Internet Advertising A Boon To Google Profits
Friday, October 12 2007 @ 03:40 PM MSD
Like a gourmet chef who rarely eats out, Google Inc. feeds advertising services to hordes of other businesses while skimping on its own marketing. The strategy has been extremely fruitful to Google. While the Internet search leader has sold more than $30 billion in advertising since 2001, it also has become a household name without buying expensive ad campaigns on television or radio or in print.
"It's almost as if they have this cultural allergy to advertising," notes Mark Hughes, author of "Buzzmarketing," a book about unconventional ways to build a brand. "It has been an advantage because it has helped keep them cool. They have zigged while everyone else has been zagging." This advertising aversion has freed up money for engineers, computing hardware and other resources that fuel Google's search engine while leaving plenty of profit to keep shareholders happy and lift stock ever higher.
Google co-founders Larry Page and Sergey Brin were among the first to break that free-spending mold, deciding that advertising didn't make a lot of sense for a company that started out 1998 with just $100,000 before raising $25 million in venture capital a year later. But they have remained marketing misers even as Google accumulated a cash hoard that now stands at $12.5 billion. The Mountain View-based tech firm believes its simple approach will become more common as major advertisers learn to deploy technology to target consumers.
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