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» About Google » Revenue Streams » Acquisitions of Google » Features and Products » Google's Products Milestones » Google’s IPO

Google went public with its IPO on August 19, 2004. Google had filed their IPO July 26th, 2004 seeking $2.7B, Morgan Stanley and Credit Suisse First Boston. They auctioned their shares.

After the IPO, the priorities of any company are diverted towards its shareholders. The same is the case with Google where there are several things that are impacting Google's decisions to change the algorithms, to deflect discussion away from organic search, and to go live with what appears to be untested algorithmic changes. Google says, quite emphatically, that they "Test, test, and test again before sending updates live. We certainly can't divulge the process, of course, but each update is run through the many stages of both internal and external testing".

It is being discussed that “robot-generated spam consists of anywhere between one-fifth and one-third of the Google index” and indicates that Google is “engaged in an arms race with search engine optimizers.”  But now it is being debated if web spam actually bad for Google? And are Google (and Yahoo! for that matter) really out to get the SEO industry?

Google and Yahoo! Or for that matter any search engine; want their paid links to be more relevant than their organic results on searches of a commercial nature.

Doesn’t Google/Yahoo like these to be slightly irrelevant and haven’t they engineered a system that makes this so? According to a comment to an article posted on Google’s manipulation of its index, in the ‘The Register’, “At this rate, in a year the SERPS will be nothing but Amazon affiliates, Ebay auctions, and Wiki clones. Those sites don’t seem to be affected one bit by the supplemental hell, 301’s, and now deindexing.”

It may not be right to say that Google wants its organic results to be completely irrelevant (like the comment above suggests) and they certainly have every incentive to be relevant for non-commercial search terms (which they are). But a little irrelevance is good for paid links and paid links is how Google makes money.

SEO is not to be blamed here. They are simply playing in a system set up to create crappy results. A notable point is how search engines differentiate in the manner in which they want the search results displayed in organic and paid listings. A recent search on “printer cartridges” brought up these two paid links first, with a cleanly optimized title and marketing message:

The same search brought up the following two organic listings first:

The question is why their huge difference in the manner is the paid and organic listings are presented. Why do these organic links have such a confusing message? Because this is the way Google has engineered the system. Webmasters have to manipulate their sites in this manner to get listed. It is evident that the user will click on the paid results and that is what helps make Google money. For commercial terms, search engines have a huge incentive to make their main search results less relevant than their paid search listings. Because the system rewards them for paid links, users have to put up with some irrelevance in their main results. Hence, SERP’s on commercial terms will be a bit irrelevant because most of the organic results are manipulated.

Google's revenue and net income rose in the first quarter, ended March 31, 2006, thanks to continued increases in the usage of its search engine services and in its online advertising sales.

Revenue came in at $2.25 billion, a 79 percent increase compared with 2005's first quarter. Excluding the commissions Google pays to Web sites in its ad network, revenue was $1.53 billion, exceeding the $1.44 billion consensus expectation from financial analysts polled by Thomson Financial.

Net income reached $592.3 million, or $1.95 per share, up from $369.2 million, or $1.29 per share. On a pro forma basis, which excludes certain one-time items, net income was $697 million, or $2.29 per share, exceeding analysts' consensus $1.97 per share expectation.

The SEM community has been greatly affected by the transition of Google from a privately held company to a publicly held one shaking up the search industry and search marketers.
The impact will also be from the retaliation of Google competitors, all positioning themselves against a new, post-IPO Google. The IPO which has touched upon we search marketers:

• Increased contextual inventory. Google's AdSense product is already quite successful. With recent improved targeting and "smart pricing," every indication is Google will continue to expand the AdSense network. With an ever-increasing amount of inventory available within the contextual side of the Google network, you'll have to understand if and how AdSense inventory works for your specific campaign.
• Smarter searchers. Media focus on Google has resulted in the public learning how to search more intelligently thus accelerating the current trend of longer search queries (searchers using more keywords in a phrase).

There has been a change in Google since the talk of IPO started. Google used to be the ‘good company’, as they weren’t in for the money but for the users/webmasters. Now it seems that Google IS in for the money. Again, in their S1-form they have promised to not be evil, but can they keep up such a policy, when the investors are pressuring for profit?”

Google is falling to the demands of being a public company. In their initial filing, Google addresses this worry as the primary focus of their owner’s manual:

“Now the time has come for the company to move to public ownership. This change will bring important benefits for our employees, for our present and future shareholders, for our customers, and most of all for Google users. But the standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google’s past success and that we consider most fundamental for its future. Therefore, we have designed a corporate structure that will protect Google’s ability to innovate and retain its most distinctive characteristics. We are confident that, in the long run, this will bring Google and its shareholders, old and new, the greatest economic returns. We want to clearly explain our plans and the reasoning and values behind them.”

It is being speculated that after the IPO:

• Google will not focus on the bottom line instead of results and therefore must increase it's focus on paid listings, thus reducing the number of natural results since these are free.
• Natural Results Won't be as Prominent with the IPO
• Google Isn't Going to Update Natural Results as Often