Google's not an ad company, they're an AI company. Ads just support them as they develop the tech. Articles like this keeps reinforcing that world view for me.
Nope, Google is an Ad company, they sell ads via tech, but you take away the ads, and Google can't afford to do tech.
Almost every product and service they do is to sell ads either directly or indirectly. Even Google Apps is about selling ads. How? Well, if small businesses don't have decent tech infrastructure, they aren't likely going to be using AdWords as much are they and they'll use traditional ads like Yellow Pages.
In case you aren't aware, Yellow Page ads and newspaper ads charge hundreds or thousands of dollars per month for minimal effective exposure. Google ads can be much more effective, but good luck selling toe people who can't even get decent email accounts setup for their business. Yeah, $5/user/month is decent money when you have 50+ employees on the system, but that's peanuts compared to the $5,000-10,000+ a month that company is likely paying in advertising.
Google desperately wants those kinds of accounts and whether they are building a browser, an operating system, an email service, a social network, or a self driving car, it's always going to come back to selling advertising to businesses because that is worth far more than just about anything else Google can do to make money.
Google, like Microsoft and Apple completely understands where they make their money and what business they are in, even if they do a lot of things to make techies happy.
Poor analogy; Google is considered an ad company because that is how they get their revenue.
From some Googling, it seems that Einstein made money from being an academic fellow, royalties on inventions, and giving lectures. So he seems like he's a physics guy (although figuring out problems to work on, speaking, politicking, etc. also come into play.)
This just in, we all need resources to complete our mission/goal, even if getting those resources takes a lot of our time and effort and isn't directly related to said mission/goal.
Example: I'm saving up so one day I can work for free for NGOs (like Watsi).
If you look carefully you will see the ad business is dying (well at least it is commoditizing) For nearly 10 quarters in a row Google has had negative growth in their CPC numbers and they have only covered that up by expanding the volume of ads they show (no you are not imagining their web pages becoming more and more 'monetized')
Here is a chart taken from their quarterly reports:
For reference that is Quarter over Quarter, (Q2Q) and year ago quarter (YAQ). In the limit they become AltaVista in 2020 or so. So they are really looking at a pretty definite timeline of having to develop an alternate strategy or downsize the company significantly.
Good grief. Or you could interpret the numbers as indicating that clicks have grown faster than ad budgets, leading to a dilution in the cost of a click. CPC is a derived metic, not a fundamental. CPC declining isn't necessarily a bad thing as long as clicks grow faster than CPCs decline.
We know where the revenue comes from. The point is that google's tech is, in many important ways, AI.
It's like McDonalds. A hamburger company? Not really. It makes a lot more sense to consider them a real estate company. Hamburgers are just the way they create value for the real estate. This is not just my whacked interpretation, but is something the CEO said in an interview awhile ago, and a perspective taught in many MBA programs.
Yes, companies make money from their revenue. It is often far more interesting and useful to look at how they create the value that generates that revenue. In the case of Google, Larry Page has been quite clear about his ambitions for Google, and selling ads is not the end of that ambition, it is merely the current income source.
I totally agree that Google is a tech company, they are driven by tech, they build tons of hardware and software. There is no denying that, but the original parent comment was about how google is NOT an advertising company and is actually an AI tech company.
I agree that McDonalds is actually in the real estate biz more than the hamburger biz. Where I think the comparison falls down is that McDonalds restaurant biz is in service to building their real estate holdings and it's not always clear if ads are in support of tech or vice versa at Google.
In my business dealings with Google over the years, it's been very clear that Google skews pretty hard towards growing and supporting AdWords even at the expense of User Experience, customer desires, etc. Just look at how they are blending ads with organic results more and more or how they are forcing Google+ down everyone's throats or how they won't show keywords unless you are buying AdWords. In those cases, they aren't making tech decisions, they are making business decisions to support selling more ads.
Google obviously does a lot of tech and sells a lot of ads, but like a hydra, it's not exactly clear which head controls the beast. I would certainly skew towards ads, but you could argue that it's about the tech. It might be both or something completely different and non obvious.
> Google obviously does a lot of tech and sells a lot of ads, but like a hydra, it's not exactly clear which head controls the beast.
I see Google doing more things to add non-advertising means of monetizing technology than non-technology means of furthering advertising, which suggest, to me, that tech is the "head that controls the beast", and that advertising is just what has so far been the runaway success in how to monetize the technology.
McDonald's corporate makes money leasing the stores to the franchisees, but the location owners make money the "regular" way, which is how they pay for the real estate back to the mothership, so from one extra step back they are a hamburger company as they appear to be. If Google is going to profit from something other than advertising, somebody somewhere has to take money from customers and give it to them.
My grandfather was responsible for sourcing all of the real estate for Jewel-Osco's expansion in Northern Illinois from the early 70's until the mid 90's. He said the same thing: McDonalds is a real estate company that happens to sell burgers.
I always heard it as McDonalds is a soda company that happens to sell burgers. They break even on the food but bank 90%+ profits on the beverages. The real estate angle makes sense on a longer timeline.
> but you take away the ads, and Google can't afford to do tech.
Therefore, ad company. But not tech company? Why are they mutually exclusive?
I wish I could add sin qua non to the catalog of informal fallacies. Google's existence depends on a number of factors. E.g. I could say "Google is an engineering firm because without engineers, it wouldn't exist. QED." I could say "Google is a web company because without the web, it wouldn't exist. QED."
Sure, Google generates its revenue primarily through advertisements. But since the Page Rank Algorithm is its flagship product, I think it's also fair to call Google a tech company. I.e. the ads per se are made by other company's marketing departments, not Google itself. Calling Google a tech company is useful for distinguishing it from companies which also generate revenue through ads, but make a dissimilar product. Like television for example.
I see where you are coming from, but it's not being called an ad company because it relies on ads to operate. It's being called an ad company because that's the product it primarily sells. It's the same reason we don't call Ford a robotics company and we don't call McDonald's a supply chain company.
I'm fine with calling it a tech company as well because they create a lot of tech at the same time, but your comparisons to other dependencies are false equivalences. Google depends on selling ads, not using ads. Google doesn't depend on selling engineers, they use engineers. Google doesn't depend on selling the web, they use the web. Get it?
This is so cynical i don't even know where to begin.
I guess i'll start here:
Do you really think Larry Page is so single minded he can't tell someone "hey, that sounds like a really cool idea, go do that" without thinking "gee i wonder how we are going to make money on ads with that"?
He goddamn well better be. The most recent non-ad initiatives they have done have been shit. Glass is nothing bit nerd porn, and Android has made more money for Samsung and Microsoft than Google.
I'm much more willing to believe that their new business model is driven by a small Google "tax". It's like Amazon's strategy of sitting on top of online commerce and charging a small fee to make those transactions more efficient (more profitable for both the buyer and seller).
Google's ideal world is where you want to use google everything to carry out every transaction. In that world Google Glass, autonomous vehicles, AI, anything that makes commerce more efficient and profitable would benefit google. They want to sit on top of everything rather than just internet white space.
But that wasn't always true and there's no reason to assume it will always be true in the future.
They used to be all about search and sold search appliances. They still sell search appliances, in fact, you just don't hear about them because the ad revenue dwarfs it. If cars makes them more money than ads, then they'll be a car company (that also sells ads and search appliances).
Hrmmm lots of ways. You could sell ads that tell you about where to eat - Google Now, you could use the glass on the vehicle to project billboards and so forth, or just project ads inside of Google Glass. You could just use it as a way for people to consume more Android apps or read more of the web, both of which make Google money.
The point is, it's all a giant machine to sell more ads in various forms. If you think Google won't sell ads on Google Now or Glass or inside the cars, or whatever, then you are kidding yourself.
