Like Yahoo! and eBay before it, Google came on the scene with good technology and then needed to work out a way to make money. Fortunately, that’s where you come in. To put it simply, Google makes money when you do. That’s the ideal, anyway. Google’s revenue model is based largely on increasing the visibility and traffic of its thousands of small-business partners, streamlining their marketing costs, qualifying their leads, and helping track returns on investment. There’s genius in Google’s method and fortunate timing.

The typical revenue path of online media companies is lined on one side with advertising and on the other side with special services. Consider Yahoo!. While gaining a huge “eyeball share” with its Web directory and building its empire on free services to its users, Yahoo! began serving up advertisements. Although this was an old-media approach, it occurred when demand for Yahoo’s ad space exceeded supply. So the company could easily charge premium prices for the privilege of placing an ad on its pages. This happy advertising era reached its height, unsurprisingly, during the greatest inflation of the Internet bubble.

When the bubble was pricked, and the demand for banner ads cooled, Yahoo! started enhancing its free services (for example, Yahoo! Mail) and charging for them. This method of supplementing revenue has worked. Yahoo! is a robust media company which, by the way, owns serious search assets that might yet constitute a challenge to Google’s dominance. (See the next section.)

Google’s business isn’t just advertising

In the beginning of this article, I emphasize advertising as the revenue model that drives Google’s growth as a business-services company. My accent on advertising is not meant to diminish Google’s great success in licensing its basic search technology to Yahoo!, AOL, Netscape, and many other high-profile Internet portals. This licensing activity has generated strong revenue flows for Google, matured the company’s business standing, and extended its brand to near-ubiquity. But most readers of this article are interested less in licensing Google’s search engine than in using AdWords and AdSense as business tools. It’s difficult to predict how far AdWords and AdSense will take Google, and what their effect on Internet culture will be. It’s not a stretch to imagine that search advertising, using the cost-per-click model that Google popularized, could alter the Web landscape by reducing advertisers’ reliance on flashing banners and those heinous pop-ups.

Certainly, the business side of Google is revolutionizing online marketing, changing it from an art to a science, from guesswork to measurement, from blind spending to targeted cost-perlead. Now consider Google’s contrasting situation and how it navigated its own infancy as a media company. Yahoo! surrounded its core directory with information pages, but Google concentrated all its resources in the search engine.

Google paired exceptional keyword matching with cost-per-click advertising to build an advertising business that paired advertisers with customers through matched keywords. Google and Its Competition Google’s dominance of consumer searching is awesome. There has been no such near-monopoly since Yahoo! was the only important search-and-find Web destination in 1994. The numbers have become a familiar mantra: more than 200 million searches a day, constituting about 50 percent of global search queries. Alongside those numbers looms Google’s activity as a business partner to businesses of all sizes. In that arena, Google also dominates, though its clout varies depending on the service. But our focus is on business services whose influence and effectiveness are tied to Google’s preeminence as a consumer search engine. Google’s command of the majority of eyeballs in the Internet population makes it the one site in which online businesses must be visible, either in the search result listings or through advertising on search results pages.

Will this situation persist? Is marketing in Google a long-term strategy? The answer to both questions is yes, but Google might not retain its consumer dominance forever. Google stunned the Internet’s foundation companies (Yahoo!, Microsoft, and AOL) by reviving search as a viable industry. Google didn’t just improve searching; it brought it back from the dead, after Microsoft, for one, had mostly written it off. Competition always pursues pioneers, and now that Google has shone new light on the search industry, its would-be vanquishers loom. Yahoo! acquired important search assets Inktomi (an engine technology company of long standing) and Overture (a pioneer of placing advertisement on search pages). Now Yahoo!, which once powered its search results and ads with Google’s engines, has launched its own consumer engine and pay-per-click advertising program.

This development is the start of a rearrangement of the competitive landscape, and Google’s vaunted 80-percent share dropped when it no longer provided search results for Yahoo! searches. Yahoo!’s separation doesn’t affect Google’s licensing provision with Netscape and AOL, two other major partners. Both receive search results from Google when their members enter keyword queries. But future changes in that quarter would likewise reduce Google’s supremacy in processing consumer searches. Microsoft is famous for coming late to the party and then drinking everyone’s punch. Microsoft’s Web portal, MSN.com, powers its search results with the Inktomi engine (owned by Yahoo!) and receives its advertising from Overture (likewise owned by Yahoo!).

Microsoft is actively working on proprietary alternatives to these licensing deals while publicly and explicitly targeting Google’s standing in the field. All eyes are on this imminent battle of search and related advertising technologies. There seems little doubt that Google’s consumer dominance will be cut down. But the ongoing story rests in the hands of consumers. New search engines might not satisfy users who have grown accustomed to Google’s ranking style and speed. Those users might migrate from the interfaces that once hosted Google results to Google itself.

Furthermore, Google isn’t exactly spending its days at the beach it’s a restless company staffed by high-octane brainpower. Google owns a stunning array of popular search services (fully described in Google For Dummies) that buffers it against lost market share in the flagship search engine. It is continually innovating and improving its revenue programs. And its extended advertising network (AdSense and premium-level AdSense partners such as USAToday.com and Discovery.com) creates an important platform for advertisers that will last a long time. In the next two years, online businesses might want to diversify their marketing efforts, reaching for recognition on other platforms besides Google’s advertising network. But even if Google doesn’t remain the only essential staging area for Internet marketing, it will remain a crucial one.

Two Sides of the Google Coin Google is really two companies: Google the search engine and Google the business-services company. Together, the two sides form Google the media company. Along the same lines, Google is employed by two breeds of user: consumers who are searching and business partners of all sizes who seek online visibility. Google’s two sides can’t be separated like an Oreo cookie; they’re stuck together by keywords. Keywords typed into the search engine are used also to determine the ads placed next to the user’s search results, because advertisers bid for the right to launch ads on those keywords. Those same ads are launched to thousands of partner sites in Google’s expanded advertising network.

Even sites that don’t advertise but appear prominently on the search results page probably built their content and HTML coding around the very same keywords. As you can see, the consumer experience (finding destinations) and the business experience (finding customers) are inextricably linked by shared keywords. But make no mistake: We business users do not enjoy the same weight in the Google equation as consumer users. (Of course, most of us use Google’s front end as consumers, too.) Google’s first concern is the search experience, and the primary relationship is between Google and the consumer.