Business Information Technology- Assignment

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Information Systems: A Manager’s Guide to Harnessing Technology V 3.0

By John Gallaugher

Chapter 16

Google in Three Parts: Search, Online Advertising, and Beyond

Learning Objectives

Understand the extent of Google’s rapid rise and its size and influence when compared with others in the media industry.

Recognize the shift away from traditional advertising media to Internet advertising.

Gain insight into the uniqueness and appeal of Google’s corporate culture.

introduction

Google earns by pairing Internet surfers with advertisers.

Advertising drives profits and lets the firm offer most of its services for free.

Voted as one of the best firms to work for in the United States.

Dominates the search market.

introduction

Market capitalization (market cap): Value of a firm calculated by multiplying its share price by the number of shares.

The firm’s founding duo are billionaires.

Within six years of the IPO, Google had become one of the twenty most profitable firms in the United States and was the youngest firm on the list, by a wide margin.

U.S. Search Market Share

Volume of searches

Sales AOL Ask Yahoo Bing Google 1.2999999999999999E-2 2.7E-2 0.11899999999999999 0.17399999999999999 0.66700000000000004

Learning Objectives

Understand the mechanics of search, including how Google indexes the Web and ranks its organic search results.

Examine the infrastructure that powers Google and how its scale and complexity offer key competitive advantages.

Understanding search

ORGANIC OR NATURAL SEARCH

Search engine results returned and ranked according to relevance.

PAGERANK

Algorithm to rank Web sites.

SEARCH ENGINE OPTIMIZATION (SEO)

Process of improving a page’s organic search results.

LINK FRAUD

Creating a series of bogus websites, all linking back to the pages one is trying to promote.

Also called spamdexing or link farming.

Understanding search

SPIDERS, WEB CRAWLERS, SOFTWARE ROBOTS

Traverse available Web links to perform a given task.

CACHE

Temporary storage space used to speed computing tasks.

DARK WEB

Internet content that cannot be indexed by search engines.

SERVER FARM

Network of computer servers running software to coordinate their collective use

Spiders discover documents for indexing and retrieval.

UNDERSTANDING SEARCH

Google’s server setup is fault-tolerant: capable of continuing operation even if a component fails.

Colos (colocation facilities): Warehouse-sized facilities where telecom companies come together to exchange traffic.

Help make the Internet function as a network of networks.

Learning objectives

Understand how media consumption habits are shifting.

Be able to explain the factors behind the growth and appeal of online advertising.

Online advertising

Factors driving trends:

Increased user time online.

Improved measurement and accountability.

Targeting: Enables a firm to spend money only on its best prospects.

Impressions help advertisers gauge an advertisement’s effectiveness.

Impressions: Each time an ad is served to a user for viewing.

Learning objectives

Understand Google’s search advertising revenue model.

Know the factors that determine the display and ranking of advertisements appearing on Google’s search results pages.

Be able to describe the uses and technologies behind geotargeting.

Google’s Search Advertising

Search engine marketing (SEM): Designing, running and optimizing search-engine ad campaigns.

Keyword advertising: Advertisements targeted based on a user’s query.

Advertisers bid on the keywords used to trigger the display of their ad.

Linking advertising to purchasing intent makes Google’s ads highly valuable.

Pay-per-click (PPC): Advertisers do not pay unless someone clicks.

Top performing ads are measured by considering the:

Maximum CPC (cost-per-click) an advertiser is willing to pay.

Advertisement’s quality score.

Quality score: A broad measure of ad performance.

Formula: Ad Rank = Maximum CPC × Quality Score.

Google’s Search Advertising

Factors determining an ad’s quality score:

Click-through rate (CTR): Number of users who clicked an ad divided by the number of times the ad was delivered.

Overall history of click performance for the keywords linked to the ad.

Relevance of an ad’s text to the user’s query.

Automated assessment of the user experience on the landing page.

Landing page: Web page displayed when a user clicks on an ad.

Google provides tools to identify popular words and phrases for selecting keywords to link with an ad.

Offers dynamic search ads: Ads generated automatically based on the content of a website.

Advertisers get a running total of ad performance statistics that helps:

Monitor the return on their investment.

Tweak promotional efforts for better results.

Keywords with highest cost per click

Term	Rank	AVERAGE CPC
Structured settlement company	1	$455.05
New Mexico mesothelioma lawyers	2	$431.94
Mesothelioma trial lawyers	3	$399.47
Structured settlement money	4	$395.65
Structured settlement companies	5	$385.08

Source: Consolidated from SpyFu.com, June 2014.

geotargeting

Ads in Google Search can be geotargeted based on IP address.

IP address: Value used to identify a device that is connected to the Internet.

Changes depending on how and where one connects to the Internet.

Identifying a user’s physical location for the purpose of delivering tailored ads or other content

Learning Objectives

Understand ad networks, and how ads are distributed and served based on website content.

Recognize how ad networks provide advertiser reach and support niche content providers.

Be aware of content adjacency problems and their implications.

Know the strategic factors behind ad network appeal and success.

Google’s Ad Network

Ad network: Links advertisers to websites and other content providers willing to host advertisements in exchange for payment.

AdSense targets ads based on keywords inside the content of a website.

Contextual advertising: Based on Web site’s content.

Content adjacency problems: Situation where ads appear alongside text the advertiser would like to avoid.

Ad Networks and Competitive Advantage

Ability to reach more potential customers attracts more advertisers.

Content providers look for ad networks with the most advertisers.

More participants bring in more revenue and help the firm benefit from scale economies.

Better return on investment from its ad technology and infrastructure.

Learning Objectives

Know the different formats and media types that Web ads can be displayed in.

Know the different ways ads are sold.

Know that games can be an ad channel under the correct conditions.

Internet advertising

IMAGE OR DISPLAY ADS

Graphical advertising, as opposed to text ads.

RICH MEDIA ADS

Online ads that include animation, audio, or video.

INTERSTITIALS

Ads that run before a user arrives at a Web site’s contents.

INTERNET ADVERTISING BUREAU (IAB)

Evaluates and recommends interactive advertising standards and practices

Payment Schemes

Most graphical display ads are sold according to impressions.

Ad rates are quoted in CPM: Cost per thousand impressions.

Affiliate programs: Program sponsors pay referring Web sites a percentage of revenue earned from the referral.

Learning Objectives

Be familiar with various tracking technologies and how they are used for customer profiling and ad targeting.

Understand why customer profiling is both valuable and controversial.

Recognize steps that organizations can take to help ease consumer and governmental concerns.

Customer Profiling and Behavioral Targeting

Communication between a Web browser and Web server reveals:

IP address - Leveraged extensively in customer profiling.

Type of browser used.

Computer type and its operating system.

Cookies: Line of identifying text, assigned and retrieved by a given Web server and stored by one’s browser.

Remarketing

Reintroduces products to users or targets with special messages or promotion .

Shows custom, targeted ads to a user when visiting other sites if the user has already visited a given page on the advertiser’s site.

Allow advertisers to obtain details on a user’s purchases.

Tailor websites to display products most likely to be of interest to a user.

Keep track of the contents of a user’s shopping cart.

Store user IDs and passwords as part of the “remember me” feature.

Third-party cookies: Identify and record users across multiple websites.

Served by ad networks or customer profiling firms.

Learning Objectives

Understand the privacy concerns that arise as a result of using third-party or tracking cookies to build user profiles.

Be aware of negative consequences that could result from the misuse of third-party or tracking cookies.

Know the steps Google has taken to demonstrate its sensitivity to privacy issues.

Know the kinds of user information that Google stores, and the steps Google takes to protect the privacy of that information.

User Privacy

The U.S. Federal Trade Commission has called for:

Greater transparency and user control in online advertising.

Opt-in when collecting sensitive data.

Opt-in: Program that requires customer consent.

Google allows users to:

See all the categorizations assigned to a browser’s tracking cookie.

Remove categorizations, or add interests to improve ad targeting.

Install a cookie or plug-in that opts them out of interest-based tracking.

Opt-out: Enroll all customer by default, but allow them to discontinue participation if they want to.

Plug-in: Extends the feature set or capabilities of another application.

Learning objectives

Be able to identify various types of online fraud, as well as the techniques and technologies used to perpetrate these crimes.

Understand how firms can detect, prevent, and prosecute fraudsters.

Types of Fraud Attempted in Online Advertising

ENRICHING CLICK FRAUD

Generating bogus ad clicks to earn CPC income.

ENRICHING IMPRESSION FRAUD

Generating false page views to boost a site’s CPM earnings.

DEPLETING CLICK FRAUD

Clicking a rival’s ads to exhaust their CPC advertising budget.

DEPLETING IMPRESSION FRAUD

Generating bogus impressions to exhaust a rival’s CPM ad budget.

Types of Fraud Attempted in Online Advertising

RANK-BASED IMPRESSION FRAUD

Repeatedly searching keywords linked to rival ads, to lower their performance rank.

DISBARRING FRAUD

Generating bogus clicks or impressions associated with rivals, to ban them from an ad network.

LINK FRAUD

Creating bogus Web sites, all linking back to a page, to increase that page’s results in organic search.

Types of Fraud Attempted in Online Advertising

KEYWORD STUFFING

Packing a Web site with unrelated keywords to attract higher-value contextual ads

CLICK FARMS

Recruiting a network of users to engage in click fraud, thereby spreading IP addresses across several systems

BOTNETS (ZOMBIE NETWORKS)

Infiltrated computers, linked and controlled by rogue software.

Learning Objectives

Understand the challenges of maintaining growth as a business and industry mature.

Recognize how technology is a catalyst, causing the businesses of many firms in a variety of industries to converge and compete, and that as a result of this, Google is active on multiple competitive fronts.

Critically evaluate the risks and challenges of businesses that Google, Microsoft, and other firms are entering.

Appreciate the magnitude of this impending competition, and recognize the competitive forces that will help distinguish winners from losers.

A Comparison of Stock Price Change

Stock Price Increase by Percent

2005

2006

2007

2008

2009

2010

2011

Microsoft Stock Price Increase

Google Stock Price Increase

Google’s Competitive Forces

Major scale advantages in search and network effects in advertising.

Dominance helps grow a data asset for service improvement.

Multiple ad networks make it easier to shift business between firms.

Google must offer superior value to retain advertisers.

Switching costs for search users are incredibly low.

What Google faces

Possible slower growth putting pressure on stock price.

Need to pursue large, risky new markets.

Microsoft may pose Google’s most significant conventional threat.

Google has been investigated for anti-trust violations.

Investing heavily in methods to promote wider Internet access.

Google Glass has struggled to achieve consumer acceptance.

Google’s Wallet service faces challenges.