This article came across my desk and since I have written on the past about the power of word of mouth advertising, I wanted to share this with all my readers.
Our friends at Zdnet have done a great job with there recent post – Google trumps Microsoft – here are some of the highlights for those of you that don’t have the time to read the full article.
99% of Google’s $122 billion market cap is derived from the sale of advertising – Adwords.
Question: If the Google CEO embraces advertising and the Google business model is wholly dependent on selling advertising, why then is Google so averse to spending money on advertising itself?
In Q3 Google generated $2.7 billion and spent $36 million on advertising (a mere 1.4% of its revenues)
Microsoft on the other hand spends a lot on R&D and Advertising – remember Windows 95 launch – expect a mega-million dollar ad spend with the launch of Vista as well.
Google’s utility and ease of use have made it one of the world’s best known brands almost entirely through word of mouth from satisfied users.
How does Google get away with it?
Google enjoys an unprecedented public good will and it manages that valuable asset keenly. Google is highly secretive and does not provide meaningful responses to press inquiries. Nevertheless, Google’s infrequent, but targeted, announcements routinely receive massive, and generally overwhelmingly positive, cost-free press coverage worldwide.
Google leverages its influence on the media to save hundreds of millions of dollars in product launch marketing expenses and to gain the interest of the world’s biggest free focus group, Google users.
Here are a couple of other related posts from Zdnet related to this subject:
Google vs. Yahoo: Google doesn’t support ad industry, Yahoo does – another good article discussing the differences between Google and Yahoo when it comes to spending money promoting their own sites.