Google Doesn’t Pay Much To Advertise

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

One of the most interesting elements about Google’s runaway success is the fact that the company has grown so huge without doing that much advertising of its’ own. Sure, they expect you to pay them for ads, but they don’t spread their own money around quite so fast. The fact they don’t pay to advertise, has also kept them “cool”.

“It’s almost as if they have this cultural allergy to advertising,” said Mark Hughes, author of “Buzzmarketing,” a book about unconventional ways to build a brand. “It has been an advantage because it has helped keep them cool. They have zigged while everyone else has been zagging.”

This advertising aversion has freed up money for engineers, computing hardware and other resources that fuel Google’s search engine while leaving plenty of profit to keep shareholders happy and lift the company’s stock ever higher.

Some marketing experts view Google as the archetype of an Internet-driven age that has made it possible for startups like YouTube, MySpace and Facebook to permeate pop culture with little or no advertising.

If there’s one thing I’ve learned from Google, it’s to keep my own marketing expenses very low. Any other way you can get people to your website without paying ends up helping profitability quite a bit. This is one factor that is keeping Google very competitive.

While major rivals like Microsoft Corp. and Yahoo Inc. pour more than 20 percent of their annual revenue into sales and marketing, Google devoted 8 percent of its revenue to the category in 2006, spending a total of $849.5 million. Microsoft spent $11.5 billion on marketing and sales in its last fiscal year, while Yahoo spent $1.3 billion. On advertising and promotions alone, Google spent $188 million in 2006 — roughly the same amount Microsoft spends every two months.

If they can keep it up, this will almost always keep them ahead of those companies who are trying to catch up with them. Now Google better hope that most companies don’t start emulating them when it comes to their ad spend.

If you enjoyed this post, subscribe to the Sootle RSS feed!.