Google is the alpha and omega of Internet search. In terms of market penetration, it is used more than any other product in the world. Not everyone drinks Coke, opens an account with Emirates NBD, or shops at Max or Splash; however, virtually everyone in the free world searches Google. How did the company become the world’s greatest functional monopoly in only 16 years? Read on to discover its journey to becoming a $400 billion company.
In 1996, a pair of brilliant college students named Larry Page and Sergey Brin collaborated on a program called BackRub. The oddly titled program they created dared to attempt the impossible; BackRub was designed to perform large-scale searches of the entire Internet, a still-nascent but already virtually infinite workspace. Their goal was to capitalize upon the growing need for information by collating millions of results then sorting them by quality of data.
Their research project soon grew out of control. To wit, it expanded so rapidly that the servers were using too much bandwidth at Stanford University. Forced to venture out on their own, Page and Brin chose the now-legendary Web address, and Google was incorporated in September of 1998.
Google’s founders tried to sell their idea to Yahoo for $1 million. After that company gravely miscalculated by passing on the offer, Google exploded in popularity. Within a month of its IPO in 2004, the company had a market cap of $35.5 billion. That’s $34.499 billion more than Page and Brin asked for their BackRub.
The growth of Google was predicated upon one subject, Internet search. In its early days, the entire company was so obsessed with search that the mere idea of adding a second hypertext link – such as images – caused thousands of work hours of research. Subtle factors could lead to profound repercussions if users no longer chose to use Google search.
In the era prior to broadband Internet, the addition of 20 milliseconds of extra download time could be enough to dissuade modem users from performing an Internet search. Also, it would place further demands on the 10,000 servers the company used by 2003. Google’s technicians discovered that when your brand is search, every millisecond counts.
The company’s growing dominance was met with skepticism on Wall Street due to the lack of revenue potential. The belief was that there was no way to monetize Web searches, which seems laughable in hindsight but at the time, it was a valid concern. Google’s total revenue in 1999 was $220,000.
Fortunately, in becoming the most powerful search engine in the world, Google invented a novel sales opportunity. It could build its own ad network to sell in tandem with the search results the network provided users.
When AdWords launched in 2000, the premise was simple: Google wanted to accentuate the strengths of the most powerful search engine in existence by monetizing it. AdWords expanded the nature of advertising by putting the power of marketing in the hands of anyone. A customer was empowered to purchase ads via a self-service system, paying for impressions rather than pay-per-click system later utilized.
By the time the company switched to auction-style advertising in 2002, their gross revenue had exploded to $400 million. In 2009, Microsoft CEO Steve Ballmer sneered that since 97 percent of Google’s revenue is attained by AdWords, the company essentially was a “one-trick pony”. That single trick yielded some pretty amazing results, though. Google recently became the second largest market cap company in America with a valuation of $400 billion. AdWords still comprises 85 percent of the search giant’s revenue with earnings in excess of $50 billion in 2013.
Despite its monetary triumphs, the perception of Google is still as a search engine. In order to maintain that level of credibility with consumers, the company has found the need to safeguard its crown jewel. Constant updates are required to prevent black hat – and grey hat – search engine optimizers from manipulating search results. Were this to be allowed, disreputable and/or undeserving websites could reach the top of Google’s ranking system. Being at the top of the listings remains most important, as almost 50 percent of search engine clicks are earned by the top two organic results.
In order to maintain the relevance of the rankings, Google provides frequent updates to its search algorithm. Since 2011, there have been 83 updates that qualify as significant alterations in addition to innumerable modest tweaks. The updates that matter the most receive harmless, yet somehow ominous nicknames such as Panda and Penguin. These changes can fundamentally reconfigure the nature of a site’s traffic.
Not every spam tactic can be prevented by an algorithm, though. Google protects its search functionality by trying to eliminate as much as possible through updates; however, the company also routinely performs manual reviews to ensure that irrelevant websites are not artificially achieving high rankings.
Google’s goal since its inception has been to prioritize fresh, quality content. The company’s mission statement is, “to organize the world’s information and make it universally accessible and useful”. Its approach to search is designed to provide an answer to a user via a single click. In the mobile era, that philosophy has been modified.
Smartphone users prefer instantaneous answers, not links. Due to the fundamental change in behavior, Google now provides a new service called Knowledge Graph. Its goal is to collate vast amounts of data about the most topical searches in order to provide immediate responses to queries. There are already “18 billion facts on around 570 million subjects,” and the combined information is growing at an exponential rate.
Not content with the current version, Google has already launched Knowledge Vault, the next-generation replacement that is intended to be the mother of all relational databases. Remarkably, this information is being gathered autonomously without any human editing performed. It already possesses 1.6 billion facts, 16 percent of which are considered “confident facts”. Ultimately, Google hopes to create a virtually omniscient search database.
The rise of Google is historically unprecedented. The company went from a garage company with an annual revenue of $220,000 to the second largest business in the United States. Brin and Page managed this in only 16 years. As technology continues to evolve, the company maintains its position as the unquestioned king of search and knowledge in a world that thirsts for information like never before in the history of mankind. And Google is perfectly positioned to maintain and even expand on that competitive advantage in the years to come.
Searchfuse Marketing Management is a digital marketing agency with offices in London, Manila and Dubai. Its services include social media management, SEO management, PPC management, digital creatives, web development and web design.