Case Study E-Marketing Assignment on Search engine industry Google and its competitor Yahoo!
Internet plays a crucial role in marketing strategies of all organizations ranging from small to large. Internet has played a crucial role in shaping the manner in which search engines work today. Rise of various search engines in the industry is the result of increased internet activity. Earlier, Yahoo was the dominant player in the industry, but Google’s emergence has led to creation of competition on the basis of value creation.
E-marketing mix is an important aspect of overall marketing of every organization that uses internet as a major platform of its marketing strategy. With the help of e-marketing mix, companies can frame effective strategies for covering internet as part of their overall marketing mix. Google and Yahoo are two major and popular search engines present in the industry for a long time. Yahoo is older than Google and both are tough competitors. The industry is technology driven; therefore, both companies keep on coming up with innovative technologies.
E-marketing mix of Google and Yahoo presents different positioning of the two companies. Google positions itself in the digital world on the basis of value creation and major focus on making the search better. On the other hand, Yahoo is focused on creation of more presentable and high tech products that can create value for the users in the form of presenting highly customizable products. The e-marketing mix includes discussion of product, price, distribution and communication. Both companies differ to a significant level in terms of all the 4 Ps. Google is superior to Yahoo in various ways including generation of large traffic for advertisers, presence of large number of user-friendly products and avoiding the stagnation of its home page by avoiding inclusion of large number of graphics. Thus, it is superior to its competitor Yahoo.
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Internet has become an important element of the business world today. Growing awareness of business value of internet has leveled the playing field for both small and large corporations to compete in the market. Businesses are able to increase both revenue and visibility through use and application of internet. A business organization that understands the benefits of utilizing the internet when conducting business operations can increase the potential of the company to the maximum level (Stefano Ceri 2010). In the context of growing importance of internet, the report discusses the role of internet in search engine industry with critical analysis of e-marketing mix strategy for Google and Yahoo.
Part A Industry Analysis
Internet has played a crucial role in the way the search engine industry works. Internet has helped the industry to organize the infinite amount of information that is present on the web in a constructive manner for helping the users to get answers they need. Earlier, search engines such as Lycos, Excite and Ask Jeeves made money through banner advertisements. However, as the trend of e-businesses started, search engines such as Google came up with the ‘do it yourself’ model for facilitating the brands to handle their online advertising affairs by themselves, thus saving time, energy and cost (Thurow 2003). Earlier, internet was primed for advertising and after 1998; search engine became the logical tool for connection between advertisers and consumers. Search marketing is the new way search engine industry works (Spink and Zimmer 2008).
Evolving internet marketing strategies are rampant in business journals and industry trade magazines. They are taught in the global university business courses. In such scenario, growth and competition concerning dominating search on internet has facilitated the development of various user-friendly applications for users and customers. It has led to facilitation of efficient dissemination of content. Thus, search engines have evolved from simple banner advertising platforms to paid advertising platforms. The role of search engine optimization in search marketing also reflects the adaptations of search engine industry according to changing business dynamics of e-business environment (Stefano 2010).
With more and more companies adopting the path of internet marketing, search engines have evolved from mere providers of information to the platform for online advertisement. Search engine optimization is the evidence of growing interest of companies in marketing their websites on internet. Search engines can also figure out what each page is about and how it is useful for its users. Thus, internet has played a significant role in the way search engines work and target their search results (Stefano Ceri 2010).
Part B E-marketing mix
Two businesses chosen in the search engine industry for critical analysis of their e-marketing mix are Google and Yahoo. Yahoo is an internet corporation located in the USA. It was established in 1994 (Yahoo 2012 Annual report 2012). Google Inc. was founded in 1998 and it grabs the largest market share of search engine industry at present (Google 2012 annual report 2012). The market share of Google and Yahoo in the industry is presented in the following figure for the US market:
Source: Google Search Share Stable, Bing Growth Continues At Yahoo’s Expense 2014
From the above figure, it can be identified that Google has 67.5% of search query volume in the US followed by Bing 18.4% and Yahoo 10.3 percent. Clearly, Google is the market leader (Google Search Share Stable, Bing Growth Continues At Yahoo’s Expense 2014). Following is the e-marketing mix of Google and Yahoo:
E-marketing mix of Google and Yahoo
E-marketing mix includes internet-based marketing techniques in the typical marketing mix of an organization. Benefits of e-marketing mix are provision of standardized vocabulary for the marketing community in the business world and conversion of thousands of microelements of marketing into manageable macro-elements (The E-Marketing Mix: A Contribution of the E-Tailing Wars 2013). The e-marketing mix of Google and Yahoo are presented below with comparison and contrast.
Google places all its products in three categories- advertising solutions, business solutions and Google Store. Advertising solutions include Google Adwords. Business solutions include matching of text-based ads according to whatever the user types in the Google search. The customers of Google pay the company every time the search engine users click on their websites. Google then helps the customer in setting up their site as the number of visitors to the websites of customers increases. The Google Store is involved in selling real and tangible items. Any item that can affix the brand, such as notebooks, bags, caps, etc. are sold on Google store. As Google is a global technology, it provides products and services for improving lives of people all over the world (Hamen 2011).
Highlight of the products of Google store are their focus on following key areas: search and display advertising, consumer content through Google Play, the Android operating system platform, enterprise and commerce. In the product area of search, Google continues to evolve and improve as more and more information comes online. Google Now is the result of people increasingly looking onto their mobile for searching things, people and places. In the advertising area, AdWords is one of the most successful product offering from Google. It has eased creation of simple text based ads appearing on Google Network (Hamen 2011).
With the advent of internet on multiple screens, such as laptops, mobile phones, tablets, Google has enhanced its Adwords service for both big and small advertisers to create relevant campaigns across all the devices with same ease. Chromebook, Google+, Google Play, Google Drive, Android and Google Wallet are products for business area of consumer content and platforms (Google 2012 annual report 2012). Google Cloud Platform comes under the Enterprise business area for developers and businesses. With the help of the platform, businesses can connect and share large amount of information on the virtual network (Hamen 2011).
On the other hand, Yahoo’s products are based on more personalization of offerings so as to create value for its advertisers and brands. The positioning of Yahoo products is to be at the center of the digital daily habits of the world. The focus is on making products that are not only enabling daily activities but also are also making these activities entertaining and inspiring (Angel 2002).
Its e-products include Yahoo.com, communications, user-generated content and mobile and emerging products. Yahoo.com includes yahoo search, yahoo news, yahoo sports, yahoo finance, yahoo video, yahoo toolbar and Yahoo entertainment and life styles. Communication products include yahoo mail and yahoo messenger. User generated content includes Yahoo groups, yahoo answers and flickr. Mobile and emerging products include Yahoo connected TV and IntoNow from Yahoo (Yahoo 2012 Annual report 2012).
On comparing products of Google and Yahoo, it is identified that Google focuses on keeping its products simple so that people who are not tech savvy can also use the product without any confusion (Google 2012 annual report 2012). On the other hand, Yahoo focuses on applications that are feature-rich, more customizable and complex. Recently, it released plans for providing media that are more content and more personalization across multiple internet device platforms (Yahoo’s Mayer: “In The Future You Become The Query 2013).
For example, digital ad formats on Yahoo mail login page focus first on presentation with inclusion of Smart Ads for videos that tailor the video ad content according to the user. On the other hand, AdWord of Google focuses on value creation and related features (Leung 2010). Thus, Google has strong association with simplicity and usefulness while Yahoo has connection with rich interfaces and complex designs (Yahoo 2012 Annual report 2012).
The PageRank system and hardware innovations of Google have made the company has facilitated the initial growth of the company in the search engine industry. They have established Google as the dominant and leading search engine technology. The technology of Google provides for costs with low margin that can be used for dissuading competitors if Google takes a decision of instigating the price war. The current pricing strategy of Google is pay per click (PPC), which represents two-third of the total revenue of the company. The placement in Google searches depends not only on the amount of buyer bids, but also on the popularity of listings with searchers (Hamen 2011).
Thus, when an ad has more clicks, its listing rises and lowers the cost per click for the advertiser. Such strategy however, lowers the short-term revenues but it enables the company to rule out advertising for irrelevant terms. Thus, Google adopts the approach of foregoing some of its revenues for enhancing the overall user experience, which is the philosophy of Google as well. Also, Google makes use of Vickery auction under which the winning bidder have to pay just only the second highest amount of bid. This creates confidence among buyers that they are receiving a fair price for the purpose of listing on Google search (Hamen 2011).
Yahoo Inc., employs quality based pricing, that measure the quality of traffic coming from company’s distribution partners like web publishers displaying paid ads. Yahoo’s Boss (Build Your Own Search Service) includes the pricing approach for pay for what the advertiser uses rather than a one size for developers and customers. By comparing the price approach of these two search engines, it is identified that Google AdWords is the logical choice of advertisers for paid search due to superior impressions and click through rates (Weston 2006).
However, advantages of YBN lies in lower cost per click and lower CPMs and Yahoo search facing less competition for the ad position, thus offering an incremental opportunity to advertisers who seek to maximize their search results. However, the prices of Google, although competitive gives the opportunity to advertisers generate more search traffic. The average cost per click for advertisers in this quarter of year 2012 is shown below that clearly indicates lower cost for advertisers placing ads on Yahoo Bing.
Source: Yahoo Bing PPC Performance Metrics 2012
The figure compares the paid search performance of advertisers on Yahoo Bing and Google AdWords in 2012 across six verticals in the US. AdWords showed higher impressions in five of the six verticals. However, Yahoo Bing showed more impressions on financial services vertical in comparison the impression displayed by AdWords (Yahoo Bing PPC Performance Metrics 2012).
In the process of determining overall marketing strategy, place of distribution plays a critical role. It includes activities of the company directed that make company’s products available to target consumers. The place of Google is internet and it targets people on the internet. According to a statement of the CEO of the company Eric Schimdt, the rate of adoption of internet is on an increase every year in all the forms. Google maintains 23 European location, 14 locations in the Asia Pacific region and the 5 in the Middle East and 3 in the region of Latin America (Hamen 2011).
Yahoo operates an affiliation program under which online marketers can promote the organization using Hosting Services, Yahoo Games, Yahoo Mail Plus, Yahoo Hot Jobs and Merchant Solutions for commissions that can range from $10 to $90. The online search marketing distribution network of Yahoo comprises of MSN, AllTheWeb, Net Zero, Info Space, DreamWiz, AltaVista and HP (Matzick et al 2008). Comparing the place of Google and Yahoo, both have internet as their place of distribution. Google serves a large number of places all over the world. Yahoo has wide search marketing distribution network. The Google search network comprises of variety of products and search engines (Hamen 2011).
Promotion activities comprises of personal selling, advertising, sales promotion and public relation. Communication forms a significant part of the overall promotion strategy. Google has generally avoided jumbling its homepage with large number of banners, advertisements, or links to other websites. It has committed itself to focus on search rather than adopting use of fancy graphics. It does not do much to get their name spread in the public. It promotes itself by word of mouth and not by advertising (Leung 2010).
In regards to the use of communication technology, Google Chrome has its own television advertisement, and it specifically maintains public relations function for proactive management of the media. It also uses money off promotions for giving incentives to advertisers so that they are encouraged to use AdWords. Products of Google are so vast that they can advertise on each of their products for free. There are no advertisements on TV as it owns the internet for communication with public and customers (Leung 2010).
In comparison to promotion strategy of Google, Yahoo has run advertisements on television and radio aiming at presenting itself as superior to Google. It has also entered into partnership with the publishing organization Gannett in which all the 81 local publishing subsidiaries with seven broadcasting division sites will sell the advertising inventory of Yahoo as part of the local advertising solutions to Gannett (Gannett Broadcasting and Yahoo! to Expand Local Advertising Partnership to 19 Broadcasting Markets 2011).
Yahoo has also developed an ad campaign with the slogan ‘your favorite stuff all in one place’ and ‘Its Y!ou’ launched in 2009 with the aim of taking a swipe at Google, the main competitor of Yahoo as shown in following figure (Yahoo! unveils new brand positioning in global marketing campaign 2009).
(Source: Yahoo! unveils new brand positioning in global marketing campaign 2009)
Thus, it is observed that Google does not follow the strategy of typical promotion and advertising. Word of mouth has played a crucial role in its promotion, while Yahoo has promotional campaigns in the form usual TV and radio ads and ad partnerships.
Internet has become an important part of corporate world today. Every organization uses the platform of internet to reach large number of consumers and customers. In the search engine industry, industry has changed the way the industry works. Earlier, search engines used to focus on giving knowledge based data to consumers. However, advent of internet with growing importance led to use of search engines by advertisers as source of reaching target market. Therefore, technologies such as AdWords have made it easy for brands to advertise themselves according to their own way. Development of applications as Yahoo maps, Google Now, Google Games and Flicker are the result of increased internet activities.
On the basis of analysis of e-marketing mix of Yahoo and Google, it can be concluded that Google is superior to Yahoo in various terms. Search engines are required to be user friendly, fast and contain large amount of information. On all these three aspects, Google leads Yahoo. Products of Google are simple and user-friendly in comparison to products of Yahoo that are designed and offered with focus on presentation and complexity. High level of customization creates complexity in the product offerings from the side of Yahoo. Furthermore, Google focuses on value creation and it does not focuses on posting large number of links or ads onto its website unlike Yahoo that has adopted the path of typical promotional channels. Although, technology is imitable in the case of search engine industry, Google remains ahead of competition through innovation and large number of products offering well suited to the needs of users.
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