Chapter 14 Google in Three Parts Search Online Advertising and Beyond 14 1 Introduction Google matches internet surfers with advertisers and makes a profit along the way so it can offer its services for free Market capitalization market cap the value of the firm calculated by multiplying its share price by the number of shares Google is the most valuable media company on the planet Key Takeaways o Online advertising represents the only advertising category that over the last several years has been consistently trending with positive growth o Google dominates Internet search volume and controls the lion s share of the Internet search advertising business and online advertising dollars The firm also earns more total advertising revenue than any other firm online or off o Google s market cap makes it the most valuable media company in the world it has been rated as having one of the world s strongest brands and it ranks among the most profitable firms in the United States 14 2 Understanding Search Query search Organic natural search search engine results returned and ranked according to relevance PageRank algorithm developed by Larry Page to rank websites web pages that have more pages linking to them are ranked higher Google does not accept money for placement of links in organic search result Search engine optimization SEO the process of improving a page s organic search results Link fraud aka spamdexing or link farming the process of creating series of bogus web sites all linking back to the pages one is trying to promote Death penalty when Google finds out you were involved in link fraud you could move from 1st on the results to 71st JC Penney Links from some websites carry more weight than others Spiders web crawlers software robots software that traverses available web links in an attempt to perform a given task search engines use spiders to discover documents for indexing and retrieval Cache a temporary storage space used to speed computing tasks Dark web internet content that can t be indexed by Google and other search engines It is estimated that Google runs over 1 4 million servers in over a dozen so called server farms worldwide Server farms a massive network of computer servers running software to coordinate their collective use provide the infrastructure backbone to SaaS and hardware cloud efforts as well as many large scale internet services o Each server farm layout has been designed with an emphasis on lowering power consumption and cooling requirements Key Takeaways o Ranked search results are often referred to as organic or natural search PageRank is Google s algorithm for ranking search results PageRank orders organic search results based largely on the number of Web sites linking to them and the weight of each page as measured by its influence o Search engine optimization SEO is the process of using natural or organic search to increase a Web site s traffic volume and visitor quality The scope and influence of search has made SEO an increasingly vital marketing function o Users don t really search the Web they search an archived copy stored on a search firm s computers A firm creates such a copy by crawling and indexing discoverable documents o Google operates from a massive network of server farms containing hundreds of thousands of servers built from standard off the shelf parts The cost of the operation is a significant barrier to entry for competitors Google s share of search suggests the firm can realize economies of scales over rivals required to make similar investments while delivering fewer results and hence ads o Web site owners can hide pages from popular search engine Web crawlers using a number of methods including HTML tags a no index file or ensuring that Web sites aren t linked to other pages and haven t been submitted to Web sites for indexing 14 3 Understanding the Increase in Online Ad Spending 3 factors driving online ad growth trends increased user time online improved measurement and accountability and targeting Impressions each time an ad is served to a user for viewing Key Takeaways o There are three reasons driving online ad growth trends 1 increasing user time online 2 improved measurement and accountability and 3 targeting o Digital media is decreasing time spent through traditional media consumption channels e g radio TV newspapers potentially lowering the audience reach of these old channels and making them less attractive for advertisers o Measurement techniques allow advertisers to track the performance of their ads indicating things such as how often an ad is displayed how often an ad is clicked where an ad was displayed when it was clicked and more Measurement metrics can be linked to payment schemes improving return on investment ROI and accountability compared to many types of conventional advertising o Advertising ROI can be improved through targeting Targeting allows a firm to serve ads to specific categories of users so firms can send ads to groups it is most interested in reaching and those that are most likely to respond to an effort 14 4 Search Advertising Search engine marketing SEM the practice of designing running and optimizing search engine ad campaigns Over 2 3 of Google s revenues comes from ads Keyword advertising advertisements that are targeted based on a user s query Pay per click PPC a concept where advertisers don t pay unless someone clicks on their ad aka cost per click CPC If no one clicks on the ad Google doesn t make money advetisers don t attract customers and searchers aren t seeing ads they are interested in therefore Google has developed a precise ad ranking formula that rewards top performing ads by considering two metrics the max CPC that an advertiser is willing to pay and the advertisement s quality score create high quality ads and your ads will appear ahead of competition Ad rank max CPC quality score Click through rate CTR the number of users who clicked an ad divided by the number of times the ad was delivered measures the percentage of people who clicked on an ad to arrive at a destination site Also included in the quality score are the overall history of click performance for the keywords linked to the ad the relevance of an ad s text to the user s query and Google s automated assessment of the user experience on the landing page Landing page the web page displayed when a user clicks on the ad Most clicks bring in between 30 cents and 1 dollar Geotargeting a computer system identifies a
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