1. The Business Model and Strategy of MBAA 609 R. Nakatsu

2. Framework for Discussion What is Google’s business model? How do search engines work? What differentiates Google’s search engine from the competition? What is Google’s advertising revenue model? –AdWords (text, keyword-based advertising) –AdSense (affiliate program) Is Google a sustaining or disruptive technology ?

3. Google’s Business Model Pure Play vs. Clicks-and-Mortar Dominant Revenue Model Commerce Strategy Pricing Model

4. How Do Search Engines Work? A spider visits a web page, reads it, and then follows links to other pages within the site. The spider returns to the web site periodically to look for changes (dynamically updated) The index contains information about every web page a spider finds. The search engine itself processes the human (user) query and sifts through the millions of pages recorded in the index.

5. How Search Engines Rank Web Pages Search engines use some kind of algorithm to determine relevancy. For Example: Pages with keywords appearing in the title are more relevant Keywords that appear near the top of a web page (e.g., the first few paragraphs of text) How often keywords (frequency) can also be used as a measurement of relevancy.

6. Other Ranking Criteria Meta tags allow the owner of a page to specify keywords and concepts under which the page will be indexed. Human editors sometimes can give a web page a higher relevancy rating. Question for discussion: What are problems with these ranking criteria?

7. How Google is Different from its Competitors Spartan, bare-bones interface Text-only ads Unbiased search results via PageRank Earns most of its revenues from advertising Today, more expanded offerings

8. How does Google’s PageRank work? The frequency and location of keywords in a web page. How long the web page has existed. Link popularity: the number of other web pages that link to the page. Also, linked pages with a higher page rank count more in the relevancy score. Of these three factors, link popularity is the most important.

9. Google Advertising “The world’s most valuable online advertising agency disguised as a search engine.” --The Economist

10. How does Google Advertising (AdWords) Work? Google uses a cost-per-click (CPC) model Google uses an auction-based system Google also uses a quality score to determine ad placement Google leverages the long tail of the Web through customer self-service

11. Google AdSense AdSense gives content providers a mechanism via which they could add advertising space to their websites. Content providers hire Google to manage the placement of relevant ads on their webpages. Every ad clicked on generates revenues for both Google and the content subscriber. The Ads are labeled: Ads by Google.

12. Questions for Discussion Is Google a sustaining or disruptive technology? Can you think of a problem with Google advertising? What type of search engine might supplant Google in the future?