Friday
Oct022009
Friday, October 2, 2009 at 12:10PM How Google-smart are you, really? Bet you're not as good as you think you are!
Two days ago Google announced another new product, The Wave. Wave is a social collaborations tool that blends elements of email, wikis, instant messaging and social networking, all to make it easier for people to plan everything from a dinner to a presentation, in real time. This is a story that was covered in the main-stream news and, if you're interested, you can read more about in the Wall Street Journal's Jessica Vascellaro's article "What next for Google Wave." This will be another Google, cost-free to consumers product, adding to an already long line of free software and services.
Ever wonder how GOOGLE makes so much money? That would be $22B in revenue last year, or about $70 dollars for every man, woman, and child in the U.S. Most people I ask don't know the answer to what seems like an obvious and easy question. If you read on...you will no longer be in that group!
The behemoth of Silicon Valley is now so pervasive, most people take if for granted--how fast we get use to the inventions of the modern age! Indeed, it is stunning how little even students of commerce know and appreciate about the answer to two questions: First, what is the underlying explanation for why Google is so fabulously successful, certainly by comparison to all similar services that have preceded it? [Put another way, how is it that in the business of information provision, Google is not just incrementally successful--it is infinitely more successful than all types of predecessors it might be compared to?] If you know the answer to this question--you get a passing grade.
The second question is, how exactly does Google make money? If you can answer this question you're really smart and you pass at the top of the class--and graduate cum laude! So...lock in your answer to each question and then correct your own exam with the explanations that follow. The answer to the first is, comparatively easy to explain. The second question, well, not so much so. Let's tackle the easy one first.
Over time there have been a lot of "services" for prospective buyers that attempt to offer information to assist individuals in the shopping and buying process. Most consumers can likely name a sizeable list of such purveyors of pre-purchase, consumption-related communications. Some of these include what we used to call the "Yellow Pages," classified ads, TV and radio commercials, magazine advertising, flyers on the windshield of your car, billboards, sky-writing, and the list goes on and on! All of these okay-to-decent-to-pretty-good information sources for prospective buyers have served shoppers well, that is, until Google came along and--almost overnight--were completely obsoleted by Google's internet search service! Which gets us close to the answer to the question: Why is Google so successful?
Google is so immensely successful because it does a better job than all the previous and known-today-to-man sources of shopper information in two important ways: First, Google provides the individual with the information he or she needs--and this is the important point to pay attention to--at the very instant the person is in the mood to buy! The creation of that situation has always been a sellers dream...to offer what the prospect is looking for at the right moment in time!
That's very different from the older forms of advertising; the "old" types of advertising were never available exactly when we--as shoppers--were thinking of buying something. Instead, they preceded that moment, frequently by a very long time, giving us information we might find useful, but precisely not at the time it got delivered; in effect, there was a huge timing problem that Google solved. So the part of answer is: Google delivers information to consumers at exactly the right time, not too early and not too late--but precisely when the consumer is looking for a particular kind of frequently consumption-related information.
The second element of Google success is the reality that the search process leads to information that is, on average, exactly what the consumer has a need for. By definition, an ideal Google search produces the kind of data or persuasive information that is precisely what the consumer is looking for. After all, the prospect entered the query him- or herself--so it has to be close to what they are have in mind or are looking for! From a marketer's POV, it doesn't get better than that!
Thus, taken together these two realities answer the first question [remember: Why is Google so successful?]: because Google delivers exactly the right information at exactly the right time to make the shopping and purchase process perfectly timed and perfectly suited for the occasion. That's what accounts for $22B--a number that dwarfs any other single advertising type--and much more so for any single corporate advertising rival! Nobody's even close.
The answer to the second question: Exactly how does Google make money...well, that's a more complicated deal to explain. For sake of time and space, I'd refer you to a terrific [pretty easy to understand] article in Wired recently that addresses the answer to this matter pretty well. I recommend it to all students of advertising: "The secrets to Googleonomics: A data-fueled, auction-driven recipe for profitability that the rest of us need to start learning from fast," by Steven Levy. If you're interested in business generally, marketing as a business discipline, and adverting in particular--you won't be disappointed! You'll learn a lot and it will change the way you think about every Google search you do--because each time you do that, you'll appreciate how you're helping Google make that $22B each year!
Next blog post: Interesting facts about Google you didn't know!
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Reader Comments (2)
keith, this summer i had a chance to visit google new york, where most of their marketing businesses are handled, and what you've touched on above is true. now they have created a separate department which are meant to work with advertising agencies. google indeed changed the whole battle ground.
You are right, Sukki, but most people don't understand the mechanics of how and the explanation why the game-changer Google does it! Nice to get your comment! KM