Google 2009 Annual Report Download - page 55

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actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, those discussed in this Annual Report on Form
10-K, and in particular, the risks discussed under the heading “Risk Factors” in Item 1A of this Annual Report on
Form 10-K and those discussed in other documents we file with the SEC. We undertake no obligation to revise or
publicly release the results of any revision to these forward-looking statements. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
The following discussion and analysis of our financial condition and results of operations should be read
together with our Consolidated Financial Statements and related notes included elsewhere in this Annual Report
on Form 10-K.
Overview
Google is a global technology leader focused on improving the ways people connect with information. Our
innovations in web search and advertising have made our web site a top internet property and our brand one of the
most recognized in the world. Our mission is to organize the world’s information and make it universally accessible
and useful. We serve three primary constituencies:
•Users. We provide users with products and services that enable people to more quickly and easily find,
create, and organize information that is useful to them.
•Advertisers. We provide advertisers with cost-effective ways to deliver online ads, as well as offline ads on
television, to customers across Google sites and through the Google Network, which is the network of
online and offline third parties that use our advertising programs to deliver relevant ads with their search
results and content.
•Google Network Members and Other Content Providers. We provide the online and offline members of our
Google Network with our Google AdSense programs. These include programs through which we
distribute our advertisers’ AdWords ads for display on the web sites of our Google Network members as
well as programs to deliver ads on television broadcasts. We share most of the fees these ads generate
with our Google Network members, thereby creating an important revenue stream for them. In addition,
we have entered into arrangements with other content providers under which we distribute or license
their video and other content, and we may display ads next to or as part of this content on the pages of
our web sites and our Google Network members’ web sites. We share most of the fees these ads generate
with these content providers and our Google Network members, thereby creating an important revenue
stream for these partners.
How We Generate Revenue
Advertising revenues made up 99% of our revenues in 2007 and 97% of our revenues in 2008 and 2009.
We derive most of our additional revenues from offering display advertising management services to advertisers,
ad agencies, and publishers, as well as licensing our enterprise products, search solutions, and web search
technology.
Google AdWords is our automated online program that enables advertisers to place targeted text-based and
display ads on our web sites and our Google Network members’ web sites. Display advertising typically includes
static or animated images as well as interactive audio or video media, such as the banner ads on the tops or sides
of many popular web sites. Most of our AdWords customers pay us on a cost-per-click basis, which means that an
advertiser pays us only when a user clicks on one of its ads. We also offer AdWords on a cost-per-impression basis
that enables advertisers to pay us based on the number of times their ads appear on our web sites and our Google
Network members’ web sites as specified by the advertiser. For advertisers using our AdWords cost-per-click
pricing, we recognize as revenue the fees charged advertisers each time a user clicks on one of the ads that
appears next to the search results on our web sites or next to the search results or content on our Google Network
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