By samoore (1251644912|%a, %b %e at %I:%M%p)
I am a big fan of Google just like most college students. You can type in almost any subject in Google Search and get all the sources you need for a solid paper in less than 1 second. Also, with Image Search, Youtube, and Google Calendar, Google pretty much serves all of my time-wasting and organizational needs. Because of this, when I heard that a speaker from Google was coming to speak to the class, I was naturally excited. Ben Lewis was that speaker.
What Ben Talked About
Ben was an interesting speaker who emphasized how Google was actually making its money from its products. He touched on the two most obvious ones (search and ads), but he also spoke to us about how Google Toolbar and Google Earth, as well as several other products, were also bringing in revenue. Perhaps more importantly, he specified the costs that are really associated with the products.
I was interested in the auctioning system Google uses for ad space. Ben went through a search for a video game and showed us the four ads that were displayed on the right side of the screen. He then explained the how the many advertisers submit bids for certain keywords and the few highest bidders get to have their ads displayed. While doing this, he talked about how Google prevents ads with excessive exclamation points and other nonsense from showing up and allows only relevant ads in its ad space.
I have never used the Google Toolbar and never thought much about how toolbars could help make money. Ben explained that the toolbar is beneficial for two major reasons. First, it keeps the brand at the top of mind. This made clear sense to me. Second, it has a PageRank feature that indicates how important a web page is by using clicks as votes. This is a useful service and it allows Google to track user data. Tracking user data leads to better information. Better information leads to better services and greater revenue. Google Earth offers Google Toolbar when it is installed, so it also provides the same benefits indirectly.
The order of costs Ben mentioned were about what I had expected. For every product, servers and bandwidth were the highest cost. The costs of creation and maintenance varied with each product, but the variable costs per use by a consumer were very low. The biggest thing that I had not previously considered at all was the fact that Google is losing money with each search that does not involve clicking on an ad.
What I Learned
I had not previously considered the level of strategic thinking that goes into Google products. It had crossed my mind several times that it makes no sense for Google spend its money offering free products. Google Earth in particular had always seemed like a really cool program that was useless for Google's bottom line. The idea of adding Google Toolbar as an option when installing Google Earth is an incredibly smart idea. Google creates a lot of goodwill because of these products and gets a lot out of them at the same time!
The support for creativity was something I had heard about on the news, but hearing it from a Google employee made it real in my mind. Ben said that Google does not put a cap on the amount of money that can be spent on a project. Ideas are funded as far as they can go! The fact that they allow creativity to work freely like this and that employees actually feel this freedom explained to me how a company can create such amazing things. Unfortunately, this freedom has become slightly limited recently due to the economic decline, but I feel that the culture that has been established at Google will continue to foster amazing new products.
On the flip side of this, I learned about the unsuccessful products Google has and the money it has lost in these products. Ben talked about Google Checkout and broke down how the fee it charges fails to cover the fees it must pay to credit cards and other related costs. He mentioned that there are actually a slew of products like this that turn out unsuccessful. Being the typical Google user, I had no idea about most of Google's products and only knew about the most popular, wildly successful ones.
Hearing from Ben was great because it gave me insight into the thinking that is behind the products I am familiar with. As an aspiring business professional, it was a good lesson in strategy and considering costs. The talk overall showed how Google uses its products to promote each other, and how it uses categorization to maximize its revenue, and how it grows through innovation.