With 'Free' Lure, Will Google Tap More Markets?
It's hard to compete with "free."
Some rivals of Web search powerhouse Google Inc. have already learned that lesson. Now, companies in a broader set of industries are grappling with how Google's ad-fueled expansion could potentially make it harder for them to charge for consumer services and products.
Google last month proposed that it offer free high-speed wireless Internet access throughout San Francisco, raising the question of why residents would pay for Internet access from cable and telephone companies. Last week the Mountain View, Calif., company announced a partnership with Sun Microsystems Inc. that includes Google supporting, in an as-yet-unspecified way, the free OpenOffice.org software that competes with Microsoft Corp.'s Office suite of programs. Microsoft's Office can retail for $399 or more.
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The scale and efficiency of Google's online advertising network could allow it or partner companies to introduce free offerings in a range of other areas, challenging traditional fee-based models. Google executives won't specify future product directions and say they remain focused on search and communications-related services.
But taken together, Google's announcements in recent weeks indicate that the company's online advertising network could have a far-reaching impact on companies whose businesses are outside Google's traditional turf. In effect, the tremendous revenue stream Google enjoys from ads subsidizes its entry into new lines of business, which in turn can generate more ad revenue. Some industry executives point to voice calling, cellphone service, console videogames, premium TV programming packages and digital music as areas where Google or its partners could supplant fee-based services with free, ad-supported ones.
Google generates nearly all its revenue, $3.2 billion last year, from the small ads it shows alongside search results and other Web content. Advertisers pay each time a user clicks on one of their ads. The ads are triggered by the keywords in a user's search query, such as "digital camera." Per-click fees set in an auction average roughly 50 cents, according to analyst estimates, but are sometimes much higher for especially sought-after keywords.
Google now also displays the ads alongside emails for users of its Gmail service and on thousands of other partner Web sites, such as the Web search site of Time Warner Inc.'s America Online unit. Many advertisers, including some large traditional businesses, have flocked to the ads, saying keyword targeting makes them extremely effective at bringing in sales.
Analysts and rivals say Google has made remarkable gains over the past year in increasing the revenue it generates each time it shows ads to consumers. By tweaking its systems, it shows more-relevant ads that consumers are more likely to click on. Increasing the number of places where it shows the ads and the number of companies buying such ads also has significantly boosted revenue.
"There are times when advertising does a better job than traditional business models at monetizing" services, says Marissa Mayer, Google's director of consumer Web products. She describes the simple calculation, which Google did early in its existence, as to whether a company can generate more revenue from advertising than it can from charging fees to its users. In Google's original business, it estimated the potential revenue from ads far outweighed what consumers might be willing to pay annually for its Web search services. Now, Ms. Mayer says, Google is trying to help book publishers, video content owners and others tap online ad revenue and make similar calculations.
She cites telephone directory assistance as another area where advertising support could replace the fee-based services offered by phone companies. (Several companies already offer such free, ad-supported directory assistance.)
Some industry executives have additional ideas. Brian McAndrews, chief executive of Seattle online marketing company aQuantive Inc., cites console videogames, traditional voice calling and cellular phone services as areas where ad-financing could replace fee-based models. "If you're giving me free wireless for a month, I'd let you show me ads," says Mr. McAndrews. Seth Goldstein, chairman of AttentionTrust.org, a specialized nonprofit consumer Internet advocacy group, rattles off "software, telecom, print [media]'' and video as areas where Google-ad-financed offerings could upend the traditional pricing structures.
Many advertisers are enthusiastic about the prospect that Google might place their ads on an increasing range of outlets. "As the opportunity gets bigger, we get a greater benefit," says Bob Kurilko, vice president of Edmunds.com in Santa Monica, Calif. The automotive research Web site bids to display its ads when users search for some tens of thousands of keywords on Google, Yahoo Inc., and other search engines.
"The bigger story here is what's driving this is traditional media [advertising] is no longer as effective as it used to be," Mr. Kurilko adds, saying search-related ads generally are better at reaching targeted customer groups than the likes of broadcast TV.
Google is not alone in selling targeted ads and brokering them for other Web sites and services. It faces tough competition from Yahoo, among others, and Microsoft and IAC/InterActiveCorp are also getting into the game.
The changes that such services are forcing on the economics of industries such as traditional media aren't entirely new. And the impact of the Internet on businesses ranging from bookstores to bank branches has been overstated in the past. Moreover, any broad downturn in advertising could humble ad-dependent Internet companies as it did several years ago.
Some critics also caution that the extension of the ad-supported model has faltered in some areas in the face of consumer resistance. In 1999, for instance, Free-PC Inc. started giving away computers in return for tracking what a user did online and displaying ads to them, but discontinued the program in 2000. Services that let users call long-distance free of charge in return for listening to ads have similarly fizzled.
Google says its ads are less obtrusive and more useful to consumers than those of earlier eras. And in each area where Google has launched free offerings, often at least partly supported by advertising, it has been making it tougher for fee-based rivals. Since last year, Google has acquired companies providing fee-based photo software and digital mapping services and made versions available free of charge.
A year ago, Google began providing free software for searching a PC's hard drive similar to what other companies had been charging for. After the release of its free Gmail email service with one gigabyte of storage in April 2004, rivals largely abandoned their fee-based email storage offerings.
Microsoft executives fretted about this phenomenon in an internal strategy paper they wrote early this year about Google for Chairman Bill Gates. In the paper, which was reviewed by The Wall Street Journal, they noted that ad-supported Gmail killed the prospects for fee-based e-mail services. And they pointed to antivirus software as another area where a free Google offering could easily spoil the market for fee-based services.
Google's Ms. Mayer says the company can generate greater revenue even when ads aren't directly linked to the services it may provide. By increasing Web use through free Internet access, for instance, the company should see a revenue boost through the search queries these users make. Ms. Mayer estimates search queries represent about 5% of Web use, with Google handling the greatest number of them.
Meantime, the success of the Google ad network is nourishing a whole generation of Internet start-ups, as evidenced by participants in the Web 2.0 conference in San Francisco last week. Many of these companies display ads brokered by Google on their sites, providing revenue as they get established, and in some cases letting them finance fledgling businesses without turning to venture capitalists. "Google is like crack for Web publishers," says Joshua Stylman, managing partner at Reprise Media, a New York search engine marketing firm.
Google“免费”大旗能否所向无敌？
在“免费”面前，什么都显得黯然失色。
网络搜索巨头Google Inc.的一些竞争对手已经感受到这点。现在，众多领域的公司都痛苦地认识到，Google凭借广告推动的增长可能会使他们更难以向消费者收取服务和产品费用了。
Google上个月提出，将在旧金山提供免费的高速无线互联网接入，使得居民开始质疑为何要向有线和电话公司缴纳互联网接入费。上周，Google宣布同Sun电子计算机公司(Sun Microsystems Inc., 又名：升阳微电脑)结成合作伙伴，其中包括以一种尚未具体说明的方式支持免费的OpenOffice.org软件，同微软公司(Microsoft Corp.)的Office套装软件竞争。微软Office的零售价在399美元，甚至更高。
Google网上广告网络的规模和效率使其或其合作伙伴有能力在各个领域推出免费产品或服务，挑战传统的收费模式。Google的高级管理人员没有阐明未来的产品方向，只是表示重点仍在同搜索和通讯相关的服务上。
但综合考虑，Google近几周来的做法表明，该公司的网上广告网络可能对业务不在Google传统领域的公司产生更为深远的影响。实际上，Google从广告上获得的巨大收入流为进入新业务领域提供了资金，这又反过来创造了更多广告收入。部分业内管理人士指出，语音呼叫、手机服务、游戏机、优质电视节目方案和数字音乐等都是Google及其合作伙伴可能通过广告支持的免费服务取代收费服务的领域。
Google去年32亿美元的收入几乎全部来自于同搜索结果和其它网页内容一起显示出来的小广告。当用户点击某个广告时，这个广告的刊登者就要支付一定费用。广告是由用户搜索查询条目中的关键词触发的，比如“数码相机”。每次点击的费用是通过竞价设定的，分析师估计平均为0.50美元左右，但对一些特别受欢迎的关键词，价格会非常高。
Google现在也在其Gmail电子邮件中和数千个合作伙伴的网站（比如时代华纳(Time Warner Inc.)的美国在线(America Online)）上显示广告。许多广告客户，其中包括一些经营传统业务的大公司都热衷于这种广告形式，称关键词定位对提高销售非常有效。
分析师和竞争对手称，过去一年里，Google在向消费者显示广告，提高其收入方面取得了巨大进步。通过优化其系统，它能够显示出更加相关的内容，使消费者更愿意点击。增加显示广告的位置和购买此类广告的公司数量也都大大提高了收入。
Google的消费者网页产品主管马丽萨?迈耶(Marissa Mayer)说，广告在提高收入方面比传统业务模式做得更好。她表示，最简单的计算方法就是看从广告上获得的收入能否超过向用户收取的费用。在Google最初开展业务时，它估计来自广告的潜在收入远远超过了每年消费者愿意为网络搜索服务支付的费用。迈耶称，Google现在正帮助图书出版商、视频内容拥有者和其它企业获得网上广告收入，也将采取类似的计算模式。
她认为电话目录指南是另一个广告支持能够取代电话公司提供的收费服务的领域。（几家公司已经提供了此类广告支持的免费目录指南服务。）
部分业内管理人士还有其它想法。西雅图网上营销公司aQuantive Inc.的首席执行长布莱恩?麦克安德鲁斯(Brian McAndrews)认为，游戏机、传统语音呼叫和手机服务是广告资金能够取代传统收费模式的领域。麦克安德鲁斯说：“如果你向我提供一个月的免费无线服务，我就会让你刊登广告。”专业非营利消费者互联网宣传组织AttentionTrust.org的董事长塞思?戈尔茨坦(Seth Goldstein)也认为，软件、电信、印刷媒体和视频是Google广告支持的产品能够取代传统定价结构的领域。
许多广告客户对Google将其广告放在其它各种媒介上的前景持乐观看法。加州Edmunds.com的副总裁鲍勃?库里尔科(Bob Kurilko)称：“随著机会越来越多，我们也会受益更大。”这家汽车研究网站希望在用户在Google、雅虎(Yahoo Inc.)和其它搜索引擎上搜索数万个关键词时能够显示其广告。
库里尔科说，推动网络广告的更大变化是，传统媒体广告不再像以前那样有效了。他说，搜索相关的广告一般比广播电视等媒体更容易传播到目标客户群。
并不是只有Google一家在销售目标广告，并为其它网站和服务牵线搭桥。它面临雅虎等公司的激烈竞争，微软和IAC/InterActiveCorp也在加入其中。
这类服务给传统媒体等行业带来的压力并非今日才出现。过去，互联网对从书店到银行等众多业务的影响一直被高估。而且，广告业的普遍低迷可能像几年前一样打击依赖广告生存的互联网企业。
部分批评人士也警告说，由于消费者的抵制，广告支持模式的扩张在某些领域遇到了阻力。比如，1999年，Free-PC Inc.开始免费提供电脑，以此换取跟踪用户在网上的行为，并向他们显示广告，但该公司在2000年停止了该方案。让用户免费打长途电话来换取收听广告的服务也同样失败了。
Google称，其广告并不过于张扬，对消费者更加实用。在Google推出免费产品的各个领域（一般至少是受到了广告的部分支持），收费竞争对手的处境变得更加艰难。去年以来，Google已收购了提供收费照片软件和数字制图服务的公司，并推出了相关的免费服务。
一年前，Google开始提供搜索电脑硬盘的免费软件，其功能同其它公司的收费软件相仿。在2004年4月发布1G空间的Gmail免费电子邮件服务后，竞争对手大都放弃了收费电子信箱服务。
微软的管理人员在今年初写给董事长比尔?盖茨(Bill Gates)的一份关于Google内部战略的研究报告中对这一现象大为不满。《华尔街日报》的记者看到了这份报告。他们在报告中表示，广告支持的Gmail扼杀了收费电子邮件服务的前途。他们还指出，杀毒软件是Google可能免费提供的另一个产品领域，这将轻而易举地毁灭收费杀毒软件市场。
Google的迈耶表示，即使广告同该公司提供的服务没有直接联系时，Google也能创造更高的收入。比如，通过提供免费互联网接入增加网页浏览，用户进行的搜索查询将会带来收入的提高。迈耶预计，搜索查询占网页浏览的5%左右，而Google处理的搜索量排名第一。
与此同时，Google广告网络的成功给新一代互联网初创企业带来了希望，这从上周在旧金山参加Web 2.0会议的与会者那里可以明显感受到。其中许多公司在他们的网站上显示Google牵线搭桥的广告，在发展的同时获得了收入，有时可以让他们获得资金支持羽翼未丰的业务，而不必求助于风险投资。纽约搜索引擎营销企业Reprise Media的董事合作伙伴乔舒亚?斯蒂尔曼(Joshua Stylman)说，Google简直就像是网站的救世主。
