Google eyed

Generating revenue

Show me the money!

Google earns revenue from online and mobile advertising related to its internet search, web-based e-mail, online mapping, office productivity, social networking, and video sharing as well as selling advertising-free versions of the same technologies. However, advertisers don't pay the company simply to display ads - money only changes hands if the user clicks on the ad.

"I only make money if the advertisement is as useful to you as a search result would have been," explains Google CIO Douglas Merrill.

"I only win if the local economy expands - and so a lot of our advertisers don't actually identify Google [in terms] of their [overall] advertising spend. With most advertising budgets it's something you spend, but you have no idea what happens, as you're ‘building a brand'.

"When you advertise with Google, you know what happens and you know what returns [were generated], so actually they're counting it as a cost-of-sales.

It is for this reason that Merrill believes Google will not cannibalise the existing advertising market in emerging regions. As the total advertising spend increases in a region, there will still be room for traditional offline advertising - as well as high-Returns-On-Investment online advertising.

Emerging markets

Targeting the Middle East

While Google's short- to medium-term commercial strategy remains rooted in established markets in Europe, the US and Asia, the company is adopting a long-term approach to the emerging markets of the Middle East.

With internet penetration struggling to crack double-digit percentiles in countries across the region and online advertising spend estimated at just US$20 million per annum, this approach comes as little surprise.

However, the company has clearly stated its intentions in recent months, launching an Arabic-language version of its popular blogging platform in beta form and new improved versions of its Arabic-language translation tools.

Still, the most challenging aspect of gaining a commercial foothold in the Middle East is not the poor rates of advertising spend but the lack of available Arabic-language content, says Google MENA marketing manager Yasmina Brihi.

"There is very little Arabic content on the web today," she says. "When you compare it to other languages it's dismally low. Internet and PC penetration is also very low across the region.

Brihi says that as an emerging market, the Middle East has huge potential commercially and cites recent research which suggests that annual online ad spend could grow by up to 600 percent pa to 2011 or 2012.

"We are developing tools that will encourage the development of Arabic-language content," Brihi says. "Once we address these issues, then we can look at ways of generating additional revenue. We have been investing in this market for some time, both in terms of our workforce and products."

google apps

Head in the clouds?

As part of its strategy to tap new revenue streams, Google is positioning itself at the forefront of the long-mooted online data storage and networking revolution, via its Google Apps software suite.

Commonly referred to as ‘cloud computing', the proposed model involves a massive array of ‘cloud servers' hosted by third-parties providing users with potentially limitless networked data storage.

"The traditional notion of computing is based on users saving files to their hard drive," says Google Middle East and North Africa marketing manager Yasmina Brihi.

We believe there's a paradigm shift occurring whereby users will store their content online and access it via centralised servers. We really see Google as one of the pioneers in that arena. Each of these applications are being built on the internet and are being accessed by users independently of their hard drives.

"Google Apps is really the centrepiece of our Cloud Computing ambitions. The software suite allows users to create and store files online or edit them while collaborating with them with your colleagues over the internet."

To the layman, Google Apps looks suspiciously similar to a virtual Office software suite. Is Google shaping for a full-frontal assault on arch-rival Microsoft's turf?

"We don't see Google Apps as a replacement for Microsoft software," says Brihi, playing down the issue. "Microsoft makes great desktop applications. We see no conflict there. As a corporation we still use Word and Excel for instance.

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