DIGC 102 WEEK 8 Industry Analysis Report
Questions: Why advertising is important to search engine industry?
Science and technology in the new media industry develop over time, and as a result of that, search engines have become one of the most important ways of searching information. More and more people are accustomed to using search engines to search webs, images, videos, maps and so on. Therefore, search engine industry is very important because it is not only the new media industries, but also an information, entertainment and education industry. So, in this report, I will trace the search engine industry and my question is why advertisements are important to search engine industry, because I think as a new media industry, the search engine industry generates revenues by selling advertisement space on websites rather than selling actual products. I will find the answer by studying the operation of three search engine companies.
The first search engine company I focus on is Google, because it is the most visited website in Australia. It is said that Google is an American public corporation that has 19,786 full-time employees and operate millions of servers all around the world, which deal with hundreds of millions of searches launched daily and about 1 petabyte of user-generated data each hour (Wikipedia, 2009). The search services of Google include web search, blog search, images, news, maps, video, scholar, alerts, book search, Google chrome, desktop, directory, notebook, specialized searches, toolbar, university search, and web search features (Google, 2009). I found that all the search services above are free for searchers, so how does Google gain profit? My answer is that Google sells advertisement space on its own web pages and other cooperative websites, which can constitute a broad advertising network. Jeanneney (2007) claims “Google sells an advertising link to interested companies, which appears on the right (or at the top) of the screen, based on the response to user queries provided on the left.” In other words, Google matches advertising with relevant keywords searched by users. Besides, I also found Google AdWords is an advertising product of Google to generate revenues from advertisers. It is said that advertisers can choose keywords which are associated with their business and products or services when they advertise with Google Adwords, so that potential customers can see the advertisements created by using advertisers’ keywords when they search for the products or services on Google (Google, 2009). In addition, Lee (2009) points out “Google’s revenue is estimated to be $700 million and fast heading towards $1 billion as more advertisers divert their budgets into a medium that delivers them measurability and sales leads.” Therefore, I think advertising is important to Google, because it is a new way of generating revenues.
Yahoo!, a search engine company, is one of the competitors of Google. Yahoo! is also a company in America, but its search engine is completely different from that of Google. It is found that Yahoo! is a searchable subject index, which can only search the titles and descriptions of sites without individual pages, and Google is a full-text search engine, which can search millions or billions of pages by the title or content of pages (Calishain & Dornfest & Adams 2003, p6). The search services of Yahoo! include web search, directory search, answers, news search, image search, local search, video search, search shortcuts, search developer network, site explorer and open shortcuts, which are free for users (Yahoo!, 2009). Although the type of search engine of Yahoo! and some services provided by Yahoo! are different from that of Google, Yahoo! also gains profit by selling advertisement space. “Yahoo! Search Marketing provides services such as Sponsored Search, Local Advertising, and Product/Travel/Directory Submit that let different businesses advertise their products and services on the Yahoo! network. Yahoo! Publisher Network is an advertising tool for online publishers to place advertisements relevant to their content to monetize their websites.”(Wikipedia, 2009) Moreover, a special Internet advertisement sales system named Panama is also be applied by Yahoo! to sell search terms based on their popularity to display the ads on search results pages to advertisers by auction. (Wikipedia, 2009) Based on the above, Yahoo! also considers advertising as a significant part of operation because it can produce great economic benefits.
Another search engine company I focus on is Lycos, a wholly-owned subsidiary of Daum Communications Corporation, which owns various search engines like Lycos Search and HotBot. Besides Lycos Search and HotBot, Lycos also provides other free products including Tripod, Angelfire, The Lycos 50™, Gamesville, WhoWhere, Lycos Mail, Lycos Cinema and Webon (Lycos, 2009). From the official website of Lycos, I can also find some services about advertising provided by Lycos such as Advertise on the Lycos Network, Content, Sponsorships, and Search Syndication and Pay Per Click Advertising (Lycos, 2009). So, Lycos also takes advantage of advertisement space to generate revenues.
It is obvious to find that there are some similarities among the three search engine companies. First of all, advertising plays an important role in operations of three companies all the time. I think vendible advertisement space may become a kind of new virtual products of search engine companies. Both advertisements and advertisement space are different from other actual products like clothes, food and so on, because customers can only see or hear them, but cannot touch and hold them. So, maybe advertising online or selling advertisement space is a symbol of the development of new media industry. Further more, new media industry including search engine industry may pay more attention to offering distinct kinds of products to different people. For example, the three search engine companies offer customers the ability to search the Internet (and a variety of other online services) for free with offering advertisers the attention (the eyeballs) of those consumers (Kramarsky & Siegel 2008, p16).
In conclusion, search engine industry sells advertisement space to generate revenues, so advertising is important to search engine industry. Besides, selling virtual products like vendible advertisement space and offering distinct kinds of products to different people can indicate the development of new media industry.
References:
Calishaim, T & Dornfest, R & Adams, D 2003, Google: Pocket Guide, O’Reilly & Associates, Sebastopol, p6.
Google 2009, accessed 12/09/2009, http://www.google.com.au/intl/en/options
Google 2009, What is Google AdWords?, accessed 12/09/2009, http://www.google.com.au/intl/en/adwords/faq/what_is_adwords.html
Jeanneney, J 2007, Google and the Myth of Universal Knowledge: a view from Europe, London: University of Chicago Press, Chicago, p30.
Kramarsky, S & Siegel, K 2008, ‘Examining online advertising: search engine keywords and “trademark use” ’, Journal of Internet Law, vol.12, no.4, pp15-25, accessed 11/09/2009, (Business Source Premier).
Lee, J 2009, ‘Google monster, Sydney Morning Herald’, August 15, accessed September 12, 2009, http://www.proquest.com.ezproxy.uow.edu.au/
Lycos 2009, Contact Us / Media Relations, accessed 12/09/2009, http://info.lycos.com/contact.php#bizdev
Lycos 2009, Lycos Products, accessed 12/09/2009, http://info.lycos.com/products.php
Wikipedia 2009, Google, accessed 12/09/2009, http://en.wikipedia.org/wiki/Google#Advertising
Wikipedia 2009, Yahoo!, accessed 12/09/2009, http://en.wikipedia.org/wiki/Yahoo!#Advertising
Yahoo! 2009, accessed 12/09/2009, http://au.search.yahoo.com/info/servicesandtools
