Google Inc

Google’s business model is mostly based on monetizing advertisements by capitalizing its powerful search engine. Overture originally developed a system to monetize advertisement called the cost-per-click system. Google entered the paid listings arena by further improving Overture’s system by taking into calculation the ratio of the actual click-through-rate to the expected click-through-rate, predicted by Google’s calculations, and weighing the cost-per-click bids. In this system, Google was able to maximize its revenue by filtering advertisers with low click-through-rate but high cost-per-click bids.

Google further capitalized in its specialty by focusing on its advanced web search engine. In 2003 Google launched AdSense, effectively introducing ‘contextual’ paid listing: a system in which editorial contents, such as news or blog postings, were listed instead of the actual advertiser’s webpages. Google also created Froogle and Google Maps, allowing local advertisers and small businesses to effectively market their products, and in process increase Google’s revenue. In 2004, Google launched Personalized Search, which analyzed a user’s history of clicks and searches to accurately match advertisements that can potentially lead to sales. Google empowered advertisers by offering Google Analytics: a program that enabled advertisers to track which key words were more effective in garnering sales.

While Google certainly was more than innovative in improving its advertisement capabilities, the underlying reason for Google’s success in the paid listings arena is mainly due to its powerful search engine that gathered unequaled amount of search traffic. In that sense, Google creates business value by capitalizing its technological and innovative prowess in the search engine, which is a realization of their core philosophy: Don’t be evil, technology matters, and we make our own rules.

Google’s philosophy can further be examined in its business model. Google does not...