Saturday, May 13, 2006

Google: Search Engine or Advertisement Delivery Mechanism?

In the latest issue, The Economist says:

Google is primarily an advertising agency. It does not sell the usual sort of advertising, in which an advertiser places a display on a page and pays per thousand visitor “impressions” (views): it has perfected the more efficient genre of “pay-per-click” advertising. It places little text advertisements (“sponsored links”) on a page in an order determined by auction among the advertisers. But these advertisers pay only once an internet user actually clicks on their links (thereby expressing an interest in buying). This works best on the pages of search results, which account for over half of the firm's revenues, because the users' keywords allow Google to place relevant advertisements on the page. But it also works on other web pages, such as blogs or newspaper articles, that sign up to be part of Google's “network”.

I like this analogy to an advertising agency. However an ad agency does a lot of other things like creative design, positioning, market segmentation, media seleection and ad delivery. Google does only ad delivery. You can argue that it is a search engine, but I will say its just an "ad delivery mechanism". Search is no longer the only way it delivers ads (example: Gmail, Google "network" websites which display ads from Google, Ads on Blogs). A future scenario can have Google delivering ads to your TV, Home, Car or Mobile Phone, and I wonder if you will still call it a search engine. We admire the evolution of human beings across ages, well here is a company evolving for you in just 10 years.

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