1. MI021 / CS021 Computers in Management Oct. 16, 2006 Search & Advertising: Google Case www.gallaugher.com

2. Topics Covered Online Advertising Spending/Growth Google –Firm background –Revenue streams –Weaknesses/challenges w/model –Areas for development Competitors –Yahoo, Microosft, & others –Exploitable resources

4. Google Growth $440M $1,466M $3,189M $6,139M $0.45 $0.41 $1.46 $5.02 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 2002200320042005 $0 $1 $2 $3 $4 $5 $6 Revenue EPS (diluted) Revenue ($ Millions) EPS (diluted)

8. Ad Spending: Comparisons & Growth

9. The U.S. Ad Market

10. Google Revenue Streams AdWords AdSense Google Enterprise Products Licensing

12. AdSense Coverage for advertisers beyond search targeting –AdSense network covers nearly every topic imaginable –Matches highly targeted advertising with niche content Broad reach for branding advertisers –Site Targeting allows advertisers to reach their target audience –Aggregates the long tail The Power of the “Tail” 3.9 Million Daily Page Views on Hip Hop Related Sites

13. Top 10 Highest Paying Keywords $54.33 mesothelioma lawyers $47.79 what is mesothelioma $47.72 peritoneal mesothelioma $47.25 consolidate loans $47.16 refinancing mortgage $45.55 tax attorney $41.22 mesothelioma $38.86 car accident lawyer $38.68 ameriquest mortgage $38.03 mortgage refinance Source: San Jose Mercury News, March 2006

15. Despite Click Fraud, Advertisers are Spending More Source: TNS-MI; 2005 and 2003 US online display advertising, excludes companies with online spend less than $400K in 2003

17. Ads In Local Search 17 Targeted Advertising

18. Ads In Google Earth Targeted Advertising

20. Google - A Global Product = Engineering and PM offices Mountain View, CA Kirkland, WA Phoenix, AZ Pittsburgh, PA New York, NY Santa Monica, CA Bangalore, India Beijing, China Belo Horizonte, Brazil Hyderabad, India London, U.K. Munich, Germany Tokyo, Japan Trondheim, Norway Waterloo, Canada Zurich, Switzerland

21. Google Computing Center An old Google server lined with cork. Velcro now connects the parts. Urs Hölzle, senior vice president for operations at Google, says the company has considered designing chips