Google ( GOOG) held what it called a "factory tour" Thursday to walk journalists and industry analysts through its search and advertising businesses and to sketch broadly where the company is taking dozens of initiatives. Rather than using the day as a launching pad for new projects or developments, Google paraded out a number of product managers who explained how the company's search technology and advertising programs work. CEO Eric Schmidt also offered up the usual chestnuts of how Google has 294 years to go in achieving its 300-year goals (a time frame that should inspire some interesting valuation models among financial analysts) and how heavily the company relies on its homegrown 70-20-10 formula. Schmidt said Google focuses 70% on its core search and advertising business, 20% on tangential technologies such as Google News and Google Maps, and the rest on whatever strikes an employee as worth pursuing. The unstructured 10% of company resources "produces some inspiring insights," he said. Marissa Mayer, director of consumer Web products at Google, addressed the frequently voiced complaint that products such as Google News are in perpetual beta, with no apparent effort to turn them into revenue streams. Mayer reassured the crowd that it will begin to change. "We're getting closer to seeing a few things get out of beta, and you'll see some of them come out over the coming months," she said. Others outlined in relatively deeper detail how Google has leveraged its superior search algorithms in ways that are beginning to transform how advertisers connect with customers on the Internet. Susan Wojcicki, a product manager for AdSense, said Google's algorithms search Web pages for content to match phrases on it to terms that advertisers have paid for. As a result, in the same way that Google's sponsored ads appear next to search results, they appear on millions of Web pages -- from large sites such as America Online ( TWX) and Cnet ( CNET) to the smallest blog -- whether readers find them through search engines or not. The publisher of the page gets a cut of the ad revenue generated by the Google links.
Google gave an example of how this twist is meant to benefit readers, publishers and advertisers alike. When Dodge markets a new truck that features a larger payload and new safety features, Google works with the advertiser to place ads on sites where readers may be looking for information of payload sizes and safety. Google can also fine-tune the results, helping advertisers track in real time how, say, rising gas prices are affecting demand for the truck -- something that standard demographic data can't produce. The company is working more closely with larger advertisers, having conducted 100 day-long training sessions with major companies that are looking to advertise more on the Net, said Tim Armstrong, Google's vice president of ad sales. "We want to teach the marketers how to fish," he said. But Google also took pains to point out that it's helping the smaller advertisers as well, giving them low-cost access to the same sites they are helping the major advertisers to place their ads on.