Googling Google

Jamees Russell linked here yesterday to a story about Google seeking to adjust or even filter out blogs from its search results. This is certainly a concern, although I am not sure we will be classified as a blog under their valuation system – we are more of an online magazine – but regardless, Forbes has a look a Google today from the corporate perspective:

As a skeleton key for the Internet, Google in five years has grown from an academic exercise in search of better ways of finding stuff on the Web into a thriving, prodigious advertising business beloved by users, sought by a hundred thousand advertisers, coveted by Wall Street and envied–or reviled–by a swarm of rivals.

….Google was launched less than four years ago by two graduate students in computer science: one, a Russian émigré named Sergey Brin, now 29; the other, a Michigan-reared engineer named Larry E. Page, now all of 30. As a gateway to 3 billion Web pages, Google is a strangely unadorned site: 37 words, four tabs and a blank space where you type in a query of up to 10 words. Google’s over 10,000 networked Google computers crawl through an index to those 3 billion pages, rank them with an equation that includes 500 million variables and spit out up to a few thousand listings. The ranking takes 500 milliseconds; the computers can handle a peak rate equal to 7 million queries per hour.

But Google has become much more than merely a search service. It is a daily tool and main entry point for millions of users, stealing the spotlight from the browser (Explorer or whatever) and Internet portals like Yahoo. It is a labor of love for programmers, who have built applications off of Google and posted them like trophies on the Web. One does a “smackdown,” comparing the Internet ubiquity of two words (“love” beats “money,” but not by much); another creates poems.

….The passion and success igniting Google, and its emergence as a new interface for the Internet, have made it a rich, fat target for rivals. Yahoo is taking aim. So is the biggest search outfit, Overture, a little-known billion-dollar vendor that provides unbranded search services for other Web sites and has sued Google, alleging patent infringement. A gaggle of some 200 Web sites in China is reportedly going after Google, too.

And now Google faces the most lethal threat of all: Microsoft, aroused, is taking aim at the popular site. This bears an eerie resemblance to the rise–and calamitous fall–of Netscape, the first commercially successful Web browser.

….To survive and succeed will require lots of talent, lots of acquisitions and lots more money. More important, Google will need to quell the hubris that is much in abundance at the jubilant company these days. To be at Google is to bask in your own public relations. The hallways of the company’s four buildings in Mountain View, Calif. are decorated with articles from around the world praising the company. One current job posting includes duties as Google’s company historian. Over 70 of the 800 employees have Ph.D.s. Google’s head of engineering admits his big-brained staff is in awe of itself; he hopes the simplicity of the Google page masks that from the outside world.

….Google, privately held–and determinedly so, for now–won’t talk numbers, but it does brag that it just logged its ninth consecutive profitable quarter.Its revenue flows include ads (the bulk); search services for Yahoo, America Online and other sites (perhaps $100 million there); and custom-tailored, bright yellow servers for corporate accounts.

….In Adwords, businesses use an auction system on the Google site to bid for the most popularly searched words and phrases. Google gets paid every time someone clicks on the ad itself. Bids start at 5 cents per click but can go to $15 or more for high-end products like helicopter parts. Critically, Google demotes a sponsor to a lower rung on its page if its response rate is too low, elevating a rival’s ad for getting more clicks. This imposes a built-in pressure on businesses. They’re even asked to revamp wording if less than 0.5% of viewers click on their ads. By contrast, many traditional banner ads get click rates of just 0.3%.

This could transform the $193 billion business of direct marketing. Junk mailers constantly work on narrowing the recipient list to the people most likely to respond and on jazzing up the envelopes to trick them into looking inside. Google ends the guesswork. People directly declare what interests them, and Google feeds them an appropriate ad. The ad’s few pitch words are critical. For big corporate accounts like Dow Chemical, Google account executives continually recraft the message, like a haiku of commerce, aiming to maximize the click-through.

Google’s long-term dream is to index all of the world’s public information and make it searchable–everything from driver records to radio shows and films–and reap profits from it. This is scarier than it sounds. Google holds an archive of 800 million postings to Internet newsgroups, from alt.sex.bondage to alt.humanities.classics, most of which it bought on the cheap just before Dejanews.com went out of business in 2000.

….Google has bought some prizes of its own, including personalization technology that “learns” what you are interested in based on previous searches; and a company called Blogger, which helps people set up their own Web-based diaries, or Web logs. More “blogs” mean more content, yielding more pages on which to run ads and more links to other pages. The more links, the better Google’s results. Most recently Google scored a company called Applied Semantics, whose content-scanning techniques can be used to tailor ads not just based on the words a user searches, but also on the actual pages he reads on the Internet. That buy was a double score for Google–Applied Semantics had been selling those services to Overture. In the week following the purchase, Overture’s shares fell about 30%.