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Here are some interesting, useful, entertaining and/or informative posts from the Cyrius office.  We hope that they can help you or your business in some way.  Please feel free to comment, subscribe to our news feed or re-post anything you find interesting on your own blog, providing you reference this site as the source.

Why is Google So Rich?

Saturday, April 05, 2008

By Stefan Sojka

There is only one reason why Google has any money at all – businesses want to be found.  Sure they have other revenue streams now – like licensing out Google Earth – but without those AdWords, Google would be nothing.

Why does Google get so much money out of AdWords customers?  Because it works.  Businesses the world over are willing to pay Google for every click to their Web page from Google's 'sponsored links' panels, because they know that those clicks are qualified leads, which equals potential new business.  If it didn't work, they wouldn't do it.

Sure, some businesses do better than others.  If you sell items worth thousands of dollars and you are paying a dollar or two to attract a visitor to your site, then it is a drop in the ocean.  If you have small ticket items, you had better pray that every Pay-Per-Click visitor to your site has a high probability of becoming a paying customer.  Otherwise your profit margins are going to get squeezed rather tight.

Google has come up with a pretty elegant system.  It makes them squillions, but it also self-organises by operating on a bidding system.  Every single keyword and phrase in the known universe can be bid on, and the bidding reflects perfectly the popularity of the term and the willingness of Website owners to pay to be visited by people who searched for that term.

I did a quick calculation and discovered that Australian banks are willing to set aside a cool $5.1 million dollars a year (around $90 per click!) to appear as sponsored links under "mortgage".  If you think of all the related search terms, each big bank probably sets aside about $100 million dollars a year each for Google AdWords pay-per-click campaigns.  That is a guess, but I am probably not far off.  It kind of helps to explain how Google's share prices remain so high.  It's not just speculation – they are raking in cash every single day – hundreds of millions of dollars worth of cold hard cash.

So much for the level playing field in the "mortgage" search belt.

Cast your eyes away from the big ticket keywords, and you find a massive level of activity by smaller players.  All of them have realised that qualified traffic to their Website is worth big bucks.

Not everyone on-line is looking for a mortgage.  Some people are after plumbers, pest controllers, wedding videographers, wallpaper, rugs, toys, swaddling cloths – anything and everything that anyone else has got to offer, and some things that are not even available yet.  It would be interesting to know how many people in Australia are Googling to buy an electric car – even though none are available.

So the smart small businesses have realised that to grow in the Internet age, they need to be found.  They need Google.  Right now is a perfect time to get into not only Pay-Per-Click, but optimisation for the free (organic) search results.  After all there are only so many Websites on page one of Google for any search term.  It is the only place to be, really.

Cyrius Media Group helps people get found.  It's not easy and there are a whole lot of elements involved – not just in optimisation, but in making sure that if you pay Google to drive traffic your way, you need a Website that will turn those clickers into customers.  Right now people are cashing in big time on getting found.

It's going to get harder, and Google is going to have to re-think their system sooner or later.  Think about it.  Let's take signwriters.  There must be at least a couple of thousand of them in Australia.  How could every signwriter possibly expect to get a fair slice of the Google pie?  How could someone looking for a signwriter possibly expect that the first page of Google results is going to give them the quality service provider they need?  In a country town, they might search for "Signwriters Dubbo" and get only a few results, but in a big city the best signwriter might be a few suburbs away and Google can't help you find the right one very effectively.  Sooner rather than later the current Google model is going to start failing.

So what to do?

1) Make hay while the sun shines – get in there and get found.  Make your site worthy of being found, and your business worthy of being in business.

2) Be prepared for change.  Things change very fast on the Internet.  You need to be aware of what is going on, and plan strategies and tactics to ensure your business' viability no matter what happens.

Check out http://www.cyrius.com.au and get in touch with us to see what strategies we can implement for you.

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