CASELET: Google

In 1998, two Stanford University PhD students, Larry Page and Sergey Brin, founded a search engine
company and named it Google. The name plays on the number googol—1 followed by 100 zeroes—and
refers to the massive quantity of data available online that the company helps users find. Google’s
corporate mission is “To organize the world’s information and make it universally accessible and useful.”
As such, the company focuses first and foremost on creating the perfect search engine. Google search
works because it uses the millions of links on other Web sites to help determine which sites offer the most
valuable content. The company has become the worldwide market leader for search engines through its
strategic business focus and constant product innovation.

Google creates and distributes its products for free, which in turn has attracted a host of online
advertisers seeking targeted advertising space. About 96 percent of its revenues come from online
advertising, which means that creating new advertising space is critical to the company’s growth. Google
sells advertising space on its search pages through a program called AdWords, which is linked to specific
keywords. Hundreds of thousands of companies use AdWords by buying “search ads,” little text-based
boxes shown alongside relevant search results that advertisers pay for only when users click on them.
Google also runs an advertising program called AdSense, which allows any Web site to display targeted
Google ads relevant to the content of its site. Web site publishers earn money every time their visitors
click on these ads.

In addition to offering prime online real estate for advertisers, Google adds value by providing tools so
businesses can better target their ads and understand the effectiveness of their marketing. Google
Analytics, for example, is free to Google’s advertisers and provides a custom report detailing how Internet
users found the site, what ads they saw and/or clicked on, how they behaved on the site, and how much
traffic was generated. With its ability to deploy data that enable up-tothe-minute improvements in a Web
marketing program, Google supports a style of marketing in which the advertising resources and budget
can be constantly monitored and optimized. Google calls this approach “marketing asset management,”
implying that advertising should be managed like assets in a portfolio depending on the market
conditions. Rather than following a marketing plan developed months in advance, companies use the
realtime data collected on their campaigns to optimize the campaign’s effectiveness and be more
responsive to the market.

Since its launch, Google has expanded far beyond its search capabilities with numerous other products,
applications, and tools that benefit both consumers and businesses. The goal behind each product was to
help users find information they need and to help them get things done better, faster, and easier than
before. Today, Google’s wide range of products and services fall into the following categories: Web (Web
Search, iGoogle, Google Chrome), Mobile (Mobile, Search for Mobile, Maps for Mobile), Media (Picasa,
Google Play, Youtube.com, which Google acquired in 2006 for $1.65 billion), Geo (Earth, Maps), Home &
Office (Docs, Gmail, Calendar), Social (Google+, Blogger), Specialized Search (Patents, Finance,
Scholarly Papers), and Innovation.

As the world becomes more mobile, Google is betting big in the mobile category. In 2008, Google
launched Android, a mobile operating system that went head to head with Apple’s iPhone. The biggest
differentiation between the two was that Android was free, open sourced, and backed by a multimillion-
dollar investment.
That meant Google wanted its partners to help build and design Android over the years. The investment
paid off, and by 2010, Android became the number-one mobile operating system in the market.

As Google expanded into mobile technology, it quickly became the leader in mobile advertising with 75
percent market share for search ads and approximately 50 percent market share for all mobile ads. In
2012, Google entered the mobile device category when it purchased Motorola and launched the Nexus 7,
a sleek tablet that competed directly with the iPad and Kindle. As Google looks toward the future, the
company wants to offer the ultimate mobile solution—Google mobile devices along with mobile services
so users can use all Google all the time.
Google’s ultimate goal is to reach as many people as possible on the Web—whether by PC or by mobile
devices. The more users on the Web, the more advertising Google can sell. Google’s new products not
only accomplish this goal but also make the Web a more personalized experience.
Google has enjoyed great success as a company and a brand in its short lifetime. From the beginning, it
has strived to be one of the “good guys” in the corporate world, supporting a touchy-feely work
environment, strong ethics, and a famous founding credo: “Don’t be evil.” Google currently holds a 67
percent market share for core searches in the United States, significantly greater than Microsoft’s 17
percent and Yahoo!’s 15 percent market shares. Globally, Google holds a more dominant lead, with 85
percent market share over Yahoo!’s 8 percent and Microsoft’s 3 percent. Google’s revenues topped $59
billion in 2013, and the company was ranked the second most powerful brand in the world with a
brand value of $107 billion. In addition, Google’s $400 billion market capitalization in 2014 edged out
companies like Walmart and Microsoft to become the second most valuable company in the world.

Sources: www.google.com; Catherine P. Taylor, “Google Flex,” Adweek, March 20, 2006, cover story; Richard Karpinski, “Keywords, Analytics Help
Define User Lifetime Value,” Advertising Age, April 24, 2006, p. S2; Danny Gorog, “Survival Guide,” Herald Sun, March 29, 2006; Julie Schlosser,
“Google,” Fortune, October 31, 2005, pp. 168–69; Jefferson Graham, “Google’s Profit Sails Past Expectations,” USA Today, October 21, 2005; Dan
Frommer,“Google’s Android Mobile Platform Is Getting Huge,” Advertising Age, October 8, 2009; Rita Chang, “Google Set for Richer Advertising
on Smartphones,” Advertising Age, October 5, 2009; “comScore Releases September 2012 U.S. Search Engine Rankings,” comScore.com, October
11, 2012; Claire Cain Miller, “As Google Changes, Its Revenue Keeps Rising,” The New York Times, July 19, 2012; Roben Farzad, “Google at
$400 Billion: A New No. 2 in Market Cap,” Bloomberg Businessweek, February 12, 2104.