Internet Marketing: Google Adsense generated US$1.68 Billion Revenue in 2008

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Saturday, July 18, 2009

Google Adsense generated US$1.68 Billion Revenue in 2008

Google recorded revenues of $5.52 billion (£3.38 billion) during the second quarter of 2009, a three per cent rise on its earnings for the corresponding period of last year.

The search engine said net income for the three months to the end of June was $1.48 billion, up from $1.25 billion in Q2 2008.

Revenue from Google-owned sites also rose by three per cent year-on-year to $3.65 billion, or 66 per cent of the total.

Meanwhile, partner sites generated revenues of $1.68 billion through the site's internet marketing service AdSense.

Google saw an increase in the amount of revenue generated from outside the US during the second quarter. The figure climbed to $2.91 billion, representing 53 per cent of total earnings. This is up from 52 per cent of revenues in both the first quarter of 2009 and the second quarter of 2008.

"These results highlight the enduring strength of our business model and our responsible efforts to manage expenses in a way that puts us in a good position for the economic upturn, when it occurs," said Google chief executive Eric Schmidt.

Recent figures from comScore show Google accounted for 65 per cent of the US search market in June.

News brought to you by ClickThrough - specialists in Search Engine Optimisation and Internet Marketing.

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Definition of Internet Marketing

Internet marketing, also referred to as i-marketing, web marketing, online marketing, or eMarketing, is the marketing of products or services over the Internet.

The Internet has brought many unique benefits to marketing, one of which being lower costs and greater capabilities for the distribution of information and media to a global audience. The interactive nature of Internet marketing, both in terms of providing instant response and eliciting responses, is a unique quality of the medium. Internet marketing is sometimes considered to have a broader scope because it not only refers to digital media such as the Internet, e-mail, and wireless media; however, Internet marketing also includes management of digital customer data and electronic customer relationship management (ECRM) systems.

Internet marketing ties together creative and technical aspects of the Internet, including design, development, advertising, and sale.

Internet marketing also refers to the placement of media along different stages of the customer engangement cycle through search engine marketing (SEM), search engine optimization (SEO), banner ads on specific websites, email marketing, and Web 2.0 strategies. In 2008 The New York Times working with comScore published an initial estimate to quantify the user data collected by large Internet-based companies. Counting four types of interactions with company websites in addition to the hits from advertisements served from advertising networks, the authors found the potential for collecting data upward of 2,500 times on average per user per month.

Aplications of Internet Marketing

Business models

Internet marketing is associated with several business models:

ecommerce— goods are sold directly to consumers (B2C) or businesses (B2B),
publishing — the sale of advertising,
lead-based websites — an organization generates value by acquiring sales leads from its website, and
affiliate marketing — A process in which a product or service developed by one person is sold by other active seller for a share of profits. The owner of the product normally provide some marketing material ( sales letter, affiliate link, tracking facility).

There are many other business models based on the specific needs of each person or business that launches an Internet marketing campaign.

One-to-one approach

The targeted user is typically browsing the Internet alone, so the marketing messages can reach them personally. This approach is used in search marketing, where the advertisements are based on search engine keyword entered by the user.

And now with the advent of Web 2.0 tools, many users can interconnect as “peers.”

Appeal to specific interests

Internet marketing and geo marketing places an emphasis on marketing that appeals to a specific behaviour or interest, rather than reaching out to a broadly-defined demographic. “On- and Off-line” marketers typically segment their markets according to age group, gender, geography, and other general factors. Marketers have the luxury of targeting by activity and geolocation. For example, a kayak company can post advertisements on kayaking and canoing websites with the full knowledge that the audience has a related interest.

Internet marketing differs from magazine advertisements, where the goal is to appeal to the projected demographic of the periodical. Because the advertiser has knowledge of the target audience—people who engage in certain activities (e.g., uploading pictures, contributing to blog) — the company does not rely on the expectation that a certain group of people will be interested in its new product or service.

Geo targeting

Geo targeting (in internet marketing) and geo marketing are the methods of determining the geolocation (the physical location) of a website visitor with geolocation software, and delivering different content to that visitor based on his or her location, such as country, region/state, city, metro code/zip code organization, Internet Protocol (IP) address, ISP or other criteria.

Different content by choice

A typical example for different content by choice in geo targeting is the FedEx website at FedEx.com where users have the choice to select their country location first and are then presented with different site or article content depending on their selection.

Automated different content

With automated different content in internet marketing and geomarketing the delivery of different content based on the geographical geolocation and other personal information is automated.

Advantages

Internet marketing is relatively inexpensive when compared to the ratio of cost against the reach of the target audience. Companies can reach a wide audience for a small fraction of traditional advertising budgets. The nature of the medium allows consumers to research and purchase products and services at their own convenience. Therefore, businesses have the advantage of appealing to consumers in a medium that can bring results quickly. The strategy and overall effectiveness of marketing campaigns depend on business goals and cost-volume-profit (CVP).

Internet marketers also have the advantage of measuring statistics easily and inexpensively. Nearly all aspects of an Internet marketing campaign can be traced, measured, and tested. The advertisers can use a variety of methods: pay per impression, pay per click, pay per play, or pay per action. Therefore, marketers can determine which messages or offerings are more appealing to the audience. The results of campaigns can be measured and tracked immediately because online marketing initiatives usually require users to click on an advertisement, visit a website, and perform a targeted action. Such measurement cannot be achieved through billboard advertising, where an individual will at best be interested, then decide to obtain more information at a later time.

Internet marketing as of 2007 is growing faster than other types of media. Because exposure, response, and overall efficiency of Internet media are easier to track than traditional off-line media—through the use of web analytics for instance—Internet marketing can offer a greater sense of accountability for advertisers. Marketers and their clients are becoming aware of the need to measure the collaborative effects of marketing (i.e., how the Internet affects in-store sales) rather than siloing each advertising medium. The effects of multilevel marketing can be difficult to determine, but are an important part of ascertaining the value of media campaigns.

Limitations

Internet marketing requires customers to use newer technologies rather than traditional media. Low-speed Internet connections are another barrier: If companies build large or overly-complicated websites, individuals connected to the Internet via dial-up connections or mobile devices experience significant delays in content delivery.

From the buyer’s perspective, the inability of shoppers to touch, smell, taste or “try on” tangible goods before making an online purchase can be limiting. However, there is an industry standard for e-commerce vendors to reassure customers by having liberal return policies as well as providing in-store pick-up services.

A survey of 410 marketing executives listed the following barriers to entry for large companies looking to market online: insufficient ability to measure impact, lack of internal capability, and difficulty convincing senior management.

Security concerns

Information security is important both to companies and consumers that participate in online business. Many consumers are hesitant to purchase items over the Internet because they do not trust that their personal information will remain private. Encryption is the primary method for implementing privacy policies.

Recently some companies that do business online have been caught giving away or selling information about their customers. Several of these companies provide guarantees on their websites, claiming that customer information will remain private. Some companies that purchase customer information offer the option for individuals to have their information removed from the database, also known as opting out. However, many customers are unaware if and when their information is being shared, and are unable to stop the transfer of their information between companies if such activity occurs.

Another major security concern that consumers have with e-commerce merchants is whether or not they will receive exactly what they purchase. Online merchants have attempted to address this concern by investing in and building strong consumer brands (e.g.,Amazon.com, eBay.com, Overstock.com, and by leveraging merchant/feedback rating systems and e-commerce bonding solutions. All of these solutions attempt to assure consumers that their transactions will be free of problems because the merchants can be trusted to provide reliable products and services. Additionally, the major online payment mechanisms (credit cards, PayPal, Google Checkout, etc.) have also provided backend buyer protection systems to address problems if they actually do occur.

Broadband-induced trends

Online advertising techniques have been dramatically affected by technological advancements in the telecommunications industry. In fact, many firms are embracing a new paradigm that is shifting the focus of online advertising from simple text ads to rich multimedia experiences. As a result, advertisers can more effectively engage in and manage online branding campaigns, which seek to shape consumer attitudes and feelings towards specific products. And just what is the critical technological development that is fueling this paradigm shift? The answer: Broadband.

In March 2005, roughly half of all American homes were equipped with broadband technology. By May 2008, broadband technologies had spread to more than 90% of all residential Internet connections in the United States. When one considers a Nielsen’s study conducted in June 2008, which estimated the number of U.S. Internet users as 220,141,969, one can calculate that there are presently about 199 million people in the United States utilizing broadband technologies to surf the Web.

As a result, all 199 million members of this burgeoning market have the ability to view TV-like advertisements with the click of a mouse. And to be sure, online advertisers are working feverishly to design rich multimedia content that will engender a “warm-fuzzy” feeling when viewed by their target audience. As connection speeds continue to increase, so will the frequency of online branding campaigns.

Effects on industries

Internet marketing has had a large impact on several previously retail-oriented industries including music, film, pharmaceuticals, banking, flea markets, as well as the advertising industry itself. Internet marketing is now overtaking radio marketing in terms of market share.[3] In the music industry, many consumers have been purchasing and downloading music (e.g., MP3 files) over the Internet for several years in addition to purchasing compact discs. By 2008 Apple Inc.'s iTune Store has become the largest music vendor in the United States.

The number of banks offering the ability to perform banking tasks online has also increased. Online banking is believed to appeal to customers because it is more convenient than visiting bank branches. Currently over 150 million U.S. adults now bank online, with increasing Internet connection speed being the primary reason for fast growth in the online banking industry. Of those individuals who use the Internet, 44 percent now perform banking activities over the Internet.

Internet auctions have gained popularity. Unique items that could only previously be found at flea markets are being sold on eBay. Specialized e-stores sell items ranging from antiques to movie props. As the premier online reselling platform, eBay is often used as a price-basis for specialized items. Buyers and sellers often look at prices on the website before going to flea markets; the price shown on eBay often becomes the item’s selling price. It is increasingly common for flea market vendors to place a targeted advertisement on the Internet for each item they are selling online, all while running their business out of their homes.

The effect on the advertising industry itself has been profound. In just a few years, online advertising has grown to be worth tens of billions of dollars annually. Pricewaterhouse Cooper reported that US$16.9 billion was spent on Internet marketing in the U.S. in 2006.

Internet marketing has had a growing impact on the electoral process. In 2008 candidates for President heavily utilized Internet marketing strategies to reach constituents. During the 2007 primaries candidates added, on average, over 500 social network supporters per day to help spread their message. President Barack Obama raised over US$1 million in a single day during his extensive Democratic candidacy campaign, largely due to online donors.

References

^ Story, Louise and comScore (March 10, 2008). “They Know More Than You Think” (JPEG). http://www.nytimes.com/imagepages/2008/03/10/technology/20080310_PRIVACY_GRAPHIC.html. in Story, Louise (March 10, 2008). “To Aim Ads, Web Is Keeping Closer Eye on You“. The New York Times (The New York Times Company). http://www.nytimes.com/2008/03/10/technology/10privacy.html. Retrieved on 2008-03-09.
^ Mediapost (Blog) – Why Marketers are Not Investing Online (2/13/2008)
^ Businessweek - Advertising Goes Off the Radio (2006-12-07)
^ iTunes ‘biggest US music seller’ (2008-04-04)
^ Ian Mohr Daily Variety. Reed Business Information February 27, 2006 “Movie props on the block: Mouse to auction Miramax leftovers”
^ David James People Magazine Time, Inc. February 24, 2007 “Bid on Dreamgirls Costumes for Charity”
^ eMarketer – Online Ad Spending to Total $19.5 Billion in 2007 (2007-2-28)
^ The Register – Internet advertising shoots past estimates (2006-09-29)
^ Internet Advertising Bureau – Online Adspend (2007-06-18)
^ PricewaterhouseCoopers reported U.S. Internet marketing spend totaled $16.9 billion in 2006″ (Accessed 18-June-2007)
^ “Spartan Internet Consulting – Political Performance Index (SIPP)” (Accessed 28-June-2008)
^ “Center For Responsive Politives Fundraising Profile Barack Obama” (Accessed 28-June-2008)