How Google And Groupon REALLY Make Their Millions

Published by 27 Comments

It’s so interesting that most entrepreneurs use basic online products in their lives every single day, but fail to realize what hooked them into using those products. Even more ironic is the fact that how disconnected we have become in recognizing the commonalities these mega successful products have that make them a “mega success”.

Ok, let me be more specific.

I am talking about successes such as:

I will show you how they did it and how we can replicate their methodologies in our businesses.

But, here is the problem, I can keep giving you examples after examples to convey the point, but still fail because you might define success or “mega success” differently than I do. To eliminate any differences here – when I say “mega success”, I am referring to a business/entity that is successfully generating revenue where others have failed or attracting more audience and fans unlike any other business or entity.

This blog is specifically about how the Big Guys monetize the heck out of their products/services easily while the frustrated entrepreneur struggles to even sell ONE HOLY copy/subscription of their product. There are reasons why this happens, and it’s not luck.

The number one reason why Google is Google, Seth Godin is Seth Godin, Digg is Digg, Groupon is… well you get the point, is because these entities are not run by marketers, they are run by strategists. You and I both have been exposed to our fair share of scammy online marketing offers, which has conditioned us to suspend our thinking and blindly believe that marketing is the solution to solving world hunger. Don’t get me wrong, I am a marketing whiz and I continue to use marketing to grow businesses, but let’s face it – marketing is a piece of the pie called business, and not the pie itself.

In reality, Strategy is a far more powerful lever to create “mega success” than marketing.

I know you want to talk about monetization, so do I, but I had to set the stage by explaining to you the importance of strategy to make the following examples much more digestible.

Alright, so let’s dive right into it.

Google.com

What do we do when we first start compiling a list of things our “state-of-the-art” website is going to have? We start off by putting an ABOUT US page, CONTACT US page, COMPANY HISTORY, and 107 other ideas to be implemented that no one else in the world cares about.

Now what did Google do? They ditched Google Weather, Google News, Google company history, owner profile and the 987354 other things that no one cares about and put laser focus on their most powerful asset - the Google Search.

What is your most powerful asset in terms of service delivery/product feature that needs this kind of highlighting?

I hope you have faced the fact that the only thing the users care about is the core product/service, which is user-friendly, risk-free, hassle-free, and convenient – PERIOD.

Are you providing that?

So the first rule is to give something of massive value to your users in a straightforward and simple fashion.

But wait… Google Search does not even sell their service, they make money on ads. Now if you have been in any sort of advertising, you know that sales people just want to create a blunt and shameless advertising spot in their available media and sell it to the advertisers. I am sure a typical ad sales person would recommend Google to sell ads on their home page. I am sure Google is going to make a heck load of money this way, but not for very long.

I hope this is making sense. Your business must be designed to give massive value to your users. If you are selling ad space on your website, realize that your users want value from them as well. Those ads must be relevant to their interest. The point is simple, date with your users and not with your advertisers. Monetization follows automatically when you get the core right.

Groupon.com

Many might not know that Groupon became Groupon after many experiments and tweaks were done to its original concept at a website called thepoint.com (http://www.groupon.com/about). ThePoint was the original concept that let users create their own campaign, which could be anything from “Raise Money For Charity”, “Ban Ebay for X days”, to“Get Publishers to Publish magazines without photoshopping the models,” and these campaigns would be promoted to encourage group action.

Do you see the point? You can create any campaign your heart desires and create an incentive that is monetary or non-monetary. Hmm! The website encouraged group action, but in a very open, unfocused and confusing way. Great concept, but lack of focus.

So one day the founders decided to break-off the Group-buying-discounts part of ThePoint and make it as its own entity now known as Groupon. This is where the magic happened and now we know Groupon as the fastest grown billion dollar company in history.

I have given you two examples so far – Google and Groupon. Did they use marketing as their lever to success or strategy?

I hope I am giving you a higher perspective here, but I am not done yet.

Google Docs

Previously you read me say that “focus on the product and the monetization will follow”, but I wish I could say that it is always that simple. If it were, Open Office would be the most used software the world knew.

Oh, so you do not know what Open Office is??? Good, that conveys my point more profoundly.

Open Office is an application suite that has all the softwares one would need to do word processing, spreadsheets, presentations, graphics, databases and more. In simple words you can do everything Microsoft Office suite can do in Open Office, the only difference is that Open Office is free.

Before MS Office 2007, Open Office was literally a copy of MS Office – same functionality, user experience and no compatibility issues.

Open Office was a failure due to the lack of strategy. MS Office kept on charging for their product, marketing to huge audiences, while Open Office was not able to giveaway their software for free to a small fraction of the market.

There are many reasons for that, but let’s talk about this:

How to do it right! – the Google way

Google introduced its edition of MS Office called Google Docs. Google Docs has a fraction of the functionality MS Office or Open Office has, but they have a really cool (in demand and problem solving) spin to it. A user can share and access his document from anywhere in the world with an Internet connection and a web browser.

But hold on! Where is the monetization part? Google is not selling ads here.

Remember! I told you that if you get the product part right, the monetization will follow (with some creative thinking). Google introduced a premium edition of their Docs and mail service for businesses, who desperately want central data storage and smart sharing capability. Many corporations have trouble moving and maintaining email servers and hence Google Apps was born. I use Google Apps, the solution is simple to use and hassle free.

Once again – Strategy

Google Search, Groupon and Google Apps filled the gap they saw in the market, but it is really important to notice that they all communicated their message clearly and focused on their core.

For Google Search the core was the Search Functionality; for Groupon, it was Group Discounts; and for Google Apps, it was Office Productivity in the Cloud.

There are many differences between the big guys and the small guys. One key difference is that the big guys are confident and bluntly say ‘no’ to the mediocre. They both have the same mental capacity but the big guys choose to use that capacity differently. I mean, I am sure Google could introduce 87 different features on top of the core functionality MS Office had, but they didn’t. They introduced basic features and introduced Cloud technology to the Office suite – pretty sweet. Remember, marketing follows strategy and not the other way round.

Start hating conventional wisdom and question ideas constantly.

Aziz Ali

About Aziz Ali

Aziz is an internationally acclaimed marketing whizkid and most commonly called a genius by his fan-base. Always working in the trenches, Aziz knows how to optimize marketing systems to produce exponential results as he did for several billion dollar companies and popular Internet Marketing Gurus.

Aziz is currently giving away two [2] tools & nine [9] strategies that has helped all of his clients find customers online EASILY!
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27 Comments

  • Jon

    Strategy, luck and competitive environment all play a roll in the success of or failure of a business – as long as you enjoy the process regardless of income, you’re a success in my book. I think something is lost if your ONLY measure of success if the financial aspect – there is so much more to entrepreneurship!

    Jon
    Founder of WoodMarvels.com

  • Nice Article Aziz

    I’m new at this game and still overwhelmed by all the resources we have at our disposal compared to years ago.

    You seem very self assured and you have a positive attitude which I believe to be the foundation to success.

    When I look at my Google Analytic s chart, instead of numbers, I see a chart of my belief and confidence go up. Seven days ago I was averaging 19 visits per day and since it has gone way up, 96 visits yesterday.

    I don’t know the specifics on an outer level as to why they are climbing, but inside I feel way more confident about my articles.

    Good job on your success Aziz!

    Tony

  • Thanks for your post Aziz,

    You would say that apart from Office Productivity, Search Functionality or Groups Discounts you would also expect a lot more people to find it attractive to create a Happy Home Business…???

    So with this Strategy in place, when do you expect
    the Marketing to Follow…?

    I don’t see a - Massive Stampede of Visitors – to my Blog yet :)

    Not that I would be all that – Happy – when
    I would suddenly had a need to Search for a Building
    that can house a few hundred employees or something like that :)

    All the Best,
    To your Happy – Home Business – Inspiration,
    HP

  • Very Useful Post. Gave my perspective of offering services through the internet, a much better clarity.
    Thank you

  • Wait, Google put laser focus on search which lead to Google Docs? I don’t understand, where did unmanned vehicles come about? What about Android? Have you ever looked at googlelabs.com and it’s constantly evolving projects? Or that Google products never seem to leave beta? It took Gmail (which is not search) years before they dropped the beta tag. Google is easily distracted. Yes, they have the best search technology, but they’ve always viewed it as a part of the business, not the sole focus. Google is at times brilliant with strategy, and at times horrible. Android is the perfect example. The project has suffered from fragmentation, poor communication, lack of focus, etc.

    And, please, talk about how Groupon’s strategy of paying ~$1.5 for every dollar earned is successful. Or explain how their model is defensible, because I have yet to understand. Or talk about Twitter, who have a wildly successful product but can’t seem to make a dime. Strategy is important, as is execution, customer acquisition, and retention. There’s a balance, and great companies seem to get the mix right overtime.

    • Dee

      I have to agree here, Google is both a good example and a really poor example of strategy. Just looking at Google Wave proves that.

      However, one strategy does prevail. Google never wanted to be just a search Engline. It has always wanted to be THE search engine, the one that knows more about you then anyone else and all this happened becuase of many years investing in this strategy.

      Perhaps the main point the OP is trying to get across here is that strategy is ultra important in success. You have to aim high and ensure every product you create fits within the bigger picture. I wrote a series of articles here on EJ about it which compliment this article well.

  • But really i have heared first time about groupon.com because google is really making a million a day i think so

  • I cannot imagine the amount of money Google must make per day, or even per hour! Absolutely unbelievable!!!

  • Hi! Aziz Ali,

    Immediately I read your article and got to the ‘Strategy’ part, I really pulled out a wonderful strategy for my online business from my brain.

    Can you suggest a strategy for blogging?

    You wrote well and meet me on your blog :-)

  • Strategy is definitely huge. Unfortunately for Open Office they didn’t have a platform that they could leverage.

    Everyone was using Microsoft Windows so using Microsoft Office was just a natural extension to that.

    Google Docs has the audience of countless Google users.

    Open Office is a stand alone application (one that I love by the way) but it has no audience preset that it can cater to.

    • In my opinion open office is not a failure and the author may thing that most people don’t know it but most of the people that I know have open office and don’t have a clue about Google Docs which even Google recognize that is not a success!

  • WOW, another post that makes me think. Great job Aziz :)

  • Google must make per day, or even per hour! Absolutely unbelievable

  • I think something is lost if your ONLY measure of success if the financial aspect

  • Very nice. Thanks for the useful post.

    Love these stories about how companies or people make money.

  • MSH

    I’m not sure Digg is a great example to use. It was a fad and has severely decreased in popularity. Well maybe not severely, but the decline is there: http://www.alexa.com/siteinfo/digg.com

    Maybe I’m biased because I’m a Reddit fan.

    Google Docs trumps OpenOffice simply because it’s online.

  • Great article and so true. Master strategists they are.

    To think of all the services Google offers freely and still find ways to make oodles of $$…. makes my head spin.

  • It is the best thing to do to provide what the market needs from you.

  • Google and Groupon making their millions never surprise me at all. They all have the characteristics of a successful business– strategy, creativity, skills, professionalism, and all other characters of success. They continue to inspire all other business today and this post is another inspirational trigger for all other businesses and for those who plan to start a business.

    • JOHN,
      You are right in the case.Google and Groupon will make dollars very easily because they also have many staff to work for them.Also the internet depends on them for a large extend.So their dollars easily comes to their pockets because their readers are increasing in the rate of milliseconds.Their story will be a great inspiration for the uprising entrepreneurs.

  • I don’t know about millions try billions. I wonder if they built Google around the idea of advertising to begin with, or they really were just creating a friendly search engine?

    • MSH

      I’m not completely sure of this, but monetisation came a lot later, once the traffic to their search engine was there.

  • Tremendous post Aziz, I didnt really know about Groupon that much after hearing all the buzz.

  • Hey Aziz,
    I use open office but I tried Google Doc’s but didn’t like it. I agree that strategy is more important than marketing. It comes down to using our intuition as opposed to the rational mind.

    I am constantly tweaking my blogs functionality and monetization strategies.

  • I am always amazed at businesses that start small and expand by such great measures. It is good to know some of the reasons and tactics.

  • “Your business must be designed to give massive value to your users.”

    This is key in a world right now where people are so desensitized to marketing messages. Generally speaking, you’re not going to care about seeing a magazine ad for Trident gum, but if they’re creating a connection with their customers with an e-newsletter, providing tips, interesting facts about gum and offering free samples, this provides a ton more value than the magazine ad. Strategy is definitely first and foremost in monetizing a product/service. And we see this with internet marketing businesses as well. It’s not about the ‘product’ – it’s more about the free giveaway (usually an ebook or some other information product), which acts as a feeder to the paid product – a POWERFUL STRATEGY that has earned many internet marketers (including Yaro Starak!) a generous sum of money per month.

    Great post, Aziz!

  • Most of the Internet marketers are after the end result in the first place, which is money they don’t think “I need to create value first” most marketers and bloggers start a blog or create a blog because they need to make money from it right now. That’s why you so many website or blogs filled with useless ads and banners it is short sight business model, as you pointed out think about strategy and value first, every product, brand or person who is successful used this principle. I often find myself trapped in this magic circle :)

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