Google 2007 Annual Report Download - page 5

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Our advertising system works well, but we still have tremendous opportunities to improve
it. For example, I just did a search for natural swimming pool, which returned eight righthand-
side ads, with only the last two of those somewhat relevant.  is is both good and bad
news.  e good news is that we have enough breadth to have some relevant ads for an
unusual topic. Furthermore, it is certainly possible to produce more relevant ads that would
be valuable to both the user and the advertiser. Also, a user interested in natural pools is
probably worth a considerable amount of money if there is enough competition among
advertisers to bid up the auction price.  e bad news is that we aren’t doing a good enough
job yet for this natural pools query and many others. We also happened to have a number
of local pool suppliers advertising in the San Francisco area for this query. Locally targeted
advertising is another important area for us to grow both in revenue and relevance.
is general problem of ad targeting is very di cult and requires cooperation from huge
numbers of advertisers. We continue to make signi cant progress on this challenging but
exceptionally worthwhile problem. Sergey and I spend an action-packed hour nearly every
week reviewing the noteworthy changes to the ads system.
--
We are still keeping to our long-standing plan of devoting  of our resources to search
and advertising. We debate where we should classify our Apps (Gmail, Docs, etc.) products,
but they currently fall into the  of resources we devote to related businesses. We use the
remaining  of our resources on areas that are farther a eld but have huge potential, such
as Android. We strongly believe that allocating modest resources to new areas is crucial to
continuing to innovate.  is  of our resources generates a tremendous amount of interest
and press, precisely because these projects are di erent and new. O en, we  nd small teams
of only a few people suddenly command huge a ention worldwide.  at’s useful to keep in
mind as you read about Googlethe vast majority of our resources are working on our core
businesses: search and advertising.
Of course, the needs of the  projects are di erent from the needs of the smaller 
projects. While I would like to report we understand how to structure these perfectly, we
are still actively evolving how we create, manage, and compensate these di erent kinds of
projects.  is is a crucial area of focus as we work to recruit and retain the best people, and
keep them really happy, organized, and productive.
iii