Google tries its hand in traditional ads

Katherine Yung
Detroit Free Press (MCT)

Ten years ago this September, two Stanford University doctoral students launched a business that would revolutionize how millions of people use the Internet.

Yes, Google is getting older, at least in tech years.

But don't expect the world's dominant search engine company to remain content with the enormous success it has achieved so far.

Google is rolling out innovative features that will allow users to search the Web more efficiently. It is also looking to expand its advertising reach, focusing on the folks who do their queries via mobile phones and car-based systems. Google has been increasing its spending on research and development, which totaled $2.1 billion last year alone.

The company has come a long way since Sergey Brin and Larry Page started Google in a garage in Menlo Park, Calif. One of the most feared and respected technology giants in the world, Google earned $4.2 billion in profits last year and employs nearly 17,000 workers.

With more than half of its user traffic coming from outside the United States, Google has evolved into a global company. It operates 60 offices in 20 countries.

It's no surprise that the company is extremely secretive about its product plans. To get some hints about what may be in store for users of Google's search engine and its AdWords advertising program, the Detroit Free Press recently talked to two top Google executives.

"We're constantly looking at the user experience - what they want, what they need," said Marissa Mayer, Google's vice president of search products and user experience.

Google regularly makes improvements to its search engine, which now contains billions of Web pages compared with only 30 million in 1998.

However, it took a major leap last year by introducing what it calls "universal search." This is a more comprehensive search engine that includes video, images, maps, news and other data. Previously, you had to visit several Google search products to get different types of information.

Mayer described universal search as a large step forward because it involved installing a new technical infrastructure.

The search engine's next frontier lies in blending in new media and adapting to the different technologies that people are using to make search queries, such as mobile phones and car-based systems.

Mayer also sees Google giving users more control over the look and feel of its Web pages. This is already happening with iGoogle, which allows people to customize their Google home page. It has been the fastest growing consumer product since its introduction three years ago, Mayer said.

iGoogle recently began offering a palette of decorative themes created by famous artists and designers such as Jeff Koons, Tory Burch and Philippe Starck. The themes give people another way to personalize their Google page.

Armed with these and other new features, Google would seem likely to continue its dominance of the search engine business. But in the rapidly changing tech world, new start-up companies are already aiming to surpass it.

With competition expected to intensify, what will differentiate Google from others? Mayer cites three factors: comprehensiveness, relevance and the user experience.

Google plans to offer more content than anyone else, not just Web pages but also books, video, news and images, she said.

Google also aims to generate the best possible results for search queries. It wants to give users more relevant answers than its rivals do.

And the search engine is working to improve its users' experience.

In the future, people may be able to express their search queries in far different ways than is possible today.

"We're constantly looking at user intent," Mayer said.

Google may operate the world's most popular search engine, but it still makes money the old fashioned way: from advertisers.

Last year, advertisers generated 99 percent of the company's $16.6 billion in revenues.

Most of this money comes from AdWords, the four-line text ads that companies create. Advertisers bid against each other to have their ads pop up to the right of or on top of Google's search engine results whenever Internet users type in certain words that the companies select in advance.

Once an ad is triggered, what determines whether it gets the top spot on the page? An advertiser's bid and the ad's quality score, a judgment by Google about how likely Internet users are to find the ad relevant.

Google won't reveal how it derives its quality scores. Richard Holden, product management director for AdWords, calls it a "special sauce."

The rankings are important to Google because it only makes money if Internet users click on the ads.

Holden said that Google has found that AdWords works best with advertisers looking to generate a direct response, such as buying a product or signing up for an e-mail list. This kind of advertising is different from trying to build a brand.

Though Google has used its current cost-per-click version of AdWords since 2002, it adds new features to it every two weeks, Holden said. It also comes up with innovations.

For example, it has introduced a pay-per-action advertising pricing model in which advertisers pay Google each time an Internet user does something like subscribe to an online catalog or buy a product.

Despite its success, Google's ambitions stretch far beyond AdWords.

The company wants to bring its ability to measure the effectiveness of ads to other forms of advertising such as radio, television and print.

Google's recent acquisition of DoubleClick Inc., a New York-based provider of digital marketing technology and services, should help it extend its reach into traditional advertising, Holden said.

"Our advertisers are asking for more ways to reach audiences," he added.

Google recently began selling TV commercials in North America.

It has already signed up 3,000 national advertisers. So far, the commercials only run on the Dish satellite network.

"That's another space I think we can bring a lot of efficiencies to," Holden said.

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