Gennaro Cuofano's Blog, page 252

September 24, 2018

When The AI Meets Users’ Intent, Google Takes A Cut On Every Sale On Earth

It all started with a paper, "The Anatomy of a Large-Scale Hypertextual Web Search Engine" in a paragraph entitled "Advertising and Mixed Motives "Page and Brin noted about the advertising business model:

Since it is very difficult even for experts to evaluate search engines, search engine bias is particularly insidious. A good example was OpenText, which was reported to be selling companies the right to be listed at the top of the search results for particular queries. This type of bias is much more insidious than advertising, because it is not clear who "deserves" to be there, and who is willing to pay money to be listed. This business model resulted in an uproar, and OpenText has ceased to be a viable search engine.

and they continued:

This of course erodes the advertising supported business model of the existing search engines. However, there will always be money from advertisers who want a customer to switch products, or have something that is genuinely new. But we believe the issue of advertising causes enough mixed incentives that it is crucial to have a competitive search engine that is transparent and in the academic realm.

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Not long after, in 2004, when Google had to go public it finally showed the power of its advertising business model:

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Advertising revenues made up 94%, 97% and 99% of our revenues in 2002, 2003 and 2004.

In 2017, Google advertising revenues still represented 86% of its total turnover:

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While Google has reached a market cap of over eight hundred billion dollars, it easy to be fooled to believe that the key to Google's future is still represented by advertising.

Yet there is an important thing to notice.

Google AI ready to be unleashed

As noted in "Ok Google, Are You In Search Of A Business Model For Voice?"

When Google's CEO, Sundar Pichai announced Google Duplex, back in May 2018, that showed Google AI ability to interact with humans. At the same time, this also shows what Google might be able to do in terms of understanding human intents. If as of now unleashing such a mechanism for Google would be too risky. It also opens up several scenarios.

One - I believe - is critical: users' intents disintermediation

When Google used advertising as its primary business model

When looking back at the history of the web, we might wonder how for years tech giants like Google and Facebook were able to build a multi-trillion empire based on advertising.

While advertising still allows those companies to generate revenues at high margins. The future might look entirely different. Let's think about it for a second. What's the aim of Google? Well, as Google puts it "Our mission is to organize the world’s information and make it universally accessible and useful."

In a way that has become the ability to answer any questions, a user might have. To be able to answer questions Google has to tap into users' intents. In short, the intent is the purpose of a search. As Google developed over the years, it managed to understand better and better users' intents. While for years Google provided a search result page plenty of pages that might have been more or less relevant. Google also got better and better at refining those results to meet the exact intent behind the users' searches.

When Google AI meets the users' intent advertising becomes superfluous

One question that might come up is "what happens if Google can tap into users' intent at the point to give them answers that bring them directly to a transaction?" "Would Google still need advertisers to sell their products on a keyword basis, when instead Google can bring any user to the store and product they wish to buy?"

In that context, advertising, meant as a way for companies to bid on keywords might be over. All the commercial intent might be covered entirely by Google, finally able to create a complete experience where the user is looking for something that can find on the web. It might also mean the end of Google AdSense (if Google can meet commercial users' intents on the search results why allow them to purchase via organic content?). However, organic content will still be the key to answer more philosophical questions and as "companion content" to the commercial intent.

What's next then?

The power of branding: Advertising is not just about meeting users' intent, but about creating demand

One of the key things the community of practitioners of the SEO industry has understood is that to survive the next wave of the web means being able to generate demand. In short, rather than just working on existing keywords, any company needs to be creating demand for new search terms. Imagine the classic scenario of a company that doesn't exist. Once it launches its brand name will have zero volume.

Yet over time with the proper branding strategy that brand name will pick up on search. Thus it will finally have a search volume. While demand generation might be part of the answer, I don't think that is the answer. Imagine the case in which I'm able to generate demand for a keyword. Google algorithms might have become so good at picking up on users' intents; which might be able to close the gap between the demand and offer very quickly. Thus, I've created a new intent and the users looking for it. That means Google might be able to cannibalize that keyword right away.

Let's think in practical terms. I've generated demand for a new Pizza recipe "Pizza with Mozzarella." Yet as demand for that Pizza picks up Google understands that users' intent on that is based on purchasing it from several local stores. Thus, it quickly adjusts its search results to send people over the Pizza shop where they can buy it so that Google can monetize by getting a cut on that. I've just generated demand on a keyword that Google cannibalized so that they can make money on it!

Will Google take a cut on every single sale on earth?

In that scenario, Google might become the intermediary between users and any store. That means it might make a cut into any deal on the globe!

Is this scenario plausible? Perhaps not. However, it is a fun exercise to speculate about the future.

How do you think the future will look like? Leave a comment below!

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Published on September 24, 2018 14:34

September 23, 2018

Salesforce: The Multi-Billion Dollar Subscription Based CRM

Salesforce main revenue generation strategy is based on a subscription-based cloud service. Over 92% of Salesforce revenues come from four categories of cloud CRM (Customer Relationship Management) services, that span from the sales cloud to marketing cloud. The remaining revenues are primarily driven by professional services. In 2017 the company generated $8.39 billion in revenues.

Salesforce business model explained

Salesforce is a leading provider of enterprise software, delivered through the cloud, with a focus on customer relationship management, or CRM. Salesforce introduced a first CRM solution in 2000.

The key to Salesforce value added is based on the fact that service offerings can be deployed rapidly, configured easily and integrated with other platforms and enterprise applications, or apps. While this might seem trivial today, it wasn't back in the 2000s. CRM services often required high upfront costs together with expensive services hard to run and maintain. Salesforce changed all that.

Those services are delivered in two ways:

Via major internet browsers and on leading mobile devices
Direct sales efforts and also indirectly through partners

The revenue model Salesforce uses is the subscription-based business model.

Salesforce cloud sales offering explained

The strength of the company derives from its sales cloud offerings. Over $7.75 billion came from those services. That represented over 90% of the revenues for 2017.

Those services can be broken down in:

Sales Cloud: it was Salesforce first offering, and it continues to be the largest contributor to total subscription and support revenues. This is a service which enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around any sale on the desktop and mobile devices.
Service Cloud: which is the second largest contributor to total subscription and support revenues. It enables companies to deliver smarter, faster and more personalized customer service and support.
Marketing Cloud: This service enables companies to plan, personalize and optimize one-to-one customer interactions across email, mobile, social, web and connected products.
Commerce Cloud: it empowers brands to deliver a comprehensive digital commerce experience across web, mobile, social and store.
Community Cloud: It enables companies to quickly create and manage trusted, branded digital destinations for customers, partners, and employees.
IoT Cloud: it enables companies to harness the power behind billions of connected devices, products, sensors and apps to derive entirely new levels of customer insights.
Analytics Cloud: it enables any employee across an organization to quickly and easily explore business data, uncover new insights, make smarter decisions and take action from any device
Salesforce Quip: it is a next-generation productivity solution designed for teams with a mobile-first strategy, empowering everyone to collaborate more effectively, work smarter and supercharge their productivity, all without email.
Salesforce Platform: (formerly App Cloud) that is for building enterprise apps— powering Salesforce’s CRM apps, with thousands of partner-built apps and millions of custom apps built by customers.

Salesforce operating structure

All of the cloud offerings that Salesforce offers to customers are grouped into four major core cloud service offerings:

Sales Cloud
Service Cloud
Salesforce Platform and Other
and Marketing Cloud

Those represented the majority of the company's revenues in 2017.

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What distribution strategy does Salesforce tap into?

Salesforce taps mainly into four sales and distribution strategies:

Direct sales
Referral and indirect sales
Strategic investments
Marketing

Direct Sales

Salesforce sells its services primarily through their direct sales force, which is comprised of:

telephone sales personnel based in regional hubs,
and field sales personnel based in territories close to their customers.

Both telephone sales and field sales personnel are supported by sales representatives, who are primarily responsible for generating qualified sales leads.

Referral and Indirect Sales

Salesforce has a network of partners who refer sales leads and who then assist in selling to these prospects.

This network includes:

Global consulting firms,
Systems integrators
And other partners.

In return, Salesforce typically pays these partners a fee based on the first-year subscription revenue generated by the customers to whom they refer.

Strategic Investments

Since 2009, Salesforce has been investing in early-to-late stage technology and professional cloud service companies across the globe to support key business initiatives to extend the capabilities of its platform and CRM offerings. The primary objective is to increase the ecosystem of enterprise cloud companies and partners, accelerating the adoption of cloud technologies and creating the next generation of mobile applications and connected products.

Marketing

Salesforce marketing strategy is to promote its brand and generate demand for its offerings. With a variety of marketing programs across traditional and social channels to target its prospective and current customers, partners and developers

Multi-channel marketing campaigns span across email, social, and web.

Other marketing activities refer to proprietary events of all sizes, ranging from Dreamforce to salon dinners, as well as participation in trade shows and industry events.

Press and industry analyst relations to garner third-party validation and generate positive coverage for Salesforce.

Some of the marketing activities comprise:

Content marketing and engagement on all of the major social channels;
Search engine marketing and advertising to drive traffic to Salesforce Web properties;
Partner co-marketing activities with global and regional implementation partners;
Website development to engage and educate prospects and generate interest through product information and demonstrations, case studies, white papers, and marketing collateral;
Customer testimonials;
Tools that enable the sales organization to more effectively convert leads to customers;
Event sponsorships and primary real estate signage.

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While primary revenues are generated via cloud services. The largest market for Salesforce is America, followed by Europe and the Asia Pacific.

Professional services and other revenues represent the remaining of its revenues. Those consist of fees associated with consulting and implementation services and training.

Salesforce also offers some training classes on implementing, using and administering service that is billed on a per person, per class basis.

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Published on September 23, 2018 14:13

Accenture Business Model In A Nutshell

Accenture is one of the world’s leading professional services companies with approximately 425,000 people serving clients in a broad range of industries and in three geographic regions:

North America,
Europe
and Growth Markets (Asia Pacific, Latin America, Africa, the Middle East, Russia, and Turkey)

Accenture runs five operating groups, organized by industry. Those are: strategy, consulting, digital, technology including application services, and operations to deliver end-to-end services and solutions to clients.

In 2017 over 27% of revenues came from products, while over 21% from financial services and over 19% of communications, media and technology. North America is the largest market for Accenture.

Accenture in numbers

Accenture is one of the world’s leading professional services companies with approximately 425,000 people serving clients in a broad range of industries and in three geographic regions:

North America,
Europe
and Growth Markets (Asia Pacific, Latin America, Africa, the Middle East, Russia, and Turkey)

five operating groups, organized by industry

strategy
consulting,
digital,
technology including application services,
and operations to deliver end-to-end services and solutions to clients

Accenture five operating groups are Accenture’s reporting segments and primary market channel, organized around 13 industry groups that serve clients globally in more than 40 industries.

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Communications, Media & Technology operating group serves communications, media, high tech, software and platform companies
Financial Services operating group serves the banking, capital markets and insurance industries
Health & Public Service operating group serves healthcare payers and providers, as well as government departments and agencies, public service organizations, educational institutions and non-profit organizations around the world
Products operating group serves a set of increasingly interconnected consumer-relevant industries
Resources operating group serves the chemicals, energy, forest products, metals and mining, utilities and related industries

The five operating groups bring together expertise from:

Accenture Strategy,
Accenture Consulting,
Accenture Digital,
Accenture Technology
and Accenture Operations

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Communications, Media & Technology net revenues increased 4% in local currency, led by Software & Platforms in North America, as well as growth across all industry groups in Growth Markets. This growth was partially offset by a decline in Communications & Media in Europe, as disruptions in the market continue to impact demand
Financial Services net revenues increased 7% in local currency, led by Banking & Capital Markets in Europe and Growth Markets
Health & Public Service net revenues increased 3% in local currency, driven by Public Service in Growth Markets and Europe
Products net revenues increased 14% in local currency, driven by very strong growth across all industry groups and geographic regions, led by Consumer Goods, Retail & Travel Services, as well as Life Sciences in North America and Industrial in Europe
Resources net revenues increased 1% in local currency, led by Utilities in Europe, partially offset by declines in Energy across all geographic regions

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Published on September 23, 2018 07:23

Nike Business Model: Demand Generation As Weapon For Business Growth

Nike makes money by primarily selling footwear via wholesale customers that distribute the Nike brands across the globe. As of 2017, over 60% of revenues came from footwear and over 28% in apparel. The remaining comprised equipment and the Converse Brand. One of the critical ingredients of Nike success is its ability to create demand for its products. In fact, as of 2017 Nike spent over $3.3 billion in demand creation campaigns.

What products does Nike sell?

Nike has nine key categories:

Running,
NIKE Basketball,
The Jordan Brand,
Football (Soccer),
Men’s Training,
Women’s Training,
Action Sports,
Sportswear (our sports-inspired lifestyle products)
and Golf.

Men’s Training includes baseball and American football product offerings. Nike also markets products designed for kids, as well as for other athletic and recreational uses such as cricket, lacrosse, tennis, volleyball, wrestling, walking and outdoor activities

Nike distribution and manufacturing

NIKE has six significant distribution centers located in Memphis, Tennessee, two of which are owned and four of which are leased.

Nike is supplied by approximately 127 footwear factories located in 15 countries. The largest single footwear factory accounted for about 8% of total 2017 NIKE Brand footwear production.

All of Nike footwear is manufactured outside of the United States by independent contract manufacturers who often operate multiple factories.

In 2017 Vietnam, China and Indonesia manufactured approximately 46%, 27% and 21% of total NIKE Brand footwear, respectively.

Nike revenues breakdown

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With $21 billion revenues in 2017, footwear represents the 61.5% of the total income. Followed by Apparel, with $9.6 billion and the Converse segment with over $2 billion in revenues.

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Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.

NIKE Brand wholesale equivalent revenues consist of:

Sales to external wholesale customers
and internal sales from our wholesale operations to our Direct to Consumer operations, which are charged at prices that are comparable to prices charged to external wholesale customers.

Others include all unisex products, equipment, and other products not allocated to Men’s, Women’s and Young Athletes’.

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Men’s sales represent most of Nike total revenues.

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Running and sportswear are the categories that generate the most revenues for the company.

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North America represents the most significant market for Nike. Greater China follows.

Nike spending on demand creation

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One key ingredient of Nike success seems to be the demand creation.

Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, television, digital and print advertising, brand events, and retail brand presentation.

Demand creation expense increased 2% for fiscal 2017 compared to fiscal 2016, driven by higher sports marketing costs, as well as higher marketing and advertising costs, primarily to support key sporting events including the Rio Olympics and European Football Championship.

How does Nike record demand creation?

The Company records demand creation expense for these amounts when the endorser achieves the specific goal. Certain contracts provide for variable payments based upon endorsers maintaining a level of performance in their sport over an extended period of time (e.g., maintaining a specified ranking in a sport for a year). When the Company determines payments are probable, the amounts are reported in Demand creation expense ratably over the contract period based on the Company’s best estimate of the endorser’s performance.

Yet the extent that actual payments to the endorser differ from the Company’s estimate due to changes in the endorser’s performance, increased or decreased demand creation expense may be recorded in a future period.

Other contracts provide for royalty payments to endorsers based upon a predetermined percent of sales of particular products.

Through cooperative advertising programs, the Company reimburses customers for certain costs of advertising the Company’s products.

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Published on September 23, 2018 04:07

September 20, 2018

Is Content King In SEO After All?

One of the exciting things about the Internet is that anyone with a PC and a modem can publish whatever content they can create. In a sense, the Internet is the multimedia equivalent of the photocopier. It allows material to be duplicated at low cost, no matter the size of the audience.

Those are some of the words Bill Gates wrote in his essay "Content is King." Ever since that has become a prophecy among content producers. Among the community where this discussion is most felt is the SEO community. That comprises a community of experts that try to rank content on the web via the main commercial search engines.

Every here and there in the SEO community a discussion goes on about whether Content is still King or that got replaced by something else.

There is no doubt that content matters. However, content depends upon context, users' intents and the authoritativeness of its author. Those factors are even more evident now after a tornado swept away the traffic from many web properties.

Content without context and intent is like a Pizza without sauce

On the first week of August 2018, a tornado that the SEO community called "Medic Update" hit badly many sites. That was an update of the core of Google's algorithm which shifted millions if not billions of visits from some sites to others. As specified by Google:

This week we released a broad core algorithm update, as we do several times per year. Our guidance about such updates remains the same as in March, as we covered here: https://t.co/uPlEdSLHoX

— Google SearchLiaison (@searchliaison) August 1, 2018

The search liaison of Google, which deals with communication with the outside world (especially SEO practitioners) gave some more details on the algorithm change by specifying:

Each day, Google usually releases one or more changes designed to improve our results. Some are focused around specific improvements. Some are broad changes. Last week, we released a broad core algorithm update. We do these routinely several times per year....

— Google SearchLiaison (@searchliaison) March 12, 2018

Some of the biggest losers of this update seem to be the YMYL (your money or your life kind of website). In short, a site offering you guidance that can affect your life (be it physical or financial) has been transformed from this algorithm change. As reported by Search Engine Land, a list of the site in a week lost anywhere between 0-50 traffic.

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Source: searchengineland.com

As Bill Slawski pointed out:

Content is not king on the Web; meeting a searcher's intent is. When someone searches for pizza at lunchtime, they likely aren't looking for a history of Pizza, but rather a slice or two. #SEO #Intent #Context

— Bill Slawski (@bill_slawski) August 9, 2018

What might seem trivial is not. In fact, in the SEO community often discussions that revolve around the length of the perfect piece of content are going on at all time. However, content is not the point. Google is a tool to find answers to questions that might be philosophical or very practical.

Thus when I'm searching "pizza" based on the time of the day, I might be looking for something to eat. Alternatively, if I'm just curious, I might be looking for the history of Pizza. Those cases show two completely different intents. One is extremely practical (I need to eat right now!). The other is informational (I want to know the historical context of Pizza).

If you were to listen to the usual saying of "content is king" you'd probably waste your time putting together a two thousand word piece that covers the history of Pizza together with all the other different questions a user might have.

However, that same user might only be looking for specific information that might as well be answered with a 300 words recipe that describes how to make a Pizza. In this scenario, thinking in terms "content is king" will probably kill your business.

Google is becoming the Semantic Web

For many years the speculation about when Google would become semantic has going on. In short, for those who don't know how Google worked and how it works now. In the past, Google relied primarily on two aspects for search: backlinks and keywords. So that each time a user would insert that keyword in the search box, a result would be given by matching that keyword with a web page. As simple as that.

Although the mechanism might sound simple, it is true that Google managed for years to index and crawled billions of pages in a snap of fingers. Also, Google's first algorithm, PageRank, represented an incredible innovation in the commercial space. When Google was launched, the search industry was a plethora of engines that more than serving relevant results would serve spammy content, plenty of banners.

Google change that. However, as Google started to grow at fast speed, none would have imagined (not even Larry Page). The most significant issue for years was to manage that hypergrowth by avoiding the company would implode. Google was able to survive its hypergrowth and become the top search engine in the world. It finally controlled the web.

However, the birth of the SEO industry also represented a challenge for Google, which had to come up with a way to overcome the "manipulation" of its algorithm. While, in general, SEO practitioners operated according to Google's guidelines (so-called White Hat SEO) many others operated to game the system (so-called Black Hat SEO). Thus, Google came up with several updates to its algorithms, like Panda or Penguin, to wipe out those who were trying to game the system.

Another direction Google is moving toward is about integrating its semantic engine, built on top of its core algorithm as the main propeller for search. Back in 2013 and 2015 Google has updated its core algorithm with Hummingbird and then with a component of it, called RankBrain. To put it shortly, those changes were mainly intended at allowing Google to read the information on the web by looking at a massive knowledge graph it had created. This is a semantic technology that allows search engines to store billions of simple logic phrases (like "I am Gennaro" and "Gennaro knows John") which connected via logic relationships will enable this graph to grow exponentially.

Today Google's knowledge graph powers up a good chunk of Google's queries. Thus, Google is finally able to provide answers to its users based on direct questions.

The war toward voice search is still to be fought

As of now, Google is also able to offer several perspectives on a single question. For instance, if you ask on Google US "who's Gennaro Cuofano" you might see this:

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Google uses two different features (featured snippet and knowledge panel) to answer the same question from two different perspectives. However, there is one interesting point to notice. The knowledge panel is by far the most stable feature on Google's search results.

While featured snippets might come and go, knowledge panels usually stick. That's because the knowledge panel information is coming from Google's proprietary knowledge graph. While the featured snippet information is coming from a web page. Thus, if another web page will come with a better way to answer that question (and a better SEO strategy) you might lose the snippet.

That is also why knowledge panels might prevail within the Google's assistant compared to the featured snippet. Thus, the knowledge panel is and will be a critical space on the white page of Google.

That space is already worth billions. Where before the information from the knowledge panel was coming from an Amazon page I had created in the past. As you notice from the picture, that same information is coming from a page of Google books, which I did not create. This is a way for Google to get control back on its search results.

That is also the avenue that goes directly in voice search. Knowledge panels are often featured as answers within Google digital assistants. However, publishers also fear that those same features intended at giving direct answers to users might even kill their business.

Where are we going next?

In the article "Ok Google, Are You In Search Of A Business Model For Voice?" I hypothesized about four business models that might be feasible going toward voice search. At this stage, though one thing becomes clear; a nice, in-depth piece of content out of context or not able to capture the intent of the user might be worth nothing. In an era where multiple devices will be able to catch our attention by tapping into our intents with more and more accuracy, we'll need to rethink the way we deliver content.

For instance, while an essay might always be the best writing format to meet users intents on a philosophical matter. Think of someone searching for "the meaning of life" (apparently more than 200k searches per month happen on Google for that). In other cases, where the intent has a very practical and transactional intent (I just typed "Pizza" in the search box around dinner time, and all I get is restaurants) understanding the context is crucial!

Summary and conclusions

Back in 1996, Bill Gates wrote the famous essay that said: "Content is King." Ever since discussions have been going on about whether this is true or not (you'll probably find articles entitled "Content is King in 1997?" going forward). While content remains critical, it is also important to remember that the majority of the web traffic today goes through Google (the most popular site according to Alexa).

Yet people searching through Google might have philosophical questions. But in most cases, those are practical ones. In fact, as of 2017, 86% of Google revenues still come from advertising, and while you can still sell something to someone looking for its life's meaning. It's way easier to sell something to someone that doens't even bother asking.

Based on that, at commercial level content producers that can capture the context of a query and understand the intents (deep concerns that get them to act or trans-act) will win!

Planning for the tasks available to a searcher on a site, and making those available to that visitor is anticipating the intents behind a visit (How to, Buy, Book, Watch, etc. )

— Bill Slawski (@bill_slawski) September 20, 2018

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Published on September 20, 2018 15:40

September 19, 2018

Is An MBA Worth It? Pros And Cons Of An MBA

Masters of Business Administration (MBA) is quite a popular degree today. It is a post-graduate program that provides technical, logical, theoretical, and conceptual training in various aspects of business like corporate and management, IT and Finance, Sales and marketing, etc. It advances more career options and promises a brighter future for students.

No wonder, getting an MBA requires a complete two-year dedication and a lot of money to complete the degree. The debate that is also making rounds along with this prestigious degree is that whether doing an MBA is worth your time and money? A lot of effort is needed to finish an MBA, plus you may also have to bid adieu to your job for the next two years, to climb the corporate ladder. Every year thousands of students finish their MBA hoping for a secure future, a stable corporate job, and a handsome salary.

Your institution or university plays a very crucial role in deciding your career when doing an MBA from a top business school. If you want to make your job in the business world, then MBA unfolds a wealth of advantages for you landing you in the top management positions.

However, for many this degree is beneficial, but it also has some disadvantages coming along. Let us look into the pros and cons of doing an MBA.

Advantages of an MBA
Develop Priceless Managerial Skills

You get out of your comfort zone and learn the art and ethics of management. You can,

Produce, advertise, and sell your products
Maintaining the Company’s finance
Do complete data analysis
Hire efficient and productive employees for the company
Amend strategies when required and take the right call in tough situations

Better Chances for a Higher Salary

You can quickly cover your entire investment done towards your MBA program within two years time. The average salary of an MBA is relatively higher than any employee having a regular master’s degree.

You can expect a starting pay scale almost equivalent to five digits with your MBA qualification.

Read the recent report by the Economics.com in the table given below for a complete MBA guideline. It discusses the major factors like salary, fee structure, and the duration of the course that will help you in analyzing your decision.

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Source: The Economist

Expand Your Business Network

Being a regular MBA student, you will get excellent opportunities to build your network. You will interact with distinguished business personals, entrepreneurs, and professionals who are experienced managers.

The various internship programs that an MBA offers will expose you to the corporate culture and create managers in the making. You will be a part of that extensive alumni network where you meet intellectual business owners and learn about the current business environment.

Experience a New Culture and Get Thriving Opportunities

You get the chance to experience diverse culture while doing an MBA. Studying abroad can give you a taste of a new country and its diversities. Your overall perspective will broaden regarding how businesses are handled globally.

You can score good grades and get hired by the top employers in the world. The work pressure is high, so you may take MBA dissertation help from online sources that can guide you in completing your MBA assignments and projects. They have a panel of experts who love to help interested students thriving to score A+ grade in their MBA.

Start Your Own Business

Many students go for an MBA because they dream of starting their own startups and business. MBA sets a foundation stone to that ambition and help you in turning the business idea into a reality. Your focus on becoming an entrepreneur is sharpened, and you walk in the right direction of becoming your own boss. The owners of Nike, Bloomberg, Tesla Motors are an alumnus of different MBA programs worldwide.

Disadvantages of an MBA
Pricing or The Fee Structure

Cost is the biggest restraint for students aspiring to do an MBA. The fee structure of MBA colleges is sky touching, and not many can afford this expensive degree. Not only the tuition fees, but the textbooks, internships, practical assignments, and other personal expenses require a tremendous financial commitment if you plan for an MBA. So, decide wisely because your money is valuable.

Check out the 40 most affordable business schools in the world along with their fee structure here.

Time Commitment

A regular MBA degree requires you to devote your next two years or minimum one year completely to studies depending on your program of study. This requires a time commitment and a balance of both life and finances. If you are studying full-time, you may not have a source of income and have to sustain all on yourself. If you are working while studying, then time is your concern. You have to dedicate sufficient time to your studies even to pass. Pursuing an MBA requires an extreme level of hard work and discipline. You need a flexible boss, a supportive family, and a stable mind to achieve this degree.

Read the table below to learn about the duration and requirements of different MBA programs in the world.

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Source: Magoosh.com

Not all CEOs are MBA

Mark Zuckerberg the owner of the social giant Facebook is actually a college drop out. So if have plans to start your own business, doing an MBA may not be the best idea. At least the surveys and the current trends say this. The degree is considered less important today over your experience. How many years of experience do you have in the relevant field is what counts today. Remember, a business is built on strategies, planning, and a sharp mind.

Summary and conclusions

An MBA might be a good option for a few reasons:

Start Your Own Business
Experience a New Culture and Get Thriving Opportunities
Expand Your Business Network
Better Chances for a Higher Salary
Develop Priceless Managerial Skills

It is critical to notice that none of those options should be the sole reason for choosing an MBA. There are also disadvantages:

Pricing or The Fee Structure
Time Commitment
Not all CEOs are MBA

An MBA is usually pretty expensive; it requires a time commitment that can go anywhere between 2-6 years (depending if you’re attending a full-time or part-time MBA). Also, for that time being, if you enroll in a full-time MBA, you’ll keep yourself out of the job market. Ultimately, if your aim is to become the CEO of a company, the MBA isn’t the only path.

MBA is a recognized degree that will open up immense career options for you. It is undoubtedly one gate to success, but it is not the only option available. Whatever you study, the fact that really matters is if you are interested in your field or not? Choose what you like to do, what you like to study, and what can excite you in the long run if taken as a career.

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Published on September 19, 2018 15:15

Ok Google, Are You In Search Of A Business Model For Voice?

As we move toward voice search, Google evolves at a fast speed, and it adds new features that in a way makes us feel how the voice-centric world might look like. In this article, I want to show you some observations done on Google's search results and what they can tell us about what the future of search might look like.

Let's start with where Google is now, in terms of business model and search.

Google business model today

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On my blog, I covered from several perspectives the Google business model. If you look at Google financials in 2017, you realize how the tech giant from Mountain View has been branching out in several areas. However, the core of the company remains its advertising business model. Still, as of 2017, 86% of Google's revenues came from advertising.

For a company that is getting closer to the trillion dollar valuation, one might ask, how sustainable would it be a company that has built its fortune on advertising alone? Even though there is nothing wrong with advertising in itself, the real issue is how an asymmetric business model, which gains from hidden revenue generation might not wake up the regulatory giants (like the European Union) and break them apart?

While businesses understand that Google is a big advertising page, where they can get featured by bidding on keywords. In many cases, users are not aware of the mechanisms behind Google revenue generation. As users learn more and more about their privacy, search engines - like DuckDuckGo - are gaining momentum. What if users would end up caring more about their privacy than the comfort of a search that is highly personalized?

To make things worst, an entire industry was born out of Google opacity in sharing how its algorithm works: that is called SEO (search engine optimization). This industry has been snowballing, at the point to become a multi-billion industry. On the one hand, SEO has helped Google become a better engine. In fact, with a race between SEOs trying to rank their content - by understanding how Google's algorithms worked - Google had to evolve quickly, to avoid to be gamed by an SEO industry sustained by businesses that were trying to rank organically, without bidding on keywords.

The process of an evolutionary fight is typical in many contexts. It is also true that it has been in a way exacerbated by the fact that a commercial engine like Google has become the center of the world information. In short, when it comes to information and knowledge, one might wonder whether the business model Google picked is the right one. This question is not new. That is a question asked over and over again in the last two decades.

However, now that we're moving toward voice search, the information might get more and more polarized and skewed toward one answer within multiple devices. Wouldn't make more sense to ask this question more pressingly?

Let's give a quick look at where Google is at today.

What's next then for search?

When Google started to index the web, its mission to “organize the world's information and make it universally accessible and useful” also made it a commodity.

In fact, by indexing and ranking billions of pages Google became a threat but also a great distribution opportunity. As new blogs joined the web, there was no way out. Either you were featured by Google, on its first page, or you would be cut out of the web.

This logic continued for years. As Google worked primarily by ranking pages based on a mechanism of reference from one page linking to another (so-called backlink); over the years Google also started to read the metadata of those pages. That is data that describes the web pages.

In other words, as the web grew Google kept collecting more and more data around a page. However, as the algorithm would not be able to process large amounts of data Google didn't probably do much with that data; until in 2012 it finally started to roll out the Knowledge Graph. A massive database made of triples, that allowed Google to manage a vast amount of that and be able to do something with it. In short, while all the data in the past might have been useless, as there was no way it could be managed.

After the knowledge graph, in 2011, Google finally started to do something with that data. There was also another critical step. For years Google has assessed the quality of content by looking at straightforward metrics, which worked quite well. Yet, as the web grew and SEO practitioners got smarter, also Google grew in sophistication.

Today Google might be looking at more than 200 main signals, that given the possible combinations might well be about thousands of factors. Therefore, Google is becoming more and more a black box, where we all see what comes out of it. But none can really understand what is going on in between the search and the result.

One thing is critical though. Finally, websites can use a tagging called Schema.org, which is a vocabulary developed by search engines to assign meaning to pages. While Google keeps assessing the meaning of those pages by using direct and indirect signals. Finally, website owners can have their say and tell Google what their web page is about. While Google has still the option to use that data. It's clear this is an opportunity for websites owners to create a better communication flow with Google.

That also opens up the possibility of alternative business models on the web, where content has been commoditized.

Valuable content is not a commodity: as it should have been since the start

Since Google indexed as much content it could, it also created a frictionless experience for its users. Today one of the most used words in the tech space is UX or user experience. The whole idea is about creating products that users want to consume and that are as frictionless as possible.

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How the term "user experience" grew with Google (mentions of "user experience" over the years in millions of books cataloged by Google)

User experience grew with the rise of the web; there is no doubt Google was one of its most fanatic supporters. Today, having a slow website can mean being out of search. Of course, Google tells you that content comes first. In most cases, content alone won't bring you far.

This frictionless experience became one of the most important metrics on the web. Google also has a set of key parameters to measure that. Those are the "user-centric performance metrics" and as Google puts it:

When a user navigates to a web page, they're typically looking for visual feedback to reassure them that everything is going to work as expected.

Is it happening?
Did the navigation start successfully? Has the server responded?

Is it useful?
Has enough content rendered that users can engage with it?

Is it usable?
Can users interact with the page, or is it still busy loading?

Is it delightful?
Are the interactions smooth and natural, free of lag and jank?

While this made total sense, it also created such a frictionless experience to give the impression that content could be commoditized.

What matters was the user experience!

Now you might argue, "isn't great content also in line with user experience?" Well... yes and no!

In general, it is intuitive to think of great content as something that benefits from high engagement rates. If a piece of content is great, you'll consume it all. However, to read that piece of content, you still have to get there. And guess who stands in the way? Yes, Mr. G! Google is the monopolist of search and the tool that can distribute content across the globe.

If Google won't bring people to read your content, there is no way anyone might be able to experience it. And if none is experiencing it, how do you assess user experience on that content?

What I mean here, is to think about two kinds of user experience. One, which we might call "technical" and one which we might call "classic." When it comes to the technical user experience that is assessed often a priori (before the user can see your page). Google is telling you (based on its user-centric performance metrics) that if your server is not responding successfully (which also means fast enough), those people won't even get to your site.

Welcome to the Google's dictatorship!

Once again, Google tells us that if you have great content, that comes first. However, great content without the right SEO strategy might be doomed. Also, as we're transitioning toward mobile search, Google also starts to impose formats that many publishers don't like, and for a good reason.

Take the polemic around AMP. It stands for accelerated mobile pages, and it is a format for mobile, which is intended to give a clean user experience. However, it also strips out from web pages important parts that might be critical for publisher navigation and monetization.

As pointed out by Kyle Schreiber:

Make no mistake. AMP is about lock-in for Google. AMP is meant to keep publishers tied to Google. Clicking on an AMP linkfeelslike you never even leave the search page, and links to AMP content are displayed prominently in Google’s news carousel. This is their response to similar formats from both Facebook and Apple, both of which are designed to keep users within their respective ecosystems. However, Google’s implementation of AMP is more broad and far reaching than the Apple and Facebook equivalents. Google’s implementation of AMP is on the open web and isn’t limited to just an app like Facebook or Apple.

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The Google AMP Lock-in experience

When you're in business or the life of your organization depends upon the visibility it gets from the web, do you have a choice not to follow what Google asks?

As a publisher myself, I understand that SEO is a critical part of my strategy. If I stop using an SEO strategy, I'd probably revert to 2015. At the time I was the only one reading my blog as I didn't get traffic from Google even though my content was good.

Initiatives like AMP also tells you that eventually, Google is trying to create a full experience, where users don't have reason to leave the engine (which can be as well compared to Facebook lock-in) unless they have to transact, in that case, you're allowed to do so because that is when Google makes money.

That is even clearer with the latest Google algorithm change, the so-called Medic Update.

Business models for voice: four possible scenarios

I imagined four main scenarios going toward voice search. Each of those scenarios might be more or less plausible. Except for the first scenario, the others are entirely speculative. However, it is interesting to start thinking in concrete terms how search might look like in the future.

Is the subscription economy the answer?

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While the advertising business model is pretty lucrative for Google, that is not for online publishers (at least not anymore). As Google has been able to increase its ability to attract businesses to spend their digital marketing budget via AdWords, it also offered to bloggers the ability to quickly monetize their content with AdSense.

AdSense is the fastest and easiest way to monetize free content on the web, yet it's not sustainable. The digital publishing industry has realized that and that is also why some players, like the Financial Times, for years have relied on the subscription business model.

In the past, though it was pretty hard to make the subscription business model work as Google aggressively indexed pages on the web and the more free content you made available, the more you could get exposure, thus monetize with ads.

Yet, as of now, large publishers are reverting to a paywall and a subscription-based business model. What's interesting though is we now are that with the semantic tagging, you can point to the search engine that a web page has content which is not accessible to anyone (see the picture above, the property called isAccessibleForFree, which you can set as "No"). That means the search engine knows that even if the user is navigating the page and going back to the search results quickly, that has nothing to do with user experience but with a paywall.

This, in turn, should make easier for publishers to build a business model that doesn't rely on advertising alone. As Google itself is differentiating its business model in new areas (from the Google Bets to the Google Other Revenues sources) why not allowing publishers - the juice of Google's organic results - do the same?

A snippet revenue share model for the publishing industry?

Google is massively rolling out new features on its search results. One interesting example is the Featured Snippet Filter Bubble. That is a feature that Google offers to users to address a specific question, but also to allow them to chose among several intents. In short, a user looking for something might have several intents on that same search. Think the case above; I might be looking for a job from New York. Yet when I search "top companies to work for" I might well be looking at companies in other cities (Chicago, Atlanta, Dallas and so on).

With the Featured Snippet Filter Bubble, Google can tap into the users' minds and offer them more and more relevant answers. Also, one thing of the filter bubble (as the name suggests) the user might well be satisfied with everything there is to see within that snippet without ever leaving the search results. That might imply people will be spending more and more time on Google search result page, which is comparable to the Facebook effect. It is interesting to see how the engagement metrics of Google are getting closer to that of Facebook:

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It is important to notice this is a rough estimate that might be far from actual numbers but decent for a quick comparison

While Google doesn't create any friction by allowing users to get in and out from the search engine, Facebook requires users to register to get access to the platform. Yet, when it comes to branding, there is no doubt that Google is among the most powerful brand in the world.

Even with a frictionless experience that is meant to bring a user (based on the intent) from place A to B on the web (in many cases now the user never leaves the engine) it still has extremely high engagement rates.

In this scenario, where Google locks in user experience at the point of meeting its search intent and allow the user to consume all the information she/he is looking for, all that is left is the transaction. Google is not a store, then it will send the user to transact on another platform. In all the other cases, Google might be able to provide an answer, to any question by mixing up snippets from several sites, with great precision. In that circumstance, the experience offered by Google might be way superior to the experience provided by a web page, where a publisher can only guess the user intent. In short, that is a war on unequal terms.

However, Google might still need snippets from several sites on the web, thus by sending traffic here and there to those sites. It will also share revenues or some sort of reward back to the web properties that provide the best snippet of information to meet specific users' intents!

Is there an alternative to this scenario?

Blockchain + Knowledge graph = The end of Google?

If there is a word that has dominated the web in the last couple of years that is Blockchain. For those that heard about it, they probably heard it in the context of Bitcoin. However, the Blockchain that was created by Satoshi Nakamoto (none knows if that is a real person or a group of people) it was just the first Blockchain. Yet, as of now many new Blockchains protocols have sprouted up and have proved successful at several levels.

Let's clarify first what a Blockchain is. That is simply a distributed ledger that allows people to transact without a central authority. Also, those transactions (or exchanges) between people are anonymous and cannot be tracked back.

What's most interesting about the Blockchain is its ability to allow people to transact entirely at the bottom-up level. In other words, finally in the history of humanity that is possible to create commercial organizations at scale without the need for a central authority. What does that imply? That might suggest the end of bureaucracy, but also the end of the center of powers that retain most of the profits and create asymmetric business models.

For instance, when Facebook gathers the data of its users then it makes money by selling them advertising:

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That model provides a hidden revenue generation that if we were to think at the business level is quite profitable. However, if we think of the negative externalities that model might create, one starts to wonder, is it worth to let Facebook collect all this data about its users just because it has to offer a better advertising experience?

The Blockchain alone can't solve the issue. Yet it can allow the owners of data (be them users or publishers) to be part of the game.

Imagine the scenario of a publisher that has a knowledge graph built on top of its domain. That same publisher has now data that can make accessible to machines (like Google) so that they can use that data to provide content and information to final users. By plugging in a knowledge graph on a massive index, where transactions and licensing of that data is managed with a Blockchain mechanism might be a viable solution.

We're building a search engine on top of a Blockchain might be a utopic endeavor (imagine that more of that a Blockchain has to handle at super fast speed to offer relevant results). Using the Blockchain instead, to plug the knowledge graphs of publishers and let them manage the way they want to share and license that data might be feasible. While letting semantic search engines (like Google) handle the billions of queries each day and build up content based on those knowledge graphs. Just as Google serves snippets to users. Those semantic engines can extract information from billions of triples comprised of those large knowledge graphs, attached to the Blockchain, which becomes the market where those publishers can transact and monetize that data.

In that scenario, there will be no single owner, no single company owning the data. Ideally, a symmetric business model where publishers make money with their data, the semantic engine offers the most relevant results based on users intents and put them in connections with the proper local online store where to make the purchase!

The apocalyptic scenario: Google AI takes it all!

When Google's CEO, Sundar Pichai announced Google Duplex, back in May 2018, that showed the weapons, Google has at its disposal. Google Duplex (a machine learning system able to have complex conversations with humans) showed what Google is capable of as of today. Of course, Pichai explained Google Duplex as a way to solve practical problems (like booking an appointment at the hair salon). Yet it also showed the power of a mechanism that if unleashed can already take over the jobs of many call center people. Not that someone is trying to defend those jobs. These are probably the least paid jobs in the world. Yet when we look at the natural language understanding ability of Google Duplex one starts to wonder whether that same machine wouldn't be able to do the same with content production.

Given enough content on the web to train Google AI wouldn't that be able to produce its own content?

When and if that happens Big G won't need anyone but its AI to meet users' intents.

If this scenario prevails, would this be really the way information is supposed to be organized? In short, does the fact that an algorithm is able to provide more relevant information than a human justify this scenario?

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Published on September 19, 2018 13:47

September 18, 2018

Baidu Vs Google: The Twins Of Search Compared

By looking at Baidu - top Chinese website and search engine - and Google - US top website and search engine - the similarities are staggering both regarding how they work and how their business model is organized.

Baidu in a nutshell

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As of 2017, Baidu made most of its revenues from advertising via its ads networks. The remaining part was mainly comprised of memberships from Baidu entertaining platform. Baid also has a few other segments of the business. In fact, besides online marketing services, Baidu offers cloud services, it has a segment dedicated to autonomous driving and a segment devoted to the market leading online entertainment service provider in China.

Google in a nutshell

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Like Baidu, Google makes money primarily via its advertising networks (AdWords and AdSense) The remaining revenues come from Google Play, Google Cloud and Hardware. A small part is related to the Google bets, a set of risky ventures where Google is investing and where Google believes the future might lay ahead.

Both make money from advertising

As we've seen both Baidu and Google has a sophisticated business model that can align businesses that bid on keywords and content producers. Also, their search service is used by over a billion users.

Google is many times over Baidu in terms of revenues. The search engine from Mountain View made over $95 billion in revenues in 2017, compared to Baidu over $11 billion in revenues from advertising.

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Both used a link-based algorithm to rank web pages

Back in 1996, Robin Li built RankDex was the first search engine that used hyperlinks to measure the quality of websites it was indexing. In 1998 RankDex was acquired by a Dow Jones subsidiary Tradeline.com. Even before Google’s Larry Page had built the algorithm that would make Google the most popular search engine on earth, PageRank.

Many argue that Baidu is a clone of Google. Yet Robin Li has been innovating in the space of search before then Google's founders.

Both are betting on video content and self-driving cars

In 2017 Baidu invested an additional $1.5 billion in iQIYI. Also, Baidu is investing in self-driving cars. Just like Google acquired YouTube and it believes self-driving cars represent the future.

Is Baidu a clone of Google?

At first sight, both in terms of business model and the way Baidu works it seems to be a clone of Google. However, by looking at the Baidu origin story and how it managed to conquer the Chinese market, Baidu had managed to become among the most recognized brands in China. Thus, Baidu is an innovative company for its own sake and not just a clone of Google.

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Published on September 18, 2018 16:33

The Google of China: Baidu Business Model In A Nutshell

Baidu makes money primarily via online marketing services (advertising). In fact, in 2017 Baidu made about $11.24 in online marketing services and a remaining almost $1.8 billion through other sources. According to Statista, Baidu has an overall search market share of 73.8% of the Chinese market. Other sources of revenues comprise membership services of iQIYI (an innovative market-leading online entertainment service provider in China) and financial services.

The tech market in China has grown exponentially in the last decade. In fact, of the 20 world’s largest tech companies China has nine of them. Companies like Alibaba reached hundreds of billion dollars in market capitalization. As Google shut down its search engine back in 2010 due to the Chinese Government censorship that opened up a huge hole that allowed Baidu to build up the most successful search engine in the country. Baidu in a way tried to replicate (with a certain amount of success) Google. Both concerning search and in terms of business model. A few know that Baidu founder was the first one to put together a link based search engine. Google in 2018 is entering the Chinese search market again.

Baidu Core business is search. However, it also operates on the broader internet market space. That implies a list of competitors like Tencent, Alibaba, Sohu, Qihoo 360, ByteDance, Xiaomi, and iFly Technology.

Baidu origin story

According to Statista as of July 2018, the Chinese search market share is pretty skewed toward Baidu:

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In 2010 the shut down of Google allowed Baidu to take over the whole Chinese market. Robin Li, now one of the wealthiest people in China, launched Baidu in 2000 together with Eric Xu.

Yet in 2000 after gathering financing from an early stage venture capital firm (Integrity Partners), the company launched in China. Today Baidu has most of China’s search market share.

How does Baidu make money?

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Baidu makes money in two ways:

Online marketing services, about $11.24 billion in 2017
And other revenues around $1.8 billion

As pointed out on Baidu annual report for 2017:

We generate substantially all of our revenues from online marketing services, a substantial majority of which are derived from our pay-for-performance, or P4P, services. Our online marketing customers will not continue to do business with us if their investment does not generate sales leads and ultimately consumers, or if we do not deliver their web pages in an appropriate and effective manner. Our P4P customers may choose to discontinue their business with us, which are not subject to fixed-term contracts. In addition, third parties may develop and use certain technologies to block the display of our customers’ advertisements and other marketing products on our Baidu platform, which may in turn cause us to lose customers and adversely affect our results of operations. Furthermore, as our auction-based P4P services enable our customers to bid for priority placement of their paid sponsored links, we may lose customers if they find the bidding mechanism not cost effective or otherwise not attractive. Additionally, if our users do not increase their search frequencies on our platform, or our content ecosystem fails to offer rich and quality content that meets users’ tastes and preferences, or our users spend more time with or otherwise satisfy their search demands on competing platforms, or we otherwise experience user traffic decline due to any reason, it would be difficult for us to attract new customers or retain existing customers. Failure to retain our existing customers or attract new customers for our online marketing services could seriously harm our business, results of operations and growth prospects.

When it comes to the other revenues sources:

Other revenues increased by 93.6% from RMB6.0 billion in 2016 to RMB11.7 billion (US$1.8 billion) in 2017, which was mainly due to the growth of membership services of iQIYI and financial services.

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In terms of business segments, Baidu can be divided into:

Baidu Core: mainly by providing keyword-based marketing services, which target and are triggered by internet users’ search queries, including primarily P4P services, other online marketing services, and artificial intelligence-enabled new business initiatives.
iQIYI: that is an innovative market-leading online entertainment service provider in China. iQIYI’s platform features highly popular original content (think of it as the Chinese YouTube)

What are the main challenges for Baidu?

As pointed out in their annual report, Baidu main challenges can be pointed to nine main ones:

general economic conditions in China and economic conditions specific to the internet, internet search and online marketing industries;

our ability to continue to attract users to our platform despite the emergence of mobile apps and other services;

our ability to attract additional customers and increase spending per customer;

the announcement or introduction of new or enhanced products and services by us or our competitors;

the amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our businesses, operations and infrastructure;

the results of our acquisitions of, or investments in, other businesses or assets;

PRC regulations or government actions pertaining to activities on the internet, including various forms of entertainment, online payment and activities otherwise affecting our online marketing customers, and those relating to the products and services we provide;

unforeseen events, such as negative publicity arising from widespread media coverage and other sources and labor disputes; and

geopolitical events, natural disasters or epidemics.

What are the Baidu business segments?

As we’ve seen the main segments are:

Baidu Core
and iQIYI

Baidu.com is the largest website in China and the fourth largest website globally, as measured by average daily visitors and page views according to Alexa.com, an internet analytics firm. Also, “Baidu” was ranked as the fifth of the highest ranking brands in China in BrandZ Top 100 Most Valuable Chinese Brands 2017, a study published by Millward Brown Optimor, a brand strategy research company.

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The operations are primarily in China. Revenues generated from the operations in China accounted for approximately 97.8% in 2017.

Who are Baidu key partners?

The key partners can be pointed to four main categories:

users
customers
Customers for iQIYI
Baidu union members
Content providers

Users: Baidu enables users to be connected to relevant information online, including web pages, news, images, documents, multimedia files, and services, through links. Baidu claims to use AI to enhance user experience and deepen user engagement.

Customers: Baidu delivers online marketing services to a diverse customer base operating in a variety of industries. In 2017, Baidu had approximately 775,000 active online marketing customers. The online marketing customers consist of SMEs, large domestic businesses and multinational companies. Baidu has customers located throughout China. Yet it has a more active and larger customer base in the coastal regions, following the current general economic demographics in China.

Customers for iQIYI: they primarily consist of advertisers, who are counted as part of online marketing customers, and membership subscribers of online video contents.

Customers are reached via direct sales force as well as a network of third-party distributors across China. Distributors help Baidu identify potential SME customers, collect payments and assist SMEs in setting up accounts about online marketing services. Mobile revenues accounted for 73.1% of total revenues in 2017.

Baidu Union Members: Baidu Union consists of a large number of third-party web content, software and mobile app providers. Baidu Union members can display on their properties customers’ promotional links that match the content of such members’ properties. Some Baidu Union members also embed some of the products and services onto their properties.

Content Providers: content providers mainly consist of video copyright holders, apps owners who list their apps on Baidu app store for users to download, users who contribute their copyrighted content to Baidu products, and publishers, who share their content through Baijiahao accounts

What are Baidu core products?

The core Baidu products comprise:

Baidu Post Bar: a social media platform that attracts users through topics of common interest
Haokan Videos: an online short-form video aggregation platform
Baidu Knows: a knowledge sharing platform built through interactive questions and answers among Baidu users
Baidu Encyclopedia: an evolving encyclopedia compiled by registered users
Baidu Education: an online platform of educational resources, whose products include Baidu WenKu, Baidu Yuedu, and Baidu Classroom
Baidu Mobile Assistant: a mobile app marketplace designed for Android mobile devices.
Baidu Mobile Guardian: a comprehensive phone security software, using mobile anti-virus technology
DuerOS: a conversational AI platform that enables hardware devices to hear, understand and fulfill the users’ needs through voice activation
Baidu Wallet: Baidu Wallet, formerly branded as BaiduPay, provides online and mobile payment services and enables Baidu users to complete a closed loop transaction
Baidu Consumer Credit: it mainly provides installment payment services to consumers and services tens of millions of users through education loans and consumer financing to meet consumers’ cash expenditure needs
Baidu Wealth Management: it provides wealth management services by leveraging big data and technology
Baidu Maps: it provides services relating to locations and intelligent routing and navigation
Baidu Cloud Drive: formerly named Baidu Netdisk, is a personal cloud service platform

Baidu services comprise

Online marketing services based on search queries:

Based on two things:

P4P: An auction-based P4P services enable customers to bid for priority placement of their paid sponsored links
BrandZone: a branded display marketing product which allows the brand image of an advertiser to be prominently displayed on the search result page and in vertical search products in a structured and uniform manner

Online marketing services through Baidu Feed can help customers precisely target the right feed users based on user data on the Baidu platform.

Online marketing services based on contextual, audience attributes, media, and placement attributes refer to the programmatic marketing service transaction system, which includes supply-side platform (SSP), demand-side platform (DSP), Baidu exchange service platform (BES), and data management platform (DMP).

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Multiple payment methods including cost per time:

cost per time (CPT),
cost per mille (CPM),
cost per click (CPC)
and cost per action (CPA)

Several systems manage this infrastructure:

SSP covers media resources of Baidu and third-party Baidu Union members.
SSP intelligently manages media advertising space inventory and optimizes marketing spending by analyzing matching content, target audience and characteristics of different media and platforms.
DSP is an integrated sales service platform for advertisers and advertising agents, providing programmatic media purchase service.
BES is a traffic transaction platform that combines DSP with media resources, by leveraging the traffic advantage and big data capabilities of BES.
DMP integrates data from advertisers, Baidu, and third-party data management platforms, which cover searches, offline visits, target audience tags, sequential placements, and crowd portraits, in order to improve the effectiveness and accuracy of DSP.

Baidu Cloud services

Baidu Cloud is a public cloud computing platform that offers four main kinds of services:

IaaS (Infrastructure as a Service),
PaaS (Platform as a Service),
SaaS (Software as a Service)
and AI2B (AI as a service) to enterprise customers and developers to build, test and deploy apps Baidu cloud infrastructure.

Baidu Cloud is based on the same cloud computing technology that supports Baidu internal functions.

Autonomous Driving

Autonomous driving is an important area for future growth for Baidu.

iQIYI (the Chinese YouTube)

iQIYI is an innovative market-leading online entertainment service provider in China. Since 2013 Baidu has been investing in iQIYI. In 2017 Baidu invested 1.5 billion dollars in the company.

Who are Baidu’s main competitors?

U.S.-based Internet Search Providers (google)
China-based Internet Companies (Alibaba, Tencent, Sohu, Qihoo)
Other advertising media (newspapers, yellow pages, magazines, billboards)
For iQIYI, our primary competitors include companies that operate online video websites in China, such as Youku-Tudou and Tencent Video

How does Baidu work?

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Baidu search engine is as powerful as Google. I run an experiment to see whether Baidu supported some advanced features (like Google’s featured snippets). In the example above I run the query “what is a Knowledge Graph,” and Baidu gave a direct, relevant answer to my question!

That is not surprising, considering Baidu’s founder, Robert Li built RankDex (a link-based search algorithm) even before Larry Page had built PageRank. What’s surprising though is the level of sophistication and advancement Baidu was able to keep up with.

Baidu search algorithm is based on six central foundational systems:

Link Analysis

Link analysis is a technique that determines the importance of a web page by evaluating the combination of the anchor texts and the number of web pages linked to that web page. The first link analysis system was created by Baidu founder with RankDex, before Larry Page’s PageRank.

Ranking system

Baidu compares search queries with the content of web pages to help determine relevance. One example is the proximity of individual search terms to each other on a given web page and prioritizes results where the search terms are near each other.

Information Extraction

Baidu extracts information from a web page using high-performance algorithms and information extraction techniques. The aim of these techniques points to:

understand web page content,
delete extraneous data,
build link structures,
identify duplicate and junk pages
and decide whether to include or exclude a web page based on its quality

Web Crawling

Baidu powerful computer clusters and intelligent scheduling algorithms allow it to crawl web pages efficiently.

Natural Language Processing

Based on linguistics knowledge, big data and knowledge graphs, Baidu natural language processing accumulates and integrates linguistics analysis, such as lexical, syntax and semantic analysis, with calculation, learning mechanisms, and other natural language processing technologies. As Google integrated algorithms, such as Hummingbird and its component RankBrain, with the aim of ranking web pages based on meaning, so Baidu uses similar approaches to understand the relevance of web pages.

MIP (Mobile Instant Pages)

That is a set of open technical standards applying to mobile web pages, which accelerates the loading of mobile web pages. Google has used a similar approach with AMP (accelerated mobile pages).

Summary and conclusions

At first sight, Baidu seems the Chinese clone of Google. That is true not only from its search algorithm standpoint (driven by NLP and a similar approach to link analysis) but also in terms of business models. Like Google has been investing in video content with YouTube, s Baidu has been investing since 2013 in iQIYI. Like Google, Baidu believes that one of the most promising future ventures will be about self-driving cars.

Also, when we look at revenue sources, 86% of Baidu revenues came from advertising, just like 86% of Google revenues came from advertising in 2017. Baidu also invested in its cloud infrastructure, and it is making money by having members of iQIYI (the Chinese equivalent of YouTube) pay for a subscription fee.

When it 2010 Google shut down its China operation that represented a considerable opportunity for Baidu, which has become over the years the most popular site in China and among the most valuable Chinese brands. While it seems the exact copy of Google in China, it is also true that Baidu’s founder created a link-based system before Larry Page. Thus, Baidu might be as an innovative company as Google is worldwide.

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Published on September 18, 2018 15:22

September 12, 2018

How Does Google Make Money? It’s Not Just Advertising!

Google primarily makes money via its advertising network that in 2017 generated 86% of its revenues. Then, the other side of the business – almost 13% of its revenues in 2017 – comprised money from the Apps, in-app purchases, and digital content in the Google Play store, Google Cloud offering and Hardware products. The remaining part is attributable to Google “other bets” a set of risky businesses Google is betting on.

Google advertising monetization model

Google follows an advertising business model to deliver relevant ads. For relevant ads, Google means those are showing up just at the right time and giving people useful commercial information, regardless of the device they’re using. As of 2017 advertising represented still 86% of the total Google’s revenues.

Also, Google offers advertisers a set of tools that help them better attribute and measure their advertising campaigns across screens.

It does so by running two main kinds of ads:

performance advertising
brand advertising

Performance advertising

Google creates and delivers relevant ads that users will click on, leading to direct engagement with advertisers. The performance advertisers pay when a user engages in their ads.

AdWords is the primary auction-based advertising program which helps create simple text-based ads that appear on Google properties and the properties of Google Network Members.

Also, Google Network Members use the AdSense program to display relevant ads on their web properties, generating revenues when site visitors view or click on the ads.

Brand advertising

Google helps enhance users’ awareness and affinity with advertisers’ products and services, through videos, text, images, and other interactive ads that run across various devices.

Google focuses on creating what they define “the best advertising experiences” for its users and advertisers in many ways. Google clarifies its efforts as “ranging from filtering out invalid traffic, removing hundreds of millions of bad ads from the systems every year to closely monitoring the sites, apps, and videos where ads appear and blacklisting them when necessary to ensure that ads do not fund bad content.”

This is critical to Google’s success. One of the most compelling reason for Google to take off the search industry was based on its ability to rank organically content that was qualitatively 10x higher compared to its rivals. Also, even though Google AdWords allows advertisers to bid on keywords, it also selected those text-based ads based on the quality, as those text-based ads with more clicks got the highest spot on the search results pages.

How does Google measure its advertising network performance?

When assessing the advertising revenues performance, there are two critical metrics Google looks at:

the percentage change in the number of paid clicks
and cost-per-click for Google properties (AdWords) and Google Network Members’ properties (AdSense)

Paid clicks explained

Paid clicks represent the main business of Google that is bringing to the company over $95 billion (in 2017). One of the innovation Google brought, beyond its ability to serve more relevant results, it was an action-based bidding model (Google actually copied it from Overture) mixed with a relevance algorithm that ranked advertising based on what generated more clicks. Thus it was more relevant.

Paid clicks can be broken down into three main categories:

paid clicks on Google.com
paid clicks on other Google’s properties
paid clicks on Google members network

Paid clicks on Google.com

Paid clicks on Google properties represent engagement by users and include clicks on advertisements by end-users related to searches on Google.com

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Paid clicks on other Google’s properties

Paid clicks also relate to advertisements on other owned and operated properties, some examples:

Gmail
Google Maps
Google Play
YouTube engagement ads

Paid clicks on Google members network

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The former category of paid clicks is the so-called “Google Network Members’ properties.” In short, that includes clicks by end-users related to advertisements served on Google Network Members’ properties. Those are the sites participating in programs like:

AdMob
AdSense for Content
and AdSense for Search

In some cases, such as programmatic and reservation based advertising buying, Google primarily charges advertisers by impression; this represents a small part of Google consolidated revenues base.

Cost per click explained

Cost-per-click is defined as click-driven revenues divided by the total number of paid clicks. Thus, that is the average amount Google charges advertisers for each engagement by users.

What does influence Google advertising revenue growth?

Several revenues might be influencing Google advertising revenue growth. As pointed out on Alphabet annual report for 2017 some of those factors are:

advertiser competition for keywords;
changes in advertising quality or formats;
changes in device mix;
changes in foreign currency exchange rates;
fees advertisers are willing to pay based on how they manage their advertising costs;
general economic conditions;
growth rates of revenues from Google properties, including YouTube, compared to growth rates of revenues from Google Network Members’ properties;
seasonality;
a shift in the proportion of non-click based revenues generated on Google properties and Google Network Members’ properties, including an increase in programmatic and reservation based advertising buying; and
traffic growth in emerging markets compared to more mature markets and across various advertising verticals and channels.

Google advertising network in a nutshell

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Google assesses as main metrics the change in its pay per clicks change and the change in its cost per click (defined as average amount Google charges advertisers for each engagement by users ).

An increase in paid clicks is a good sign of Google ability to attract advertisers on its platform. However, it needs to be assessed against Google cost per click change. More advertisers might spend less per clicks thus make the average revenues for Google decrease.

As you can see in 2017, the pay per clicks increased compared to 2016. However, it was offset by a decrease in cost per click. Google doesn’t show absolute numbers as this is kept secret.

Breaking down the other side of the Google business model

Google other revenues consist primarily of revenues from:

Apps, in-app purchases, and digital content in the Google Play store;
Google Cloud offerings
Hardware

Google other revenues increased $4,197 million from 2016 to 2017. The increase was primarily driven by revenues from Google Cloud offerings, hardware sales, and revenues from Google Play, mainly relating to in-app purchases.

Google Play business model

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Source: web.archive.org

Google introduced in-app subscriptions to Google Play in May 2012. Previously known as Android Market, Google Play is a digital distribution service operated and developed by Google.

That is the Google official app store for the Android operating system. The set of applications developed on top of the Android software development kit and published via Google.

On Google Play, developers will make – based on apps purchases – a revenue split of 85/15. In short, the app developer makes 85%, while Google retains the 15%. The products on the Google Play store have a strong mix comprising:

Music
Books
Movies and TV shows
News publications and magazines

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Source: web.archive.org

Google cloud business model

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Google was a company built in the cloud and has been investing in infrastructure, security, data management, analytics, and AI from the very beginning.

We have continued to enhance these strengths with features like data migration, modern development environments, and machine learning tools to provide enterprise-ready cloud services, including Google Cloud Platform and G Suite, to our customers.

Google Cloud Platform enables developers to build, test, and deploy applications on Google’s highly scalable and reliable infrastructure.

Our G Suite productivity tools — which include apps like Gmail, Docs, Drive, Calendar, Hangouts, and more — are designed with real-time collaboration and machine intelligence to help people work smarter.

Because more and more of today’s great digital experiences are being built in the cloud, our Google Cloud products help businesses of all sizes take advantage of the latest technological advances to operate more efficiently

The Google hardware business model

Google offered hardware devices for purchase until the introduction of a separate online hardware retailer, called Google Store, on March 11, 2015.

That comprises Google-branded hardware and accessories:

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Google “Other Bets”: A look into Google’s future

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Alphabet’s Other Bets are early-stage businesses, which goal for them is to become “thriving, successful businesses in the medium to long-term.”

That is how Google defines them. One of the first steps Google has done is to have a “strong CEO to run each company while rigorously handling capital allocation and working to make sure each business is executing well.”

Those early-stage businesses carry a high risk, yet some of them are already generating revenue. For instance, Nest is already generating revenues. Waymo, a self-driving car company, continues the development and testing of its technology and now has a fleet of vehicles in Phoenix, Arizona, driving without a person behind the wheel.

Verily, a life sciences company received an $800 million investment in 2017 from Temasek to accelerate its strategic programs.

Google’s other bets primarily generate revenues from:

internet and TV services
licensing and R&D services
and Nest branded hardware

Alphabet “Other Bets”: In Search Of Google’s Hidden Gems

Summary and conclusions

Google business model can be broken down into three main lines:

Google advertising network
Google other revenues (consisting of Apps, in-app purchases, and digital content in the Google Play store; Google Cloud offerings and Hardware)
Google other bets

The advertising network remains the cash cow of the company, making it 86% of its total revenues. That is a complex machine that made Google one of the most successful tech companies in the world.

However, Google has been building an ecosystem that allowed it to monetize in many other ways. Google Play is an app store where users can download anything from apps to music, books, and movies.

The model is based on revenues share with developers or publishers, usually based on an 85/15 split, where the developer keeps 85% of the revenues, while Google retains the 15%.

The third revenue model is comprised of Google’s other bets. A set of eight risky businesses of which only a few are already generating money.

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Published on September 12, 2018 15:10

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