Google users were greeted with an unfamiliar sight when they tried to perform an internet search one Monday afternoon last month - an error message. With supreme timing, a virus prevented some people in the UK and the US from using the site on the very day the company announced the estimated price tag for its initial public offering (IPO).
From the resulting newspaper headlines the next day, you'd have thought the national grid had collapsed. As one chat-room user remarked: 'Google's down? Forgive me while I stock up on water and ammunition.'
The reaction was slightly hysterical, but not unexpected considering the iconic status now afforded this brand. Google is the most popular search engine among UK web users and the third most popular website across Europe. A study conducted exclusively for Marketing by OMD Snapshots underlined just how widely used the site is. It found that 29% of internet users visit Google every day; of this group, nearly one in five use it at least 10 times a day. No wonder they were so dismayed when their favourite source of information crashed.
Google's 'tipping point' came in January 2001, when an article headlined 'Don't be shy, ladies - Google him! Check out his search engine first!' appeared in The New York Observer. The piece, which chronicled the growing trend for people to use Google to find out more about their dates, was a moment of pride for the company, which had been founded only five years earlier in a Silicon Valley garage.
Its new-found fame came at a price. Google was soon to discover what Hoover and Xerox had already learned - that when a brand worms its way into popular vocabulary, its owner risks losing control. By 2003 Google's lawyers were writing to dictionary publishers asking them to mention its trademark status or to delete reference to the brand.
It was a crash course in brand management for founders Sergey Brin and Larry Page, and an issue that they are revisiting as they manoeuvre Google through this month's 拢20bn flotation. To say that the IPO is unconventional would be an understatement. Brin and Page have opted for a novel dual-share structure that ensures they will have 10 times the voting power of other shareholders. It is also being conducted as an auction of shares with the intention of attracting primarily small, US-only, investors rather than large institutions. While an auction-style IPO is unusual (and has even upset some on Wall Street), it is entirely in keeping with Google's thinking. It bears comparison with the company's AdWords advertising system, whereby advertisers bid for first position on searches for specific key words, and Google Answers, which invites users to name their own price for a researcher to answer a question.
It also serves to underline the brand's almost messianic principles.
Page spells these out in the search engine's IPO registration document: 'Don't be evil. We believe strongly that in the long term, we will be better served - as shareholders and in all other ways - by a company that does good things for the world, even if we forgo some short-term gains.
Our goal is to develop services that improve the lives of as many people as possible.' To this end, the company offers free ads to a host of non-governmental organisations and has set up a charitable foundation.
If the company manages to pull off the flotation successfully, it will not only have delivered cash for growth, but enhanced its anti-establishment reputation among Google users. Such gains are never easily won, and the challenge of the IPO is a microcosm of the dichotomy between brand and business that Google now faces.
Creeping commercialisation
This is a brand that has built itself up entirely through word-of-mouth recommendation and subsequent media endorsement. It has done so largely due to its uncluttered user interface and the fact that it is seen to serve consumer, rather than advertiser, interests.
The truth of today's Google is somewhat different from the perception.
An array of services have been added that build advertising revenues, and just 18 months ago it embarked on business-to-business advertising; for the time being advertising to consumers remains a no-go.
This drive for revenue has only been embraced relatively recently. In 2001 it made only 拢66m in ad revenue. As Google became more commercially minded, this rose sharply to 拢306m in 2002, and then 拢772m last year.
In April this year Google announced plans to launch its own email service, GMail. Google fans loved the idea of the vast inbox capacity proposed, but were shocked by the thought that advertisers would be able to place ads on emails linked to key words used in their messages. It is a good illustration of the difficulty Google faces: its reputation for putting the end-user first is so strong that any attempt to make money from advertisers will inevitably jar.
In fact, the creeping damage to Google's reputation started last year.
The search engine was accused of censorship by some members of the internet community when it acceded to demands by the Church of Scientology and music website Kazaa to remove links to unauthorised versions of their sites. The decision did not sit well with the lofty principles of openness that Google has always espoused.
Yet the brand remains the stuff of Silicon Valley folklore, and retains the image of the ultimate in counter-capitalist dotcom cultures. The company is managed in a famously casual and democratic way, with spacehoppers and table-tennis tables strewn about the office and employees offered unlimited ice cream and massages. Google Labs - the part of the Google website that allows users to test services being considered by the company - reflects this culture of openness. There aren't many technology companies that consider it so important to share their ideas with consumers that they are willing to risk rivals stealing their concepts.
For many consumers the warm glow has been maintained by the fact that Google is simple and effective. According to Tara McGregor, director of new media at Corporate Edge, Google has worked hard to maintain the purity of its search technology. 'Search engine optimisation companies always have the hardest job trying to get their clients into Google listings because the company constantly changes the search technology it uses,' she says. 'They don't want the listings bombarded with commercial sites.'
Unlike Yahoo! and MSN, both of which are powered by the Overture system and accept payment from commercial sites in return for inclusion in listings, Google keeps all its paid-for references in clearly marked ads or sponsored sections. As Ajaz Ahmed, co-founder of internet advertising agency AKQA, observes: 'The perception is that Google is not advertiser-funded. Visitors see it as more of a public service.'
For some, however, its hokey imagery is at odds with the reality of a 拢20bn company that now dominates a market. Amanda Jones, head of search at online advertising agency i-level, argues that to see Google as 'just a bunch of geeks at heart' is to underestimate its commercial savvy. 'The fact is that they are effectively levering their power as a media owner by developing products that are outside their core area,' she says.
This expansion strategy is taking Google away from its roots in search technology. One example of this diversification is the company's most recent service created for advertisers, AdSense, which places ads on third-party websites deemed to have content related to the ad, using the same technology that will see ads appear on emails.
Jones is not a fan of this system. She says her research has shown that AdSense's conversion rates are much lower than ads placed on search results.
'You only pay when people click through, but I feel that using AdSense dilutes the (power of ads on the) search pages,' she argues. 'Search is an optimal place for advertising, as people are often ready to buy. That isn't the case with third-party websites.'
The danger isn't just that AdSense may not prove commercially viable.
It may also prove to be the first step down a road that takes Google away from its core positioning. Jez Frampton, chief executive of Interbrand, believes that Google needs to stick firmly to the perceived values of objectivity and simplicity that have made it so popular. 'The brand's simplicity is its elegance,' he says. 'It needs to resist the temptation to turn into something else.'
Rival manoeuvres
The GMail service could also be construed as a shift away from its core area, though the fact that it will feature a facility for searching emails means there is still logic to the move. However, Microsoft and Yahoo! have been quick to increase the capacity on their email inboxes, blunting Google's edge before GMail is even out of its test phase.
For some, initiatives such as AdSense and GMail are appropriate given the encroachment of competitors into the search market. AOL has indicated that it has aspirations to offer a search product of its own. Yahoo!, meanwhile, has altered the look of its search page to give it a more Google-esque uncluttered appearance and has changed the way it displays results to reflect Google's uncomplicated listings.
But it is Bill Gates that the company needs to watch out for most. Jones believes that Microsoft's trials of its own search technology should be the biggest worry for those at Googleplex headquarters. 'Every product Microsoft brings out ends up virtually monopolising a market,' she says. 'This has the potential to wipe Google out in terms of use.'
Gates has admitted that his company missed a trick by letting the search market grow without being a player. Microsoft's MSN announced last month that it would no longer allow paid inclusions in its search results in an attempt to improve the integrity of its search product - always Google's point of difference.
The software giant is also planning to incorporate a search facility in future versions of Windows.
Engineering growth
There is still huge potential for growth in search technology. Julian Smith, online advertising analyst at Jupiter, argues that the big three operators have everything to play for. 'Search is still at a fairly rudimentary level,' he says. 'There are plenty of technological irons in the fire that could give a company significant competitive advantage.'
These include regional searches: all three major search brands are testing ways to improve the effectiveness of searches for local companies or services, and these will offer new opportunities for advertisers. Other innovations being tested include voice-recognition technology to deliver results over the phone. Google also plans to offer advertisers the ability to put pictures on ads through its ImageAds service. Increasing complexity in the market could work in Google's favour, as users pick the best-known brand. But given the marketing war chests of Microsoft and AOL, it cannot afford to sit back and hope.
Aside from the growing competition, potential investors are beginning to voice concerns that Google's healthiest growth may now be in the past.
Revenues rose just 7.5% in the three months to June, compared with average growth rates in the region of 30% before. There are fears Silicon Valley's golden child is being overpriced.
So could all this mean that Google will be forced to advertise itself for the first time to defend its patch? The company was unable to comment for this article during its pre-flotation phase. But in the UK at least, Google's user profile presents the potential for a slowdown in growth unless it acts more pro-actively to draw consumer attention to its services. Although Google has by far the highest number of users, it has a much lower percentage of users who are new to the internet than MSN, Ask Jeeves and Yahoo!, according to Forrester. In addition, the OMD Snapshots research shows that few of even the most dedicated Google fans have ever used the extra services such as News or Answers.
It isn't just the mega-brands that Google needs to stay ahead of. At the beginning of last month, as the City and Wall Street continued to debate the wisdom of investing in the company, Google received a salutary warning in a small story in The Times about a UK internet company seeking funds. That firm is search engine Blinkx, which goes beyond what is currently available by also trawling through users' computers for results. As with Google in its early days, it has apparently been swamped by offers from venture capitalists.
Google's European marketing chief Lorraine Twohill is only too aware of the need to beat off both the mega-brands and the tech start-ups. Earlier this year she told Marketing (21 April) that she was well aware of the potential fragility of Google's hold on the search market. 'People came to us in seconds,' she said. 'They could leave us in minutes.'
GOOGLE EXTRA SERVICES
Answers - Users can post any question, set the price they are willing to pay, and a researcher answers it.
Catalogs - A service available only in the US, this allows users to view the pages of companies' catalogues. Dominated by homeware, clothing and computer firms.
Directory - A search engine arranged in directory format, much like Yahoo!
Froogle - Launched at the beginning of last year, Froogle allows users to search for items they want to buy.
Gmail - Still being tested, this will offer 1000Mb of memory and will allow advertisers to target ads based on key words mentioned in messages.
Orkut - A social networking site only a few months old, this was created by an employee taking advantage of Google's policy to encourage personal projects.
TIMELINE - GOOGLE
1996: Larry Page and Sergey Brin, two PhD students at Stanford University, devise a search engine that counts the number of links to a web page and then ranks them.
1998: The duo raise $1m in venture capital, including a contribution from Yahoo!'s David Filo.
1999: $25m is raised for investment. The 'beta' label (internet-speak for test) is removed from the site.
2000: Google signs a deal to supply Yahoo! with search technology. It also rolls out its AdWords advertising system and the Google toolbar.
2001: Google is made available to mobile phone users in the US and Asia, and acquires the Usenet discussion boards. It launches Google Zeitgeist, a real-time list of most popular searches.
2002: AOL picks Google to provide search services for its 34m users. AdWords is overhauled to offer a cost-per-click pricing model. Google News is launched.
2003: Google acquires Blogger by buying Pyra Labs, and launches AdSense. A new version of the Google toolbar includes a pop-up blocker.
2004: Email service Gmail begins testing, and the company prepares for its IPO.
TOP 10 SEARCH SITES
Site Audience Active Av length
(000) reach of visit
(%) (min:sec)
1 Google 13,699 52.7 26:19
2 MSN 5802 22.4 4:26
3 Ask Jeeves 4554 17.6 11:28
4 Yahoo! 4400 17.0 12:08
5 AOL 2429 9.4 26:31
6 Wanadoo 1391 5.4 6:31
7 My Way 1015 3.9 5:08
8 AltaVista 832 3.2 9:00
9 Microsoft 780 3.0 3:47
10 Tiscali 652 2.5 3:27
Source: Nielsen//Net Ratings Data period: May 2003-May 2004
TOP 10 INTERNET BRANDS
Brand Audience Active Time per person
(000) reach (%) (hr:min:sec)
1 Microsoft 15,969 61.6 0:34:43
2 MSN 15,775 60.9 2:02:01
3 Google 13,669 52.7 0:26:19
4 Yahoo! 10,445 40.3 1:01:36
5 BBC 8712 33.6 0:44:46
6 eBay 8646 33.4 1:46:40
7 Wanadoo 6949 26.8 0:17:29
8 AOL 5536 21.4 3:38:44
9 Amazon 5189 20 0:17:27
10 Ask Jeeves 4554 17.6 0:11:28
Source: Nielsen//Net Ratings Data period: May 2003-May 2004