The Business Model of Google

MBAA 609R. Nakatsu

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.

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.

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?

Google’s Business Model

Spartan, bare-bones interface Text-only ads Unbiased search results via PageRank Earns most of its revenues from advertising Today, more expanded offerings

Google Advertising

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

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.

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

Questions for Discussion

What is Google’s impact on advertising? Can you think of a problem with Google

advertising?