd3rd 3rd 3rd Internet Ranking

Internet Ad Spending

• Internet adspending ison the rise

• Paid searchdominatesInternet adspending

Google’s 2009 revenues

over $23 BILL ION !

Paid Search

Google VALUE

• Google’s market capitalization (a.k.a.market cap) makes it most valuable mediacompany on the planet

– Market capitalization (market cap):Firm value = share price X number of shares

• Shows how quickly and deeply technology-

fueled market disruptions can occur

Google Is The Search King

• Google dominantsearch provider

– for now!

• Microsoft’sBING! on the rise

• Mobile advertising

is still young; – Can Google continue

its dominance?

Understanding Search

• Query: Search

• Organic or natural search: Searchengine results returned and rankedaccording to relevance

• Search engines use different algorithmsto determine the order of organic searchresults; Google method called PageRank

– PageRank: Algorithm developed by Googlecofounder Larry Page to rank Web sites

– A site with more pages linking to them are

ranked higher

Search: “Used Toyotas”

Sponsored Links AdsLocal Organic ResultsNatural PageRank Results

Making it to the top of the list

• SEO: Search Engine Optimization – The process of improving a pages organic

search results

• Critical for an organization to be at the topof the search results!

• Can we fool PageRank with fake site links?

– This is call l ink fraud – Google actively works to find and shut down

these types of efforts

How Google Search Works

http://www.youtube.com/watch?v=BNHR6IQJGZs

How Does Google Work?• It doesn’t search the web. It

searches a database• “Spiders” crawl the Web,

reading Web pages and

reporting back to Google’sdatabases

• You can also submit your siteto search engine for indexing

• Search terms are matchedagainst the database using aproprietary algorithm

Site information is read

from the Web site by spiders

This requires a whole bunch of servers in many server farms!An estimated 1.4 million as of 2008

Three Drivers Behind IncreasedOnline Ad Spending

1. Increasing user time online

2. Improvedmeasurement& accountability

3. Targeting

Google’s trick is “matchmaking”

--- matching advertisers to rightaudience

• Secret of Google’s success – Pull (instead of Push) Advertising

– Pricing Method (CPC instead of CPM)

– Selling Strategy (Auction instead of fixed prices)

– Ad Networks (AdSense)

Trackability

Take a tour of Google

Analytics! http://www.google.com/analytics/tour.html

• Unlike magazines and TV,Internet ads can betracked instantly

• Online tools allow

advertisers to calculateROI, test creativity, andadjust ads quickly

• Tools allow you to seeperformance of site byregion, category, date, andother criteria

Trendspotting with Google

• Google lets yousee aggregatetrends in whatusers search for,which yieldspowerful insights

• Allow anyone toexplore search

trends; breakingout the analysis byregion, date, andother criteria http://www.google.com/trends

Traditional Display Ads

• Pop-up or Banner ad – Pop-up ad: an ad that displays in a new browser window – Banner ad: an ad that is embedded into a web page

• Kind of mass advertising

What’s the problem with traditional display Ad

Unmatched Audience

LowMortgage

A way of pushing

Context Based, Targeted Marketing

More valuable audience A way of pulling

Dogfood!

IP Addresses and Geotargeting

• Geotargeting: Identifying a user’s physical location for

purpose of delivering tailored ads or other content• IP Address: A value used to identify a device that is

connected to the Internet

You only pay if they click on it!!

• Cost per thousand (CPM): Advertiser paysfor every thousand times an ad is displayed

– Magazine advertising paid for this way

• Cost per action (CPA): Advertiser pays eachtime a person does something (sale, lead, etc.)

– Car Insurance Quote

• Cost per click (CPC): Advertiser payseach time a Web site visitor clicks on an ad

– Google charges this way

Top 20 Most Expensive Keywords

1. Insurance(“auto insurance price quotes”)

2. Loans(“consolidate student loans”) 3. Mortgage(“refinanced second mortgages”) 4. Attorney(“personal injury attorney”)

5. Credit(“home equity line of credit”) 6. Lawyer 7. Donate8. Degree

9. Hosting10. Claim

11. Conference Call12. Trading13. Software14. Recovery15. Transfer 16. Gas/Electricity

17. Classes18. Rehab19. Treatment20. Cord Blood

http://techcrunch.com/2011/07/18/most-expensive-google-adwords-keywords/

“[No surprise,]…the most expensive keyword categories is clearly

a result from people who, en masse, turn to the Web in search for help,whether it’s for financial, educational, professional services or medical aid.”

Robin Wauters, Tech Crunch

Pricing Method:

From Page Impression To Click Through

• Based on Click Through – Payment based the number of click-through – Less risky for advertisers

Selling Strategy:From Fixed Price To Auct ion

• Fixed Price

– Price as labeled – One price for one

product/service

Selling Strategy:From Fixed Price To Auct ion

• Advertisers specify the maximum CPC they are willing to pay

• The rank of ads based on both maximum CPC and the quality of advertisers’ web pages

• Actually pay just one cent more than the second highest bid

Google’s Ad

Network

Where else can Google sell ads?

• YouTube, like Google,starts with meager beginnings & grows

quickly• Now a large, influentialbusiness that peoplemake their living off of with monetizing channels

• A costly business butpotential $$ maker now

for Google

If you have lots of YT views…

Dear xxxxxxxxx,

…Google may cut you in on the action

Privacy Concerns

Free services like Gmail offer greatconvenience, but some fear that Google may

know too much!

Online adsare tied to the

content of your incoming email.

Does this make Google+ more or less exciting to join?

What else to Google want to own?

Profiling and Privacy

• Google’s steps to protect user privacy

– Won’t link query history or registration data to ads – Refuses to link registration data with tracking cookies

– Placed significant control in the hands of users

• Google’s “ Ads Preferences Manager ” allows surfers to see,remove, and add to, any of the categorizations that Googlehas assigned to that browser ’s tracking cookies

– Allows users to install a cookie or plug-in that optsthem out of interest-based tracking

• Opt-out: Programs that enroll all customer by default, butallow consumers to discontinue participation if they want to

• Plug-in: Small computer program that extends the featureset or capabilities of another application

Strategic Issues

• Google leads in search/ads and offersunmatched network reach

• Strong BRAND

– BUT switching costs for search LOW• Defeating Google with some sort of

technical advantage will be difficult,

since Web-based innovation can oftenbe quickly imitated…

What About Siri? Is SEO Dead?

• Current Search Engine

Optimization strategiesmay need to change. Siriand other apps will

– Bypass search altogether – Put emphasis on local

– Make pay-per-clickadvertising irrelevant

– May change the socialmedia marketinglandscape

http://www.youtube.com/watch?v=MpjpVAB06O4 http://www.inc.com/jeff-haden/siri-and-the-end-of-seo-as-we-know-it.html

Cross-sided Market

• To exploit cross-sided network effect, the platform needs tohave very good matching mechanisms

• Switching cost of Google users are LOW --- so Google needsto please users with continuous innovation

Advertiser

end users Ad Network

partners• Google enters every market it could potentially place ads:

Google Map, Google Earth, Google Book, Google Mars(?)…

Comparison of ~Five Years of Stock Price ChangeGoogle (GOOG) versus Microsoft (MSFT)

Key Terms

• natural search

• paid search

• spider/bot• page rank

• SEO

• CPC• CTR

• CPM

• CPO/CPA

• ad network

• cookie

• click fraud

• behavioraltargeting

• Link fraud

Appendix

Google’s Products/Services

http://www.google.com/intl/en/about/products/

Example: Google Voice

http://www.youtube.com/watch?v=m4Q9MJdT5Ds

Customer Profiling andBehavioral Targeting

• Communicationbetween Webbrowser and Web

server can identify: – IP address

– Type of browser

– Computer type

– Computer operating system

C t P fili &

Customer Profiling &Behavioral Targeting

• IP address can indicate a browser ’s employer or university, which can be further matched withinformation such as firm size or industry

• Ability to identify a surfer ’s computer, browser,or OS can be used to target tech ads

• Greatest personalization andtargeting comes from cookies

– Cookies: line of identifying text, assigned andretrieved by a Web server and stored byyour browser

Customer Profiling

Customer Profilingand Behavioral Targeting

• IP targeting can’t reliably identify individualusers, as users are regularly assigned differentIP addresses when they connect anddisconnect from various physical and wi-finetworks

• Cookies assigned by browsers, associated witha log-in account profile on that computer

– Problem if several people use same browser onsame computer without logging on as separate users

Cookies• Small text files placed

on your computer by

Web sites you visit• Can help personalize

a page, target ads,or monitor traffic

• Cookies are notexecutable, so theycan’t replicate andare not viruses

• However, due tobrowser mechanismto set and read cookies,can be used as spyware

B t Wh t if I D ’t W t C ki !

But What if I Don’t Want a Cookie!

• Most popular Web browsers allow you to block

all cookies, block just third-party cookies, purgeyour cookie file, or even ask for your approvalbefore accepting a cookie

• If you block cookies, you block any benefits thatcome along with them, and some Web sitefeatures may require cookies to work properly

• Deleting a cookie breaks a link between your

browser and that Web site – However, if you supply identifying information in the

future, the site might be able to assign your old profile data to the new cookie

Click Fraud• When stakes are high and

an opportunity to cheatarises, some will take it!

• With billions of dollars

at stake, some aretempted to find ways tocheat the system by

registering false clicks• Ad companies are

constantly finding ways

to prevent fraud

IP address trackingcan be used to help ensure

there’s not more than

one click per computer.

Search Engines Ad Networks

Search Engines, Ad Networks,and Fraud

• Common types of fraud attempted in onlineadvertising include

– Enriching click fraud

– Enriching impression fraud

– Depleting click fraud

– Depleting impression fraud

– Rank-based impression fraud

– Disbarring fraud – Link fraud

– Keyword stuffing

B i h B d G

Busting the Bad Guys

• Lots of clicks from a single IP make

bad guys easy to spot

• Click farms: Recruiting a network of users toengage in click fraud with the goal of spreading

IP addresses across several systems to makea fraud effort more difficult to detect

• Zombie networks: “clickbots” or “bot nets” hordes of surreptitiously infiltrated computers,

linked and controlled remotely

– Used to perpetrate click fraud and other computer security crimes

• Search firm and ad

network software usedata patterns and other signals to ferret out

other fraud types: – Rank-based

impression fraud

– Spamdexing

– Keyword stuffing Spamdexing - a number of methods,such as repeating unrelated phrases, to

manipulate relevance of resourcesindexed by a search engine

Class 21 - Google

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