Sbe430 Essay

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DeVry University Online | SBE430 | Week 2 Case Study | | Submitted to Dr. Glenn Palmer January 20, 2013 Question 1: Explain how Google generates revenue and identify future levels of revenue given some of the risk factors are for future revenue generation. Prior to Google becoming such a success, Northern Light and Ask Jeeves were the default search engines of choice for many people. However, with advancement in search technology Google became the “number one in search engines. Its success in terms of revenue was not until it began auctioning ads that appear alongside the search results” (n.d). That is what separates Google from its competitors. “AdWords typically operates on a cost per click basis, meaning that an advertiser can place an ad with zero obligation. If no one clicks on the ad, the customer doesn't pay a dime. However, the moment a Google user accesses a page on which an ad appears, Google charges the company that placed the ad”. (n.d) Google generated approximately 99% of its revenues in 2007 from its advertisers with the remainder from its enterprise search products (Chaffey 116). Some of Google’s risk factors are as follows: 1. New technologies could block Google ads. – Although this is not widespread, there is the possibility that Ad-blocking technology could affect Google in the future. 2. Litigation and confidence loss through click fraud. – While on a small scale, click fraud can be a problem when competitors click on a link. The challenge for Google is structured click fraud whereby site owners on the Google content network seeks to make additional advertising feeds. 3. Index spammers could harm the integrity of Google’s web search results. - This could damage Google’s reputation and cause its users to be dissatisfied with its products and services. (Chaffey 116). 4. Intense completion from rivals such

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