To: HerbVic who wrote (165782 ) 2/10/2014 3:23:40 PM From: Ryan Bartholomew Read Replies (2) | Respond to I thought that almost all of Googles profits were derived from advertising through a few channels of free services. I would think that the barriers to entry for that business model are not that insurmountable. Indeed, almost all their profits are derived from advertising (albeit that's shifting... they have an increasing amount of service revenue). That's how their reputation as a "one trick pony" was formed. People thought of Google as a search engine that sells a lot of ads to make money, and that's the only way they make money. Early on, it was largely true. People going to www.google.com and performing a search were generating the vast majority of the ad views. This is no longer true. YouTube, Gmail, Android, and literally dozens of other products generate ad views. So while ads are still the one product that generate most of their revenues, the ads themselves are so ingrained in the world of computer use (mobile and traditional) and among so many products (many of which are dominant), that it's almost impossible for a new company to just storm the market and take a sizeable share away. Could happen over time, but would have to be gradual. Adding to their strength is that their ad platform per se is the most efficient. Advertisers *want* Google to dominate because they generate the biggest bang for the buck based upon their efficiency, including targeting. I have a large amount of experience running ads, and while some tend to think, "boy... big advertisers must hate that Google is in such a dominant position", it's actually quite the opposite. Most advertisers prefer to have as much inventory as possible on one platform as long as it's the most efficient, and because the pricing mechanism is on a self-adjusting bidded basis, there's no concern about price fixing. Google can't take advantage of a naturally monopolistic position, as advertisers would just lower bids if they did
