Using its dominant role in the industry to fuel expansion, Google has diversified into a number of new sectors, from mapping software to word processing programs, email clients and media sites such as YouTube. The days of Google as the quick and nimble innovator are far in the past. With a commanding stake in the market, the company must now defend its position while still adapting to the rapidly changing technology landscape.
While Google is best known to consumers for the free services it provides, such as its search engine, email accounts, map application, Web browser and new social media programs, the company's profitability is based on Web marketing revenues. Those small ads you see along the side of your search results or Gmail account are part of a profitable marketing business aimed at the millions of users of Google products. The company also has agreements with content creators such as newspapers and bloggers to display Google-generated advertising on third-party sites, with Google receiving a percentage of the revenue.
As Internet usage increases throughout the world, the Internet marketing space grows with it, with an increasing number of companies wanting to reach the exploding number of Internet users. Google's dominant position in the market presents the company with an advantage. According to comScore, a digital marketing intelligence analyst, Google's market share in the United States among search engine providers grew in 2011 to more than 65 percent. Similarly, use of other programs like the Google Chrome Web browser and Gmail has expanded since the introduction of the services, becoming important players in their respective fields. Google's advertising revenues depend on this large and expanding user base.
Acquisitions and Diversification
From its namesake search engine, Google, Inc., has expanded to include a number of Internet properties. Part of this expansion has been driven by Google's own developers, who rolled out applications such as SketchUp and Google+. Yet the company has also been aggressive in acquiring competitors in media and advertising fields, such as YouTube and the advertising firm DoubleClick. These new applications have strengthened Google's position as a major provider of Internet content, expanding Google's free service offerings to an ever-increasing base of users and advertising consumers.
As a major multinational corporation, a good deal of Google's expansion has occurred outside the United States, where it has often started at a disadvantage. As of 2009, Google makes more than 50 percent of its profits from markets outside the United States, with offices in Europe, Asia and Latin America. Google has struggled to replace local competition in critical markets like China. The company's position may also be threatened by growing boutique and niche search engine options, targeting specific user groups and often providing more focused services than Google's giant and more general operation. The overall strength of the company's global position gives it an advantage, but as the rise of Google over earlier players like AOL demonstrates, small, nimble companies are often able to outrun older and larger competitors.
- Google Investor Relations: 2011 Financial Tables
- BBC: Google Buys YouTube for $1.65 bn
- BBC: Google's BigQuerry Service Challenges Analytics Industry
- Bloomberg: Google's US Search Share Rises to 65.3%
- Campaign Monitor: Email Client Popularity
- GetClicky: Web Browsers (Global Market Share)
- InfoWorld: The Demise of Google