1. MD253/MK252 Electronic Commerce April 3, 2006 Search & Advertising: Google, Yahoo, Microsoft

2. Topics Covered Online Advertising Spending/Growth Google –Firm background –Revenue streams –Weaknesses/challenges w/model –Areas for development Competitors –Yahoo, Microosft, & others –Exploitable resources

4. Ad Spending: Comparisons & Growth

5. The U.S. Ad Market

6. Experiments with Offline Ads

7. Google Growth $440M $1,466M $3,189M $6,139M $0.45 $0.41 $1.46 $5.02 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 2002200320042005 $0 $1 $2 $3 $4 $5 $6 Revenue EPS (diluted) Revenue ($ Millions) EPS (diluted)

8. Google Revenue Streams AdWords AdSense Google Enterprise Products Licensing

10. AdSense Coverage for advertisers beyond search targeting –AdSense network covers nearly every topic imaginable –Matches highly targeted advertising with niche content Broad reach for branding advertisers –Site Targeting allows advertisers to reach their target audience –Aggregates the long tail The Power of the “Tail” 3.9 Million Daily Page Views on Hip Hop Related Sites

11. Top 10 Highest Paying Keywords $54.33 mesothelioma lawyers $47.79 what is mesothelioma $47.72 peritoneal mesothelioma $47.25 consolidate loans $47.16 refinancing mortgage $45.55 tax attorney $41.22 mesothelioma $38.86 car accident lawyer $38.68 ameriquest mortgage $38.03 mortgage refinance Source: San Jose Mercury News, March 2006

14. Despite Click Fraud, Advertisers are Spending More Source: TNS-MI; 2005 and 2003 US online display advertising, excludes companies with online spend less than $400K in 2003

15. AdWords Editor for Sophisticated Advertisers

16. Options for SMBs Intuitive Targeting Straightforward Reporting Simple Bidding

18. Ads In Local Search 18 Targeted Advertising

19. Ads In Google Earth Targeted Advertising

22. 70-20-10 Product Framework 10% 20% Core 70% Search Ads Google Video Google Talk Gmail Local Search Desktop Search AdSense Book Search Enterprise Mobile Search Google Earth AdSense Offline Google Movies Google Code Google Reader Google Suggest Google Pack OrkutWiFi

25. Google - A Global Product = Engineering and PM offices Mountain View, CA Kirkland, WA Phoenix, AZ Pittsburgh, PA New York, NY Santa Monica, CA Bangalore, India Beijing, China Belo Horizonte, Brazil Hyderabad, India London, U.K. Munich, Germany Tokyo, Japan Trondheim, Norway Waterloo, Canada Zurich, Switzerland

27. Cost/performance evolution is not just in chips…

30. Cookies stored in a text file on your hard drive usage –track users (unique ID) –save passwords / prefs. –temporary storage (shopping basket) each cookie can only be accessed by the domain that placed it (ads have own domain) may be disabled (prefs) a cookie  single user

33. Targeting Targeting Options site categorization visitor frequency geography domain name service provider SIC codes company size (emp, $) browser type operating system click stream