With Android and Google GPS, I've talked about Google's strategy of giving away its products for free in order to acquire mobile search market share. It's worth taking a look at this tactic from a higher perspective and analyzing Google's larger strategy. What is Google's core product? Search, of course. Search drives ad revenue through the AdSense program, and a quick look at Google's income statement from last year shows a $21 billion in advertising revenue. So, Google's main strategy appears to be: Drive people to search, which in turn leads to higher ad revenue.
Ben Parr argues that Google's strategy is actually much simpler than that. Google's strategy isn't to gain market share with its products, it's simply to get you to use the web more often and for longer amounts of time. AdSense is the core of Google's revenue engine, but you have to think about AdSense outside of Google's products. Google's places ads all over the internet, not just in its own products. Go to any website, big and small, and you're likely to see Google ads. From YouTube, MySpace, New York Times and blogs worldwide, you're going to see Google ads delivered to you. The entire web is a platform for Google's AdSense product. So, Google's main strategy now appears to be: Drive people to use the web, which in turn leads to higher ad revenue. Parr has a nice little equation to sum this all up.
Google's Revenue Equation: Revenue = Amount of Time on the Web
Android fits this equation, as does YouTube, Gmail and Google GPS. In fact, if you take a look at most of Google's products you'll see they're all designed to get you on the web. This is why Google chooses to give away some of its more innovative products for free, like Chrome or Android. They're designed to make it easier for us to connect online and to increasingly keep our lives wired. As long as you're on the web, Google is happy.
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