Google is one of the top 5 most recognizable tech company brands in the world (Apple, Google, Microsoft, Facebook and Amazon). It was rated by Forbes second overall among the top brands values for the third straight year, being valued at US$132.1 billion. Google has gained such a high level of awareness through it search engine, mobile operating system, digital advertising and providing excellent products to the consumer free of charge.
Googles strong brand awareness and favorable reputation among consumers has also helped the company develop and introduce new products lines into the market and increase sales without having to spend a lot of money on launch campaigns or advertising. Because of this strong brand awareness, the company has been able to focus a lot of their revenue on developing new innovative projects (i.e. auto complete, home smart speaker, Daydream View VR headset and Wi-Fi wireless-networking systems). In 2017 Fast Company rated Google as one of the top most innovative businesses in the world. In addition, the brand name is so recognizable that it’s now listed as a word in the dictionary which means “google” search for information about (someone or something) on the Internet using the search engine Google.
Because of Googles strong recognition and dedication to technology innovations, it has also garnished a strong brand loyalty among its consumers. In 2017 Brand Keys Customer Loyalty Leaders List 2017 ranked Googles search engine as ranked Google second in brands that are among the ones most likely to meet consumer expectations for their respective categories. Since the late 1990’s Googles search engine has remained simple and user friendly. Over the years the system front end user design has not changed and remained simple to conduct a search on the Internet. The changes to the search engine have all been behind the scenes with Google continually updating algorithms and making iteral application changes that enhance the user experience.
Because Google has remained consistent and the search engine performs at a high level producing results for the user, the consumer has had no other reason to use another search engine and has remained loyal to Google. Dominance in search engine, mobile operating systems (OS) computing, video content sharing, and online advertising Alphabets Inc., subsidiary, Google is primarily an Internet company that competes in digital marketing and web searches. Through acquisition’s Google has been able to expand their portfolio beyond just web searches and offer diverse hardware and software services to their consumer. Google search is the company’s search engine that consumer uses to find and filter information online. It is the most used search engine in the world with 73.73% computer desktop market shares and 92.9% shares in the mobile market as of March 2018. Google’s search engine shares are 90% in Europe in both the desktop and mobile markets.
Google Android mobile operating system is the number one OS in the world and is used by the top smartphone vendors such as LG, Samsung, and Huawei. In 2018 Google’s Android OS had 74.2% of the worlds smartphone market shares. Because of this market dominance in the mobile market, google has received additional increase in digital marketing revenue that his being viewed and delivered primarily on smartphone and tablets. Googles YouTube is a website designed for sharing video. Currently one third of all time spent online is accounted for by watching video and its predicted that 80% of all internet traffic will come from video in 2019. Googles YouTube is the most popular site in the world. It receives around 30 million visits per day. Its main source of revenue is from advertising that is required to view prior to getting access to the shared video content. Google’s main source of revenue comes from its digital advertising business and in 2017 it generated US$95.375 billion in revenue (from both desktop, mobile and streaming advertising). This was 87% of Googles total revenue and 86% of the total Alphabet’s revenue in 2017 According to eMarketer, Google and Facebook earn more than 60.4% of all total revenue worldwide for digital marketing. Google dominates the digital advertising program by being able to provide targeting based upon consumer interests and capitalizing on those consumer habits being tracked using Google tools such as YouTube, Search Engine and Android OS. In 2017 Googles total share of the US digital ad market was 42.2%, of which more than half of the digital marketing ads benign served to smartphones and tablets.
Highly regarded algorithmGains strong traffic by offering many of its products and services at no-cost to the average user making it widely assessible to everyone.
Almost all of Google’s products and services are free to use and provide an excellent consumer experience. This has been the winning factor for Google in achieving its success and market dominance. By providing an excellent product for free, they have been able to gain huge market shares and leverage those market shares to the benefit of the company. Whereas the majority of the products Google offers are free and the company does not benefit revenue from their services, such as search engine it uses key word digital marketing to delivery targeting advertising and generating review through that advertising. YouTube, Googles online content sharing platform uses this same digital advertising to deliver targeted ads based on versions of what the consumer is viewing on the popular site. This same platform is also used on the Android OS, which is the most widely used Mobil OS in the world. The popularity of these free services generate review from the company based on how many digital advertising they can deliver through these widely used platforms.
Too reliant on advertising revenueIn 2017 Google earned US $95.4 billion in revenue solely from digital advertising. Googles total revenue in 2017 as 110.0 billion, which means that 87% of Googles revenue came directly from advertisement. This makes Google vulnerable since it only real profitability is in advertising. Just a few changes in the market, such as increased competition (Search Engine, content-Sharing, Android OS) and the company could see revenues decline. In addition, with 87% of revenue coming from advertising it will need to watch trends in advertising closing, such as changes in the market, advertising blocking software and changes to the user habits.
Google, cost per click, the amount advertisers pay Google each time someone clicks on one of its adds, saw a bigger decline in 2016 to 2017 of 19%, as in previous year from 2015 to 2016 of only 11%. Google mobile surf traffic is increase, due to its large market share in the Android OS market. Goggle will need to focus on growing its core business and diversify in order to offset the declining trends and threats to Issues of Antitrust LawsIn 2018 the European Union fined Google $5.1 billion for exploiting its dominant position in the search engine market to promote its own services. The fine also was came with mandatory changes that regulators ordered to take affect by end of 2018. This may undercut Googles ability to automatically include is own search and other apps in mobile devices, opening it to more competition in a market that it has always dominated. Google has been accused of requiring phone manufactures to install the company’s chrome web browser and its search tool on their devices. In exchange Googles financial incentives to place its apps on phones, but also threatened to cut off access to the Google Play Store if companies did not comply. In addition, due to this recent EU violations, President Trump is now considering a draft executive order that would call for an anti-trust investigation to Googles practices. These recent rulings and investigations are a sign of of recently shifting attitudes and a tougher stance by the EU and US in tech company’s dominance in the marketplace.
Demand for Voice controlled virtual assistant at HomeIn-Home Virtual Assistants are everywhere today and one of the fasted growing categories in consumer technology with annual 2010% growth and some 9 million sold in the first quarter of 2018. Google has developed it own in-home Virtual Assistant called Google Home. In Q2 2018 Google surpassed Amazon Echoes 2.5 million. by selling 3.2 million. This is significant because Amazon Echo was introduced in 2014 and had a 80% share in the marketplace. In 2017 Google Home was launched and today it has surpassed Amazon Echo. In part this is since Amazon Echo is only available in the US, whereas the Google Home is available in the US, UK, Germany, India and Spain Google is able to adapt to local markets faster and is already present. Google is also doing what spending the time developing its products and delivery devices that can learn faster than those of its competitors.
While Google Assistant on the smart phone will remain a primary virtual assistant globally, Google has proven its ability to adapt to the changing markets faster than it already has a presence In addition Google is focused on spending tome on their product development and delivering devices that can learn faster than those of its competitors. This allows Google to widen its VA product portfolio. Hardware can be connected and controlled through only one VA and accessed almost anywhere in a house.
Research from Market & Market reveals that the market for intellect virtual assistant will be worth over US$17.72 billion by 2023. While it is not the biggest market opportunity for Alphabet and google it has a lot of potential to strengthen the company’s portfolio and provide a better user experience.
Cloud service market
Developing markets for subscription-based video on demand services YouTube is the most popular video on demand streaming platform in the world, with more than 1 billion users who spend collective hundreds of millions of hours watching user generated content. You tube current strategy is to reach the widest audience possible by providing its service for free. The platform generates its revenue mainly through displaying advertisements before or during videos. However, that is not currently a profitable business plan, especially when average CPC prices are falling. To increase the platform’s revenue and profitability You Tube started offering a subscription-based services called YouTube Red and a TV subscription service YouTube TV. The market for video on demand services is growing. According to Transparency Market Research, the market is expected to grow by 9.3% on average from 2017 to 2024. It is estimated to be worth around US$73.9 billion by 2024. The market for subscription-based video on demand services will be worth US$19.26 billion in 2024.
The marketing for video on demand and Googles YouTube is well positioned to take advantage of this opportunity withbore at 1 billion existing users. YouTube Red is currently the second most growing video on demand app in the work just behind Netflix. While the revenue from YouTube Red app is still slow, it could become a significant revenue source for YouTube. Currently video on demand is ranked as following 1, Netflix, 2 Googles Netflix, 3. HBO NOW time warner 4. Hulu and 5. Starz. You tube should push its services more aggressively to take advantage of this growing appointee. IT could also increase the number of its own original movies and TV shows, which would further help the platform to attract more subscribers. Google to consider advance in social media and online shopping opportunities.
Innovative and highly driven competitors: ‘amazon, Facebook and AppleWidespread adoption of advertisement-blocking software. Increasing ad-blocking software usage is threatening Alphabets revenue and will likely decrease it’s in the future. The company itself identified this treat in its 217 finical report. In an effort to avoid the consumer from installing ad-blockers to block all digital media ads. On February 15,2018 google released a new versions of Chrome that features a built-in ad blocker intended to automatically remove disruptive ads from publishers websites if they do not meet the new Better Ads Standards Pop-u[s Ads, Auto playing Video Ads with Sound, Ads with Countdown, Large Sticky Ads). This ad-blocker will basically classified ads that are annoying to the user and they will not be shown. This is a creative way to appear consumer friendly and address many complaints about Googles search engine and Android OS. Google is attempting to stall the increasing adoption by the user of ad-blocking software. In 2016 over 615 million devices (desktop/tablets/mobile) were running ad blocking software. This grew by 105 million from 2015 to 2016. In 2017 87% of Google revenues were derived from fees paid for digital advertising online. If ad-blocking software continues to be adopted by the consumer, these technologies and tools could negatively affect Googles revenues.
Regulations and awareness:
Googles main biggest advantage is its ability to gather, from multile platforms, large amount of user information. Google then collects, stores, uses and protects that information to create targeting digital advertising. Because Google gathers so much information and retains full control of the data it raises many privacy concerns. Google takes serious its obligation to ensure that it is keeping secure the data it gathers and stores. Any breachof this data couls seriously threaten its business.
Two of the key external threats that will negatively affect the company is increased government investigations, and the effects of new or existing laws that could be applied to Googles operations, produces, and servicesIn the past the internet giants, have had essentially no regulatiory burdesn. With the recent implementation of the Eurpoean Union GDPR and US State data privacy laws such as California Data Privacy there is a heighten awareness of how big tech firms handle the data they gather. On March 1, 2018 Google changed ists privcy policeis and terms of services to consolidate more thatn 60 separate privacy policies and replace them with one uniform policy. These changes allow Googe to pool information from tis users YouTube, Google, Gmail, Bloer, etc accounts to enable it to better serve advertising. The EU Data Protection Agency issues a report alleging that googles new policy failed to compl with its Data protection rules. Google has an advertisng model that is just as data-hungry. It doesent just gather our search history and location. Youtube platform tracks our taste in medial and they pool data on us around all its properties. Recently the EU implemented new Data Privacy regulation GDPR it does not affect Google directly, but does affect its biggest source of reenue, the Advertisers. With GDPR advertisers who tulizle Google Ads are required to obtain consent for the useof cookies where legally required and for the collection, sharing and use of personal data for personalized ads for the user. For services that Google provides such as Google Analytics they had to build in features for the customer to be able to go into the system and delete any personal identifiable information . and delete “we are subject to numerous US and foreign laws and regulations covering a wide variety of subject matters. New laws and regulations (or new interpretations of existing laws such as US patent laws and European patent laws may affect the amity of companies, including us to protect their innovations and defend against claims of patent infringement. The cost of compliance with these laws and regulations are high and likely to increase in the future.