Googlemission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”
Google‘smission is to “organize the world’s information and make it universally accessible and useful.”
Let’s break down this statement to capture the Googlebusiness model essence. At this stage, it is important to highlight that Google today is Alphabet Inc. and it isn’t anymore just a search engine but a company that diversified in several areas. However, the search engine is still Alphabet Inc.’s cash cow.
Google generated over $116 billion from advertising revenues in 2018, which represented 85% of its total revenues. Of those revenues, over 70% came from traffic via Google’s main properties (Google search engine, YouTube, Gmail, and others). Google’s main properties are monetized primarily via a cost-per-click mechanism. Network members’ sites are primarily monetized on a cost-per-impression basis. Google also spent over $26 billion in 2018 to sustain its traffic on both its properties and as a revenue-share mechanism with its network members (AdSense and AdMob).
Having clarified that we can look at the core of the Googlebusiness model. Google highlights four key concepts of its mission:
Organize.
Information.
Universally accessible.
Useful.
Google “organizes” the “information.” Google doesn’t create content. Indeed, Google assembles billion web pages and returns an accurate result in a matter of milliseconds. That information is “universally accessible” as Google is free and available to billion of users each day.
When the information served is useful (relevant) that’s when that information becomes knowledge. If you didn’t get it yet, Google has been so far a media company, and its corporate structure reflects that. Indeed, it has a dual-class stock structure which reflects the structure of other media companies like The New York Times.
It is a free tool for users, but a paid tool for businesses. It is an amplification and distribution channel for publishers (Google organic traffic is as of 2019 the channel that still brings the most traffic to websites all over the world).
Source: Jumpshot – SparkToro
And a free tool for publishers and content producers. Indeed, tools like Google Analytics, Google Search Console, and Google Trends help publishers analyze the content that is more searched by users, by limiting their risk of producing content that isn’t relevant.
Example of data from Google Trends on most popular queries by country
Google is changing at a fast pace and as AI grows and the search engine can put together content on its own (by scraping content from websites to offer direct answers or by feeding it to its AI algorithms) publishers are becoming less relevant.
Therefore from the three key players:
Users.
Publishers.
Marketers/Businesses.
There is one player that wins over the others: users. In short, Google knows that as soon as its search engine is extremely valuable to its users, then it will be so also for publishers and advertisers.
That doesn’t mean Google always defends users’ interests. Indeed, one of the recurring polemic around Google practices in collecting massive users’ data even though it might not use it “yet.”
To understand why users always come first for Google, we need to look at Google‘s vision!
Google’s Founders in the IPO letter of 2004, started with:
Google is not a conventional company. We do not intend to become one. Throughout Google’s evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world.
That is also the reason Google has picked dual-class stocks corporate structure, where Bring and Page maintained control over the company while instituting several boards of directors to make other important decisions.
As highlighted in the Alphabet annual report for 2018:
Many companies get comfortable doing what they have always done, making only incremental changes. This incrementalism leads to irrelevance over time, especially in technology, where change tends to be revolutionary, not evolutionary. People thought we were crazy when we acquiredYouTubeand Android and when we launched Chrome, but those efforts have matured into major platforms for digital video and mobile devices and a safer, popular browser. We continue to look toward the future and continue to invest for the long-term. As we said in the original founders’ letter, we will not shy away from high-risk, high-reward projects that we believe in because they are the key to our long-term success.
This point is critical as Google is a company that doesn’t think incrementally. Indeed, the 10X better has been its paradigm since the start, and that is also why Google has been using Moonshot Thinking also to bet in other areas, that have nothing to do with the search:
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).
In the 2004 Founders’ letter, Page also highlighted:
Sergey and I founded Google because we believed we could provide an important service to the world-instantly delivering relevant information on virtually any topic. Serving our end users is at the heart of what we do and remains our number one priority.
To notice that Page specified “serving our end users is at the heart of what we do and remains our number one priority.”
If you do understand that, then you can grasp why Google (the search engine) “behaves” the way it does!
Google wants to provide users with what it thinks is “quality and relevant content.”
Low quality pages may have been intended to serve a beneficial purpose. However, Low quality pages do not achieve their purpose well because they are lacking in an important dimension, such as having an unsatisfying amount of MC, or because the creator of the MC lacks expertise for the purpose of the page.
This comprises things like:
An inadequate level of Expertise, Authoritativeness, and Trustworthiness (E-A-T).
The quality of the MC is low.
There is an unsatisfying amount of MC for the page.
MC stands for the main content, “which is determined by how much time, effort, expertise and talent/skill have gone into the creation of the page and also informs the E-A-T of the page.”
Give visitors the information they’re looking for.
Make sure that other sites link to yours.
Make your site easily accessible.
Don’t fill your page with lists of keywords, attempt to “cloak” pages, or put up “crawler only” pages. If your site contains pages, links, or text that you don’t intend visitors to see, Google considers those links and pages deceptive and may ignore your site.
Today hundreds of millions of websites are adapting their content guidelines to Google’s definition of quality content to be up to date with Google’s changes! That is what happens when a company scales up to the point of influencing billions of stakeholders worldwide!
Thus, when we think of Google (the search engine) moving in a particular direction, we have to ask, “will this benefit users?”
For instance, in the publishing world, or in other industries where Google might have a massive impact, the companies involved start to ask “whether this is good for them” and complain about Google taking over a specific industry. However, they are pondering the wrong question.
At the same time, those same publishers also raise significant concerns, as Google is massive and influential and it can crash overnight those same publishers.
At the annual conference Google holds each year, the Google I/O for 2019, its CEO, Sundar Pichai highlighted that Google’s mission stays the same, and now more than ever its mission is strong.
However, he highlighted how the way Google approaches its mission has changed. Indeed, Google is moving more and more from “access to information and knowledge” to allowing you “to get things done!”
The switch and change in its approach are critical to understanding as Google will be developing tools that control a larger part of the users’ experience. This becomes clear with tools like Google Duplex and AI applied to search and voice.
Understanding Google’s incentives
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.
To understand Google’s underlying incentives, it’s critical to emphasize the fact, that the company remains an attention merchant.
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 revenue. 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.
This means that Google needs to be able to monetize its traffic many times over.
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.
Something, that the company has become very good at in the last decades, as it built its vertically integrated business machine:
In business, vertical integration means a whole supply chain of the company is controlled and owned by the organization. Thus, making it possible to control each step through customers. in the digital world, vertical integration happens when a company can control the primary access points to acquire data from consumers.
Today, Google is able to monetize its traffic many times over.
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.
And part of the revenue and resources generated by the Google advertising platform, is invested back into it, go continuously maintain and grow it.
And the digital advertising landscape is getting way more competitive, with players like Amazon and Apple ramping up their advertising operations.
And players like TikTok growing at an exponential rate. This makes the whole advertising landscape potentially more fragmented, thus, making it difficult for Google to maintain its dominant position in the long term.
The digital advertising industry has become a multi-billion industry dominated by a few key tech players. The industry’s advertising dollars are also fragmented across several small players and publishers across the web. Most of it is consolidated within brands like Google, YouTube, Facebook, Instagram, Amazon, Bing, Twitter, TikTok, which is growing very quickly, and Pinterest.
While, on the other hand, Google also places bets elsewhere.
Adidas’ mission is “To be the best sports brand in the world.” Adidas AG is a German multinational initially founded in 1924 by Adolf Dassler who developed spiked running shoes out of his mother’s house. Today, the company is the largest sportswear producer in Europe and the second largest globally behind rival Nike.
Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla used a transitional business model as its ecosystem grows.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
Nike vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”
Google mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”
Google’s mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”
A mission statement helps an organization to define its purpose in the now and communicate it to its stakeholders. That is why a good mission statement has to be concise, clear, and able to articulate what’s unique about an organization.
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Apple’s Mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2009 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
Nike’s vision is “To bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities where we live and work.”
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
