GOOGLE CASE

Google’s New Marketing Philosophy Weaving Magic to Connect Case study Reference no 512-052-1

This case was written by Joel Sarosh Thadamalla, Amity Research Centers Headquarters, Bangalore. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources.

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512-052-1 Google’s New Marketing Philosophy: Weaving Magic to Connect

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Author: Mr. Joel Sarosh Thadamalla

Google’s New Marketing Philosophy: Weaving Magic to Connect

Abstract: Google Inc. was established with a mission to organise the information and make it accessible and useful to users across the world for free. Google had moved beyond search, generating revenues through advertising to become a business to be reckoned with, transcending defined traditional categories. Google always relied on its users and the network partners to spread the word about its products. Within a short span of time, the company was able to achieve a remarkable growth and remained profitable. The net profit as on December, 31st 2011 was about $2.7 billion at $8.34 per share compared to $2.5 billion at $7.95 per share in 2010. The Co-Founder of Google Larry Page (Larry), who returned as the new CEO in April 2011 was optimistic about Google’s growth in future and was making strategic reorganisation plans, besides complete management turnover. But the investors were not amused by the optimism. On the other hand, Google was also faced with formidable competition for its expanding portfolio of products, anti-trust investigations, privacy and other public relation issues. In addition, the company was trying to stem the exodus of talent. Amidst all this, the industry observers noted that Google was slowly moving towards embracing marketing in a big way overcoming the aversion of its founder to such methods. But analysts considered that Google’s change of heart pertaining to the sales and marketing spends were not enough to compete with the likes of Microsoft and Apple who heavily relied on advertising to promote their products. It remained to be seen whether Google would be able to overcome the challenges and continue to weave magic to connect with the users. Pedagogical Objectives The case study helps to understand and analyse:  Why a Company should strive to Build Consumer Brands  The importance of Marketing and Advertising  Advertising and its Impact on consumers. Case Study “GOOGLE is not a conventional company. We do not intend to become one.”1

– Larry Page and Sergey Brin, Founders, Google Inc. “Marketing helps brands interpret themselves to their customers."2

– Sushobhan Mukherjee, Brand Strategist and Planning Director at R/GA3

1 “How long will Google’s magic last?”, http://www.economist.com/node/17633138, December 2nd 2010 2 Mukherjee Sushobhan, “How Nike+ helped millions of runners to Just do It”, http://forbesindia.com/blog/digital-navigator/how-nike-helped-millions-of-runners-to-just-do-it/#ixzz1iU7nnXk3, January 1st 2012 3 New York-based digital advertising agency with an office in Singapore that specialises in award-winning creative for digital, mobile, retail, and out-of-home experiences, and complex technology development and solutions.

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The growth of Google Inc. (Google) has been the most intriguing successful business story in the internet technology arena.4 In the span of 13 years, the company was able to fascinate the management scholars, corporate executives, media reporters and even the general public for its practices, management philosophy and business model studies.5 Inspired by the success of Google, many companies tried to follow its model and practices. Renowned management expert, Gary Hamel (Hamel) opined that “Google has invested heavily in building a highly transparent organization that makes it easy to share ideas, poll peers, recruit volunteers, and build natural constituencies for change. Every project team, and there are hundreds, maintains a Web site that is continuously monitored for peer feedback. In this way, unorthodox ideas have the chance to accumulate peer support – or not – before they get pummeled by the higher-ups. It also helps that Google is organized like the Internet itself: tightly connected, flat and meritocratic.”6 Although Google adopted advertising as a business model to generate revenues, the company hardly invested any money in traditional advertising to promote its products. Google concentrated on delivering quality products and services, relied on the users to spread the word, besides keeping its sales and marketing costs relatively low for several years.7 But the change in the competitive landscape, issues related to anti-trust, privacy and public relations forced Google to increase its sales and marketing spends to refurbish image.8 In addition, several Google executives were pushing the management to reconsider its aversion to paid advertising.9 In 2009, Eric Schmidt, the then CEO of Google Inc. (Google) tweeted "Hell has indeed frozen over”, 10 after releasing the first ever television advertising during the Super Bowl11. Since then, Google released 13 different ads on the television and increased its marketing spending to about $103 million in 2011 from about $53 million in 2010.12 But analysts considered the spending minuscule compared to what Google’s competitors like Microsoft and Apple who spent heavily on advertising. Analysts also wondered whether Google’s change of heart towards traditional advertising would help the company to overcome the formidable competition and continue to weave magic to connect with the users. Google Inc: An Overview Incorporated in September 1998, by two Stanford University students Larry Page (Larry) and Sergey Brin (Sergey), Google focused on improving the ways people connect with information.13 According to the company website, the key ingredients of a Google search were– Relevance, Comprehensiveness, Freshness and Speed.14 By February 1999, Google had 8 employees and was clocking 500,000 searches a day.15 Goggle had grown to employ 28, 768 employees and the number of searches a day increased to 3.6

4 Carr G. Nicholas, “The Google Enigma’, http://www.strategy-business.com/media/file/sb49_07404.pdf, Winter 2007

“© 2012, Amity Research Centers HQ, Bangalore. All rights reserved.” 5 “The Google Enigma’, op.cit. 6 Hamel Gary, “Management à la Google”, http://online.wsj.com/public/article/SB114601763677436091- RZdaVtvykRAz4EhCKs0KervA0Eo_20060503.html?mod=blogs, April 26th 2006 7 Vascellaro E. Jessica and Vranica Suzanne, “Google Reconsiders Its Aversion to Advertising”, http://online.wsj.com/article/SB122299236642900625.html, October 3rd 2008 8 Swift Mike, “Google ramps up marketing as its products expand beyond search”, http://articles.latimes.com/2011/dec/24/business/la-fi-google-marketing-20111224, December 24th 2011 9 “Google Reconsiders Its Aversion to Advertising”, op. cit. 10 Learmonth Michael, “Why Anti-marketer Google Has Embraced Marketing”, http://adage.com/article/news/anti-marketer- google-embraced-marketing/230846/, November 7th 2011 11 The championship game of the National Football League (NFL), the highest level of professional American football in the US. 12 “Why Anti-marketer Google Has Embraced Marketing”, op.cit. 13 “Google Inc.”, http://www.reuters.com/finance/stocks/companyProfile?symbol=GOOG.OQ 14 “Technology Overview”, http://www.google.com/about/corporate/company/tech.html 15 Edwards Douglas, “The Beginning”, http://online.wsj.com/article/SB10001424052702304911104576444363668512764.html, July 16th 2011

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billion in 201116, building the business around three important constituencies–Users, Advertisers, and Websites17 (Exhibit I). Craig Silverstein, Google's first employee, said: “Flexibility is expensive. But we think that flexibility gives you a better product. Are we right? I think we're right. More important, that's the sort of company I want to work for."18 Google’s product development philosophy was centered on rapid continuous innovations that were improved with subsequent iterations. Initially, the products were tested at online locations, at Google Labs or directly at Google.com. Once satisfied with the high quality and utility they became the core Google product.19 Google also believed in building a trusted, highly-recognised brand that provided high-quality products and services ‘to make a noted difference’ in users’ lives. Google relied on users to spread the word about their products and services to keep its marketing costs relatively low and engaged in targeted marketing to deliver results to its clients, besides informing potential advertisers of business opportunities. Occasionally, Google sponsored industry conferences and indulged in distributing Google Toolbar for free to users to make its services easier to access.20 Over the years, advertisers of all sizes, whether big or small were able to use Google’s variety of tools and services to place their simple text advertising messages or display messages or mobile advertising messages to grow in their business and become successful.21

Exhibit I Google Business Universe

Source: “Amendment No. 9 TO FORM S-1”,

http://www.sec.gov/Archives/edgar/data/1288776/000119312504142742/ds1a.htm, August 18th 2004

Danny Sullivan (Danny), Editor of Search Engine Watch22 and an influential commentator, said: “Google is a great innovator. They keep rolling out great things.”23 On the other hand, Web searching was becoming a

16 ibid. 17 “Amendment No. 9 To FORM S-1”, http://www.sec.gov/Archives/edgar/data/1288776/000119312504142742/ds1a.htm 18 Hammonds H. Keith, “How Google Grows…and Grows…and Grows”, http://www.fastcompany.com/magazine/69/google.html?page=0%2C4, March 31st 2003 19 “Amendment No. 9 To FORM S-1”, op.cit. 20 “Amendment No. 9 To FORM S-1”, op.cit. 21 “Business Overview”, http://www.google.com/about/company/business.html 22 A website that provides news and information about search engines and search engine marketing. 23 “How Google Grows…and Grows…and Grows”, op.cit.

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commodity service – many portals were beginning to offer news and links on varied subjects.24 When Douglas Edwards (Edwards), the Director of Consumer Marketing and Brand Management at Google recommended branding as a part of marketing plan to differentiate Google from competition, Google founders thought of revolutionary approach to reap market share. They suggested their marketing team to find options to invest in charitable promotions rather than invest investors’ money (they had funding25 from venture capital firms–Sequoia Capital and Kleiner Perkins Caulfield & Buyers26) in marketing.27 In August 2003, Google was reincorporated in Delaware, US and shifted its principal office to Mountain View, California, US28 and the total revenues at the end of 2003 were about $961.9 million in 2003, with a net profit of $106.5 million29 (Annexure I). Google was competing hard against large internet firms like Yahoo.com30, Microsoft's MSN31, and Time Warner's AOL32, besides e-commerce firms like ebay.com33 and Amazon.com34, etc.35 Google launched a comparison shopping website Froogle and a free e-mail service– Gmail with unlimited storage space that facilitated ads tied to the key-words in the emails of the users.36 In 2004, Google’s Initial Public Offering (IPO) created a buzz among several investors’. Peter Thiel, Managing Member of Clarium Capital37 said: “There's always a tremendous amount of buzz with Internet IPOs but I don't think we'll go back to people getting excited about all Internet stocks like in the late '90s. Google is going public because it's profitable. This is not a publicity stunt.”38 Google generated revenues primarily by delivering online advertising and also focused on areas, like search, advertising39, operating systems and platforms40, and enterprise.41,42 Through AdWords programme, Google facilitated businesses to promote their products and services with targeted advertising, besides, helped third parties that comprised the Google Network to deliver relevant ads to generate revenues and enhance the user experience through another programme called AdSense.43 According to a Knowledge@Wharton article titled ‘Creating Internet Strategies for Competitive Advantage’, “the Internet is serious business, meant for companies that have a basic appreciation of the laws of economics.”44 The article pointed out that scalability, complementary resources and capabilities, relation- specific assets, and knowledge-sharing routines as four most important elements of a business model.45

24 Price A David, “How Google Got Going”, http://online.wsj.com/article/SB10001424052702304066504576351650017002270.html, July 12th 2011 25 “History: Google Inc.”, http://www.fundinguniverse.com/company-histories/Google-Inc-company-History.html 26 A world-leading venture capital firm. 27 “The Beginning”, op.cit. 28 “Amendment No. 9 To FORM S-1”, op.cit. 29 La Monica R. Paul, “Google sets $2.7 billion IPO”, http://money.cnn.com/2004/04/29/technology/google/, April 30th 2004 30 An American multinational internet corporation headquartered in Sunnyvale, California, United States. 31 The Microsoft Network (MSN) is a collection of Internet sites and services provided by Microsoft. 32 Previously known as America Online is an American global Internet services and media company. 33 An American internet consumer-to-consumer corporation involved in online auction and shopping website. 34 Online retailer of books, movies, music and games along with electronics, toys, apparel, sports, tools, groceries and general home and garden items. 35 “Google sets $2.7 billion IPO”, op.cit. 36 ibid. 37 A hedge fund firm. 38 “Google sets $2.7 billion IPO”, op.cit. 39 Advertising included Google Search, Google Display, Google Mobile and Google Local. 40 Operating Systems and Platforms included Android, Google Chrome OS and Google Chrome, Google TV and Google Books. 41 Enterprise products provided technology for business settings through Google Apps– Gmail, Google Docs, Google Calendar, and Google Sites, among other features. In addition, through Google Search Appliance (real-time search of business applications, Intranet applications, and public Websites), on their public-facing sites with Google Site Search (custom search engine), and Google Commerce Search (for online retail enterprises) Google provided search technology to be used within the enterprise. 42 “Google Inc.”, op.cit. 43 ibid. 44 Knowledge@Wharton, “Creating Internet Strategies for Competitive Advantage”, http://knowledge.wharton.upenn.edu/article.cfm?articleid=244, September 28th 2000 45 ibid.

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While, Michael E. Porter46 opined that, the Internet had not only created a new digital marketplace but also forced several existing industries and companies which were constrained by high cost of gathering information, communications and transactions, to reconfigure their businesses.47 (Annexure II). According to Hamel, the litmus test for any management was to grow the company consistently through strategic adaptation over the long term rather than grow quickly in the short-term, because the world demanded relentless and seditious change.48 Hamel further stated that corporate history was replete with example of adaptation failures across wide range of industries, be it the airlines, automobiles, pharmaceuticals, and media and entertainment where companies were not able to adapt to the changes around them, quickly. But on the other hand, Google was able to devise a management system to ride on the evolutionary potential.49 Google’s Transformation Plans – Creating Consumer Brands: Raison d’être Google was known for its aversion to marketing itself and any of its products.50 The company began to recruit several executives from creative agencies in 2007 to set up Google Creative Lab (GCL) and assigned the task of marketing everything–existing and future products that Google planned to launch, besides steward the Google brands.51 The first work that GCL created was little green Android space robot which became familiar and a powerful symbol of Google's Android brand.52 Jeff Gillette, Creative Director at GCL, said: “When I first met with Andy and Robert I was won over by their desire to use advertising and branding to change the world. I decided it was an opportunity I couldn’t pass up.”53 Ji Lee, a Graphic Designer at GCL said: “We all work together toward the same goal. It’s not about winning awards or becoming famous. It’s about spreading the best of Google. And because the products and projects we promote are free and helpful to many people, we feel that we actually make a positive difference in the world. It’s the main reason why everyone’s here.”54 Moreover, over the years, Google was able to build for itself a brand aura – by subscribing to the philosophy of creating products that people love, rather than running any television or print ads, opined David Lawee (Lawee), VP Marketing at Google.55 Lorraine Twohill (Twohill), VP, Global Marketing at Google said: “We’re the only company on the planet that lets others play with our brand. We stand for something that’s very unique and personal with users. There’s a trust there. The users feel like they own our brand.”56 Lawee further stated that “the challenge for us is to continue to outdo ourselves. That's a challenge for a lot of brands. Brands aren't static things. They're like people. They grow, they learn, they evolve. Now we're almost 10 years old. We know we have a lot to learn. But we're trying to be our own person. That's a little bit different from the way branding used to be done.”57

46 Generally recognised as the father of the modern strategy field, Michael E. Porter is s a leading authority on competitive strategy and economic development of nations. 47 Porter E. Michael, “Strategy and the Internet”, http://hvass.nu/s2/artikler/teori/Misc/porter.pdf, March 2001 48 “Management à la Google”, op.cit. 49 ibid. 50 Learmonth Michael, “Ad Age digital-A List: Google Creative Labs”, http://adage.com/article/special-report-digital-alist/ad-age-digital-a-list-google-creative-labs/149076/, February 27th 2011 51 “The area: marketing”, http://www.google.com/intl/en/jobs/uslocations/new-york/markcomm/creativelab/marketing-manager-creative-lab-new- york/index.html 52 “Ad Age digital-A List: Google Creative Labs”, op.cit. 53 Leander Johanna, “Do-Gooders”, http://www.johannalenander.com/wp-content/uploads/2010/07/Lenander-GOOGLE.pdf, December 2009 54 ibid. 55 “Q&A with Google's VP of Marketing” , http://www.businessweek.com/magazine/content/07_32/b4045417.htm, August 6th 2007 56 Heussner Mae Ki, “Technology: Google VP of Global Marketing Lorraine Twohill”, http://www.adweek.com/news/advertising-branding/technology-google-vp-global-marketing-lorraine-twohill-136000, October 25th 2011 57 “Q&A with Google's VP of Marketing “, op.cit.

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Brand management specialists like Colin Bates opined that “brand is a collection of perceptions in the mind of the consumer.”58 The evolution of Internet and the need for information resulted in companies to look at brand management more closely and devise plans to communicate the persona of the organisation to the users. As a most used search engine, Google worked hard to create that persona to develop a distinct brand and effectively communicated its corporate philosophy to the media and to the users.59 But the analysts observed that media spending was very less compared to other big tech brands in the industry, in making efforts to transform itself from a company grounded in search to a power building consumer brands like Chrome, Google+ Android and cloud computing apps.60 Google became a tech behemoth with a $180 billion market capitalisation by 201061 with business stretched across the Internet – Google Search, Gmail, Orkut the social networking and web-based software applications, or apps. But, analysts opined that Google still depended heavily on search-related advertising revenues (Exhibit II). Yet, the Google Co-Founder and new CEO Larry said: “I’m very, very optimistic about our future.” 62 Larry who took over as CEO from Eric Schmidt in April 2011 began to initiate several much needed steps to invigorate Google such as re-organisation of the management team to eliminate red tape and political wrangling.63 Benchmark Co.64, analyst Clayton Moran said: “Larry Page is making some fairly significant changes to try to change the culture at Google.”65

Exhibit II Google Inc. Advertising Revenues 2008 – 2010

Year Ended December 31

2008 2009 2010

Advertising Revenues

Google Websites $14,414 $15,723 $19,444

Google Network Websites 6,715 7,166 8,792

Total Advertising Revenues 21,129 22,889 28,236

Other Revenues 667 762 1,085

Revenues $21,796 $23,651 $29,321

Source: “Form 10-K”, http://investor.google.com/documents/20101231_google_10K.html But in May 2011, Apple surpassed Google to claim number one spot as the most valuable brand ending Google’s four year record in the Millward Brown’s BrandZ66 annual ranking.67 Peter Walshe (Walshe), Millward Brown’s BrandZ Director said: “More valuable brands command heightened premiums, desire and 58 Serjeantson Brett, “Brand Management – Beyond Marketing”, http://www.mediamiser.com/resources/archive/060201_brandman.html 59 ibid. 60 “Why Anti-marketer Google Has Embraced Marketing”, op.cit. 61 “How long will Google’s magic last?”, op. cit. 62 Marlow Iain, “As Google moves beyond search, costs soar”, http://www.theglobeandmail.com/globe-investor/as-google-moves-beyond-search-costs-soar/article1985772/, April 14th 2011  63 Guynn Jessica, “Larry Page, back as Google CEO, shakes up top ranks”, http://articles.latimes.com/2011/apr/09/business/la-fi-google-page-20110409, April 9th 2011 64 An institutional brokerage firm that offers investment banking and advisory services to banks, mutual funds, hedge funds, and other institutional investment customers. 65 “Larry Page, back as Google CEO, shakes up top ranks”, op. cit. 66 Developed by Millward Brown Optimor, the BrandZ Top 100 Most Valuable Global Brands ranking analyses the world's leading brands and the economic and competitive dynamics that influence value fluctuations. 67 Costa MaryLou,” The most valuable brands in the world”, http://www.marketingweek.co.uk/the-most-valuable-brands- in-the-world/3026256.article, May 12th 2011

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excitement, all through a compelling and quality brand experience.”68 Walshe also noted that “Embracing technology and digital media has helped luxury brands increase their prestige.”69 The annual ranking report BrandZ also reported that the Internet brands such as Facebook were creating buzz more than ever because of their rising importance for advertisers and close integration in the daily lives of users.70 Eileen Campbell, Global CEO of Millward Brown, attributed Google’s drop to 4% decrease in its market capitalisation and its investments in mobile platforms and Chrome Browser.71 In addition, the total revenues of Google at the end of December 31st 2011 were $37,905 million of which total advertising revenues were $36,531 millions.72 To reduce the dependence on advertising revenues, Google turned to acquisition. In a quick succession, acquired YouTube in 2006 and online advertising network DoubleClick in 2007, and created a war chest of $33 billion to bid for more deals in the future. The acquisition of YouTube helped Google to ‘become a force to be reckoned with’, but failed to reduce the dependence on advertising.73 Meanwhile, Google Search engine was also faced with ‘walled gardens’ - a term used for hoarding of customer data by social networking sites, especially by Facebook and applications provided by Apple, making it hard to access the data.74 Eric Schmidt, Google’s Chief Executive said: “Two years ago I would have told you this isn’t a problem. Now I will tell you it is a threat.”75 The numbers of visitors to Facebook in America saw a surge compared to that of Google (Exhibit III). In addition, the television content producers and media companies were thinking twice before licensing content to Google and were making it available for free on the web. 76 Moreover, Google was also faced with investigation from several governments in Europe over allegations of manipulating search results for unfair advantage and violation of users’ privacy online.77 But the more serious problem, according to some industry observers was exodus of talented employees from Google such as Omar Hamoui, the founder of AdMob78, and Lars Rasmussen79 who moved to Facebook. Google on the other hand initiated several measures like hiking 10% pay for all its employees and gave $1,000 bonus to stem the exodus, besides setting up venture-capital arm to acquire stake in the business floated by Xooglers–former Google employees.80

68 ibid. 69 ibid. 70 ibid. 71 Neff Jack, “Apple ends Google’s four year run as the most valuable brand”, http://www.millwardbrown.com/Libraries/MB_Articles_Downloads/Ad_Age_BrandZ_2011_May.sflb.ashx, May 9th 2011 72 “Form 10-K”, http://www.sec.gov/Archives/edgar/data/1288776/000119312512025336/d260164d10k.htm, January 26th 2012 73 “How long will Google’s magic last?”, op.cit. 74 ibid. 75 ibid. 76 ibid. 77 “How long will Google’s magic last?”, op.cit. 78 A mobile-advertising company that Google acquired in 2009. 79 Project Head of Wave–a new kind of online collaborative tool. 80 “How long will Google’s magic last?”, op.cit.

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Exhibit III Web Traffic in America: Google vs. Facebook

Source: “The Internet: How long will Google/s magic last?”, http://www.economist.com/node/17633138, December 2nd 2010

According to few analysts, Google was also under pressure from investors as its costs begun to soar high.81 Although, the company was able to record a net income, $2.7 billion in December, 2011 at 8.34 per share compared to $2.5 billion in December 2010 at $7.95 per share, while the total costs and expenses were $7.07 billion in December 2011 compared to $5.45 billion in December 201082 (Annexure III). While some analysts felt that Google should continue to spend on new products to push itself into areas such as social networking and mobile businesses. BGC Partners83 Analyst Colin Gillis opined that "But Larry Page has signaled pretty clearly that he is going to be driving up expenses. If the expenses are targeted and result in future revenue streams, then good for Larry. If not, that results in an undisciplined spending approach."84 Jim Tierney, Chief Investment Officer of Asset Manager WP Stewart85, said: “My sincere hope is that over time he (Page) enunciates the strategy much more clearly.”86 However, Larry opined: “There's tremendous improvements to be had in our core products and our core business."87 Way Forward Google always believed in promoting its products through word of mouth and partnerships since its inception. The founders of Google thought that splashy advertising would not fit with Google's image. But

81 “As Google moves beyond search, costs soar”, op. cit.  82 “Form 10-K”, op.cit. 83 A global financial services company based in New York City. 84 Oreskovic Alexei and Saba Jennifer, “Cost surge under new Google CEO unnerves Street”, http://www.reuters.com/article/2011/04/15/us-google-idUSTRE73B6N820110415, April 15th 2011 85 An asset management company that owns Google shares. 86 “Cost surge under new Google CEO unnerves Street”, op.cit. 87 ibid.

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some Google executives were partly successful in pushing the company to change its views.88 After prolonged internal debates and discussions with advertising agencies, Google, in August 2008, launched an outdoor and online advertising campaign in Japan to promote the Google brand and several products such as Google Maps and Gmail.89 Greg Sterling, an Internet Analyst at Sterling Market Intelligence90 said: “Google is beginning to ‘break with its relatively low-key history’ around marketing. They're definitely doing more things that look like traditional marketing.”91 The marketing staff attached to various product groups at Google too was seen working hard to adopt new approaches.92 Google hired Andy Berndt a former co-president of Ogilvy & Mather, New York to head GCL to evolve a strategy and find ways to promote Google’s products without diluting the consistent brand image. Analysts felt that Google was left with no option as the new offerings from its stable were likely to face formidable competition from Microsoft and Apple who relied heavily on advertising (Annexure IV). Rita Rodriguez, Chief Executive of the U.S. division of Brand Union, a unit of WPP Group93, said: “People still default to Google as only search.”94 In 2009, Google bought its Super BowlTV ad, thereafter, began to buy time on the popular television shows like NBC's "Saturday Night Live," Fox's "Glee," Comedy Central's "Futurama" and during major television events such as the World Series etc. to promote Google’s new products.95 Google released 13 different ads on the television and increased its marketing spending to about $103 million in 2011 from about $53 million in 2010.96 According to Peter Daboll, Chief Executive of Ace Metrix97 “Characteristically, Google is blazing its own trail, one that runs counter to some industry trends by focusing on longer commercials, storytelling and emotion.”98 Faced with stiff competition for its broadened product portfolio that stretched beyond simple search to music and movies, smartphones and tablet computers, anti-trust investigations, privacy and other public relation issues, Google firmed up plans to spend more on sales and marketing in an effort to spruce up its image and connect with consumers.99 Karsten Weide (Weide), Analyst at IDC100 said: “They want to get away from just being a hardscrabble engineering company to being a consumer brand. They realize they cannot win the war against Apple if they don't do that.”101 Apple had spent about $204 million in the first six months of 2011 to promote iPhones and iPads, while Google spent only $21.5 million in the same period.102 Besides, Weide opined that “They want to become much more of a household name as a consumer product maker.”103 The sales and marketing spends in 2011 was 12% of its total revenue compared to about 8% in 2009.104 Analysts were also surprised at the $4-billion sales and marketing effort in 2011 to embrace television advertising which the Google founders once abhorred.105 It remained to be seen whether Google’s change

88 “Google Reconsiders Its Aversion to Advertising”, op. cit. 89 ibid. 90 A market-research firm. 91 “Google Reconsiders Its Aversion to Advertising”, op. cit. 92 ibid. 93 A world leader in advertising and marketing services. 94 “Google Reconsiders Its Aversion to Advertising”, op. cit. 95 “Google ramps up marketing as its products expand beyond search”, op. cit. 96 “Why Anti-marketer Google Has Embraced Marketing”, op.cit. 97 A Mountain View, California –based company that analyzes the effectiveness of TV ads. 98 “Google ramps up marketing as its products expand beyond search”, op.cit. 99 ibid. 100 An International research firm. 101 “Google ramps up marketing as its products expand beyond search”, op.cit. 102 ibid. 103 ibid. 104 ibid. 105 “Google ramps up marketing as its products expand beyond search”, op.cit.

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of marketing philosophy would help the company to overcome the formidable competition and continue to weave magic to connect with the users.

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Annexure I Google’s Competition: Revenue, Net Income and Employee Strength in 2003

Source: La Monica R. Paul, “Google sets $2.7 billion IPO”,

http://money.cnn.com/2004/04/29/technology/google/, April 30th 2004

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Annexure II Internet Business Environment

Source: Porter E. Michael, “Strategy and the Internet”, http://hvass.nu/s2/artikler/teori/Misc/porter.pdf, March

2001

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Annexure III Google Inc.: Consolidated Statement of Income March 31st 2010 – December 31st 2011

Source: “Form 10-K”, http://www.sec.gov/Archives/edgar/data/1288776/000119312512025336/d260164d10k.htm, January 26th 2012

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Annexure IV Advertising Spending Comparison: Microsoft, Apple & Google

Source: Yarow Jay and Angelova Kamelia, “Here's How Much Tech Companies Spend On Advertising”, http://articles.businessinsider.com/2010-05-07/tech/30085430_1_total-ad-million-ad-yahoo-

plans#ixzz1l6oQu1eV, May 7th 2010

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