In “Google vs. Yahoo: Google doesn’t support ad industry, Yahoo does” I note a Google world-class irony:99% of the revenues of $122 billion market cap Google are derived from its advertising sales business model, while at the same time the company is proud that it doesn’t buy advertising itself.
99% of the revenues of $122 billion market cap Google are derived from its advertising sales business model, while at the same time the company is proud that it doesn’t buy advertising itself.
If the Google CEO embraces advertising and the Google business model is wholly dependent on selling advertising, why then is Google so averse to spending money on advertising itself?
Google’s latest earnings report confirms Google’s aversion to spending its hard earned billions on advertising, while it aims to obtain the advertising spend of everyone else in the world!
Google advertising frugalness in Q3:
Revenues: $2.7 billion
Advertising and promotional expenses: $36 million George Reyes, CFO, Q3 conference call
Google relinquished only 1.4% of its $2.7 billion in revenues to advertise and promote its multi-billion dollar advertising business.
Microsoft’s multi-billion dollar business, on the other hand, is dependent upon large scale investment in advertising and promotion.
Colleen Healy, Microsoft GM, Investor Relations F1Q07 conference:
we continue to invest aggressively in both R&D and sales and marketing to drive future growth
In “Microsoft readying Vista marketing blitz,” CNET’s Ina Fried reported earlier in the year:
Aiming to re-create the excitement that accompanied the launch of Windows 95, Microsoft is gearing up for a massive campaign to launch Windows Vista. Chairman Bill Gates has tasked the Windows marketing team with repeating its achievements with the decade-ago launch, such as convincing scores of people to line up at retail stores to purchase the operating system.
Google famously touts a “do no advertising ourselves” philosophy, however, when putting forth its “mission”:
Google's utility and ease of use have made it one of the world's best known brands almost entirely through word of mouth from satisfied users.
Google enjoys an unprecedented public good will and it manages that valuable asset keenly. Google is highly secretive and does not provide meaningful responses to press inquiries. Nevertheless, Google’s infrequent, but targeted, announcements routinely receive massive, and generally overwhelmingly positive, cost-free press coverage worldwide.
Google leverages its influence on the media to save hundreds of millions of dollars in product launch marketing expenses and to gain the interest of the world’s biggest free focus group, Google users.
Google scored well placed free PR today in The Washington Post’s “A New Advertising Engine, Google Expands Its Web Reach to Madison Avenue.” The piece aims to portray Google’s efforts to “woo” Madison Avenue (see Google to Madison Ave: Buy from us, too).
It begins noting a “top U.S. advertising manager” who “has just flown in from California” to “look” to Google for advice is “high-fiving” Google execs.
The story often reads like a combo official press release-corporate case study-white paper:
There's probably a false assumption in the marketplace that Google is a bunch of machines in Mountain View [Calif.] and we don't have relationships like you might see at Conde Nast up the street or at ABC television," said Patrick Keane, Google's director of product marketing.
Google's strategy is to bring the math and science that fueled its search-engine ad success to other forms of marketing. The company's existing text-ad system allows advertisers to see how many people click on each ad and pay only when someone clicks, helping advertisers calculate the return on their marketing dollars. Eventually Google hopes to offer similar metrics for online video ads and off-line campaigns…
Anna Papadopoulos, interactive media director of Volvo's campaign with ad agency Euro RSCG 4D, said Google's data provided Volvo with confidence and made clear that Google wanted to be accountable for the results….
Papadopoulos likes Google's hands-on customer service. She said she also was impressed with how Google matched the demographics of likely Volvo buyers with visitor demographics at dozens of small sites.
There is no story in The Washington Post today cheerfully recounting prospective clients visiting and high-fiving Microsoft execs.