Microsoft Corporation (MSFT), Google Inc (GOOG): Gaming the Search Engines Is Good for the Web’s Leaders

Page 1 of 2

The rise of the search engine spawned a whole industry interested in beating the system. Companies spend billions of dollars on “search engine optimization” to improve their rankings on Google Inc (NASDAQ:GOOG). Higher rankings mean more visibility – and hopefully more profits.

Google Inc (GOOG)

Unfortunately for the search engines, not a single penny spent on SEO flows to the top-line. Money spent gaming the system isn’t money that will flow to Google Inc (NASDAQ:GOOG) or Microsoft Corporation (NASDAQ:MSFT)‘s Bing, but it isn’t money lost, either.

Why SEO is great for search engines

Search engines make money by displaying advertisements around the organic search results. Some keywords fetch only a few cents per click; some, like local searches for a lawyer or plumber can cost $20 or more. This is why SEO is so alluring. If a company can rank number 1 in search with a modest investment in SEO, it can avoid high-cost advertising in search results.

Some see this as “lost money” for Google Inc (NASDAQ:GOOG) and Bing, but SEO might just be one of the search engine’s biggest assets.

The first weakness of the argument is that not every company can rank number 1. Not every firm will make it to the front page with SEO. When one company out-optimizes another, the loser may turn to advertising to stay on the front page.

But it goes deeper than that. Thanks to the rise of search engine optimization, Internet marketers around the world optimize their sites for modern search engines. Google Inc (NASDAQ:GOOG)’s Matt Cutts is one of the most watched people on the Internet. His words are taken as gospel, and webmasters make SEO strategy decisions based on his every blog post or Tweet.

Thus, the Internet is essentially sculpted for search. Marketers make the job of the search engine easier by optimizing their pages to fit Google’s algorithms. Over time, the quality of web search only goes up, and the current leader, Google, taps into a lifelong user base. It’s just another facet of the industry that gives Google a wide moat that protects it from competitive threats.

Finally, SEO is the best advertising for Google Inc (NASDAQ:GOOG) and Bing. Businesses that appear in the search results and receive new customers from organic results quickly realize that a bigger search budget might be in their future. If organic results are bringing customers, so too should the inorganic, paid advertising that Google and Bing offer.

Why profits in search are only going higher

One would expect that over time the search engine will lose its critical importance for online shopping as customers find their preferred online store. Rather than Google a product before purchase, shoppers will turn directly to Amazon to read reviews and make a purchase. Google is combating this lost revenue with new “Shopping” ads that reward Google Inc (NASDAQ:GOOG) with ad revenue on every click through.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!