google-swot-analysis

Google SWOT Analysis In A Nutshell

Google’s strength is its strong consumer brand. The company is grabbing new opportunities by opening up industries like voice search and consolidating in industries like the cloud. As a weakness, its revenues primarily come from advertising. A primary threat is the quick change of search and potential intervention by regulators.

Read: Business Strategy: Examples, And Case Studies, And Tools

Strengths

google-vision-statement-mission-statement
Google’s mission statement is to “organize the world’s information and make it universally accessible and useful.” While its vision statement since the start was to “provide an important service to the world-instantly delivering relevant information on virtually any topic.”

Brand

Google enjoys a brand that is extremely strong. The company’s products are used each day by billions of people across the world, with incredible engagements rate.

Strong consumer products

Google’s core product, its search engine I a goldmine of search intent data which makes it possible for Google to still have a long-term advantage against competitors in the space.

Massive users’ adoptions

The company’s products are incredibly sticky for users, which are the key stakeholders for Google’s continuous growth and development as an organization.

Opportunities

google-bets
Under the hood of Google’s 161 billion in revenues (2019), it hides an accounting item called “other bets.” That accounting item might hide the next big thing in technology and business. Yet, as Alphabet shows its “other bets” on its financials, we can try to understand where Google’s hidden gem is and where the future of technology and business might be heading toward.

Google has substantial cash to invest back in R&D activities on its core products but also to invest to open up new market opportunities.

This makes Google a unique company.

While bets are companies that do not have a current impact on Google business (that is why we’ll see them also in the weakness section), other revenue sources, like cloud, and hardware are also a strong contributors to Google’s revenues.

Weaknesses

what-is-google-tac
The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years Google has been able to reduce its traffic acquisition costs and in any case, keep it stable. In 2021 Google spent 21.75% of its total advertising revenues (over $45.56 billion) to guarantee its traffic on several desktop and mobile devices across the web.

For a company like Google, sustained success means that the company will be able to keep its products sticky for billions of users across the globe.

googles-traffic-monetization-multiple
Companies like Google have to cut distribution deals and split revenues with content partners to bring traffic back to their main properties online. For instance, in 2021, Google spent over $45 billion in traffic acquisition costs, but it generated over $209 billion in advertising revenues. This means that Google could monetize its traffic 4.6 times its traffic acquisition costs. An increased monetization multiple over the years is a good sign. It means that Google was able to keep its advertising machine competitive. On the opposite side, a negative monetization multiple means the advertising machine is losing traction.

That is why the core focus is on users’ adoption of continuous growth. Indeed, the more users join the platform the more that becomes interesting for advertisers who contributed to 83% of Google’s revenues in 2019.

how-does-google-make-money
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, this comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).

So what are some of Google’s weaknesses?

  • A significant portion of Google revenues are generated from advertising, therefore a reduced spending by advertisers, a loss of partners, or new and existing technologies blocking ads could seriously harm the business.
  • While other bets are long-term strategic initiatives for Google, those bets are highly uncertain and the company will not be able to assess whether any of those will become successful, if not in hindsight.
  • As Google has become a global player primarily based on the digital advertising industry, as the industry matures and consolidates this also might mean stagnating revenues for Google and a strong reduction of its margins.
  • If the company fails to protect its intellectual property rights that might also result in a substantial risk for the business.
  • Brands are among the most important assets for organizations, but they are also expensive to maintain, thus, Google’s strength as a mass appealing consumer brand can also turn in weakness as the company has to keep pouring billions back to the business to maintain its assets in the short term.

Threats

fang-companies
FAANG is an acronym that comprises the hottest tech companies’ stocks in 2019. Those are Facebook, Amazon, Apple, Netflix and Alphabet’s Google. The term was coined by Jim Cramer, former hedge fund manager and host of CNBC’s Mad Money and founder of the publication TheStreet.

The current market propelled by technological companies has become highly fluid, as those companies all fight for the same pocket. This makes it harder to keep track of all the possible threats and which one might really harm the business. For the sake of this analysis some of the key threats for Google are:

  • Intense competition: innovation isn’t easy, neither inexpensive. If Google doesn’t successfully manage to keep its innovation pace it might eventually lose its dominating position, thus jeopardize the business.
  • As people access to the internet now happens through a variety of platforms, that increases substantially the pressure for companies like Google, which business model is based on the attention and interest of its users. That means the company has to be able to keep anticipating those trends.
  • Data privacy, security concerns, and regulations become a serious threat to Google’s future success.
  • Low-quality user-generated content, web spam, content farms, can seriously worsen the quality of the content provided on Google thus making suddenly less appealing to users.

Key takeaway

The SWOT analysis is an interesting exercise to get to know an organization more intimately. However, when it comes to the business landscape it’s extremely hard to predict where the next threat will come from, or whether the opportunity you’re pursuing will turn out to be successful. That is why it’s important to have a strong experimental framework.

Other case studies:

Related Case Studies

google-business-model
Google is a platform, and a tech media company running an attention-based business model. As of 2021, Alphabet’s Google generated over $257 billion in revenues. Over $209 billion (over 81% of the total revenues) came from Google Advertising products (Google Search, YouTube Ads, and Network Members sites). They were followed by over $28 billion in other revenues (comprising Google Play, Pixel phones, and YouTube Premium), and by Google Cloud, which generated over $19 billion in 2021.
what-is-google-tac
The traffic acquisition cost represents the expenses incurred by an internet company, like Google, to gain qualified traffic – on its pages – for monetization. Over the years Google has been able to reduce its traffic acquisition costs and in any case, keep it stable. In 2021 Google spent 21.75% of its total advertising revenues (over $45.56 billion) to guarantee its traffic on several desktop and mobile devices across the web.
how-does-google-make-money
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, this comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).
advertising-industry
The hidden revenue generation model is among the most profitable patterns for business models built on advertising. In fact, businesses like Google and Facebook have managed to gain more than $290 billion in 2021 from advertising on their platform, even though many users might not be aware of the mechanisms that drive those platforms.
advertising-business-model

Read Next: Organizational Structure, Google Business Model, Google Mission Statement, Google SWOT Analysis.

Other business resources:

SWOT Analysis Case Studies

McDonald’s SWOT Analysis

mcdonalds-swot-analysis

Nike SWOT Analysis

nike-swot-analysis

Samsung SWOT Analysis

microsoft-swot-analysis
Samsung was founded in South Korea in 1938 by Lee Byung-Chul. Originally a trading company, it took Samsung 22 years to become the fully-fledged electronics company that most people recognize today. Indeed, the company is a leader in technological innovation through telecommunications, electronics, and home appliances.

Costco SWOT Analysis

costco-swot-analysis
Costco is a large American multinational corporation with a focus on low-cost, membership-only retail warehouse clubs. Costco is the 4th largest retail operator in the world, operating 785 warehouses in 10 different countries. Indeed, it has enjoyed rapid success growing from zero to $3 billion in sales within six years.

Walmart SWOT Analysis

walmart-swot-analysis
From humble beginnings just over 50 years ago, Walmart has grown to become the world’s largest retail company. A single small discount store in Arkansas has now expanded to over 11,000 stores in 28 countries. Some reports suggest that the company now makes $1.8 million of profit every hour.

Uber SWOT Analysis

uber-swot-analysis
Headquartered in San Francisco, California, Uber started as a peer-to-peer ridesharing platform. In more recent times, the company has moved into food delivery, rental cars, and bike-sharing. In one form or another, Uber now has a presence in over 900 cities worldwide.

Disney SWOT Analysis

disney-swot-analysis
It would be hard to argue the case for a more recognizable entertainment brand than Disney. Disney is of course synonymous with Walt Disney, but it was Walt and his brother Roy who started the company in 1923 in Burbank, California. Disney content is now broadcast on over 100 channels in 34 different languages across the globe.

Coca-Cola SWOT Analysis

coca-cola-swot-analysis
Coca-Cola is the market leader of the soft drink industry. It is also the most widely recognized brand, with a Business Insider study revealing that a staggering 94% of the world population recognizes the red and white logo. However, Coca-Cola faces significant challenges with increasingly health-conscious consumers and less access to water resources.

Ford SWOT Analysis

ford-swot-analysis
Founded in 1903 by Henry Ford and is the fifth-largest family-owned company in the world. Ford is a globally recognized brand in the automotive industry for a couple of reasons. First, Henry Ford is well-known as the inventor of the production line and thus the modern automobile industry. Today, Ford has also maintained relevance as the seventh-largest car manufacturer worldwide, selling a range of passenger cars, trucks, and vans.

Tesco SWOT Analysis

tesco-swot-analysis
Tesco was founded in 1919 by Jack Cohen, as a small group of market stalls. After rapid expansion in the following years, the company became the largest retailer in the UK and is now the second-largest in the world. To put their dominance into perspective, consider that Tesco serves around 66 shoppers per second across 7000 retails stores, delivering approximately $180,000 worth of sales every minute.

Nestlé SWOT Analysis

nestle-swot-analysis
Nestlé is a large multinational food and beverage manufacturer with more than 2000 brands spread across 197 countries. Some of Nestlé’s well-known brands include Nescafe, Kit-Kat, Purina, Aero, Butterfinger, Maggi, and Haagen-Dazs. Originally a producer of infant food in 1867, it is now considered to be the world’s largest food manufacturer.

Amazon SWOT Analysis

amazon-swot-analysis
Amazon is among the most diversified business model in the tech industry. The company is well-positioned to dominate e-commerce further. And while its online stores have tight profit margins, Amazon still unlocks cash for growth, while consolidating its dominance in the cloud and grabbing new opportunities like voice.

Facebook SWOT Analysis

facebook-swot-analysis
Facebook, with its products, with its strong appeal, and consumer brand has a solid business model, threatened in the last years by privacy concerns, which open up the way to potential regulation to break up the company. If that will not happen, Facebook will have the chance to expand to define other markets like VR.

Starbucks SWOT Analysis

swot-analysis-of-starbucks
Starbucks is a global consumer brand with direct distribution, recognized brands, and products that make it a viable business. Its reliance on the Americas as a primary operating segment makes it a weakness. At the same time, Starbucks faces risks related to coffee beans price volatility. Yet the company still has global expansion opportunities.

Tesla SWOT Analysis

tesla-swot-analysis
Among the most recognized car manufacturers, Tesla is valued more than the combined market capitalization of GM and Ford. While the company’s direct distribution is a strength, its lack of financial viability is a weakness. Competition is a future threat. However, if Tesla defines a new market for car manufacturing its potential growth will be massive.

Netflix SWOT Analysis

netflix-swot-analysis
Netflix is among the most popular streaming platforms, with a subscription-based business model. The brand, platform, and content are strengths. The volatility of content licensing and production are weaknesses. The streaming market is a potential blue ocean. Inability to attract and retain premium members, and its fixed long-term costs are threats to its business model.

Apple SWOT Analysis

apple-swot-analysis
Apple can leverage a strong consumer brand and set of successful products as a strength. Yet the company is still too reliant on the iPhone as a primary revenue stream. Though Apple is working to open up new markets as an opportunity, it has to make sure to sustain its stores’ sales.

Google SWOT Analysis

google-swot-analysis
Google’s strength is its strong consumer brand. The company is grabbing new opportunities by opening up industries like voice search and consolidating in industries like the cloud. As a weakness, its revenues primarily come from advertising. A primary threat is the quick change of search and potential intervention by regulators.

Read Next: SWOT Analysis, Personal SWOT Analysis.

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