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Google in 2008

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Case Study ­ GOOGLE in 2008 1. Why has the pay­per­click search business grow so rapidly? The reason have to start with Gross’ way thinking, as GoTo.com broke down in to two strategies to attract advertisers: First, they charge advertisers only when somebody clicked on a link and was directed to the website, this is the launching point of pay­per­click, which would make advertisers easier to evaluate their performance of the ads, rather than spending lots of money without knowing the real ROI. Second, the GoTo.com priced the keywords low ($0.01 per click), therefore attracting many audience to join the network, and being the affiliates. Once this efficient business model be used by more advertisers, it will definitely grow rapidly. 2. Analyze the competitive structure of the market for search based on advertising. What are the implications of this structure for the long run profitability of players in the market? The market for search based on advertising is profitable because it charges the advertisers, not the users. If the market makes profit by charging its users, the users may normally choose to use the search engine that charges the least, leading to a price war in the long run. Conversely, if the market makes profit by charging the advertisers, things will go differently. The advertisers are aimed at attracting more people to see their ads, as a result, they are willing to pay for their ads as long as the price is affordable. In addition, advertisers of popular ads may be willing to pay more for their ads, creating more revenues for the market players. The implication of this structure for the marketplace is that the demand for placing ads would not disappear. In other words, the source of revenues is stable and, as a result, charging the advertisers for their ads is reasonably profitable in the long run. 3.Why was it

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