Google 2011 Annual Report Download - page 55

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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 under Item 8 of 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 website 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 and offline ads to
customers across Google-owned websites and through the Google Network, which is the network of 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 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 websites of our Google Network Members. 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 websites. We share most of the fees these ads generate with these content
providers, thereby creating an important revenue stream for these partners.
Recent Development
On August 15, 2011, we entered into the Merger Agreement with Motorola, a provider of innovative
technologies, products and services that enable a range of mobile and wireline digital communication, information
and entertainment experiences, under which we will acquire Motorola for $40 per share in cash, or a total of
approximately $12.5 billion in cash. The completion of this transaction is subject to customary closing conditions,
including the receipt of certain regulatory approvals.
How We Generate Revenue
Advertising revenues made up 97% of our revenues in 2009 and 96% of our revenues in 2010 and 2011. We
derive most of our additional revenues from our enterprise products, as well as our display advertising
management services to advertisers, ad agencies, and publishers.
Google AdWords is our auction-based advertising program that enables advertisers to place text-based and
display ads on our websites and our Google Network Members’ websites. Display advertising comprises the videos,
text, images, and other interactive ads that run across the web on computers and mobile devices, including smart
phones and handheld computers such as netbooks and tablets. 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 websites and our Google Network Members’ websites as specified by the advertisers. For
advertisers using our AdWords cost-per-click pricing, we recognize as revenue the fees charged to advertisers
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