41126-piy-ch08-01.pdf_18891

41126-piy-ch08-01.pdf_18891 - CHAPTER 8 Google: Search,...

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CHAPTER 8 Google: Search, Online Advertising, and Beyond… 1. INTRODUCTION LEARNING OBJECTIVES After studying this section you should: 1. Understand the extent of Google’s rapid rise and it’s size and influence when compared against others in the media industry. 2. Recognize the shift away from traditional advertising media to Internet advertising. 3. Gain insight into the uniqueness and appeal of Google’s corporate culture. Google has been called a one-trick pony [1] , but as tricks go, it’s got an exquisite one. Google’s ‘trick’ is matchmaking—pairing Internet surfers with advertisers and taking a cut along the way. This cut is sub- stantial—over $21 billion in 2008. In fact, as Wired’s Steve Levy puts it, Google’s matchmaking capabil- ities may represent ‘the most successful business idea in history’ [2] . For perspective, consider that as a ten-year-old firm, and one that had been public for less than five years, Google had already grown to earn more annual advertising dollars than any U.S. media company. No television network, no magazine group, no newspaper chain brings in more ad bucks than Google. And none is more profit- able. While Google’s stated mission is “to organize the world's information and make it universally ac- cessible and useful”, advertising drives profits and lets the firm offer most of its services for free. Personal PDF created exclusively for fangxin (fangxin@umd.edu)
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FIGURE 8.1 Online Advertising represents the only advertising category trending with positive growth. Search captures the most online ad dollars, and Google dominates search advertising [3] FIGURE 8.2 As more people spend more time online, advertisers are shifting spending away from old channels to the Internet; and Google is swallowing the lion’s share of this funds transfer [4] . By some estimates Google has 76 percent of the search advertising business [5] . Add to that Google’s lucrative AdSense network that serves ads to sites ranging from small time bloggers to the New York Times , plus markets 140 INFORMATION SYSTEMS Personal PDF created exclusively for fangxin (fangxin@umd.edu)
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Market Capitalization (market cap) The value of a firm calculated by multiplying it’s share price by the number of shares. served by Google’s acquisition of display ad leader DoubleClick, and the firm controls in the neighbor- hood of 70 percent of all online advertising dollars [6] . Google has the world’s strongest brand [7] (it’s name is a verb— just Google it ). It is regularly voted among the best firms to work for in America (twice topping Fortune’s list). While rivals continue to innovate (see box Google Rules , but It Ain’t Over ) through Q1 2009, Google’s share of the search market has consistently grown while its next two biggest competitors have shrunk.
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41126-piy-ch08-01.pdf_18891 - CHAPTER 8 Google: Search,...

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