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By Elinor Mills, 3 March 2006 12:10

COMMENT

11:21 Mayer: Google Base is derived from "database". It's attracted sequence genomes, to clinical trials, to products. Plan to allow people who upload stuff to be able to sell it to people who have a Google account.

11:19 Huber: Google's doing an effective job in dealing with click fraud. The effect on advertisers and business is "small". The company has advanced tools to deal with it. The goal is to recognise invalid clicks before they're monetised. Google does issue credits when an advertiser complains about click fraud.

11:16 Mayer: Google tries not to get too focused on external competition but it's improved search quality with a bigger index and algorithm analysis to reduce index spam. "Spam is at an all-time low in the Google index and probably at an industry low." When you look at what Microsoft is doing, it's clear that search is a focus and a start on their ad network. The fact that AOL chose to go with Google rather than Microsoft [as a search partner] indicates AOL thinks Google is better.

11:10 Huber: Multiple dimensions to monetisation. One is better end-user quality, from better algorithms. The second area is around user interface. Google has made subtle improvements. The third area is better advertiser effectiveness. For example: AdWords Power Editor. The fourth area is more inventory. The fifth area is geographic expansion. The sixth area is general flow of advertising dollars to the internet as a medium. Online offers greater efficiency and measurability or accountability. People are spending about 13 per cent of their time on the internet but only six per cent of ad dollars are being spent on the net.

11:09 Eustace: The company has huge leverage over its revenue stream. It's hard for other big companies to increase revenue in any one day without increasing costs.

11:07 Huber talks about investments. AdSense for content seemed like a leap initially but has been successful. Google Earth monetisation logic was in question initially. The combination of Google Local contributions and distribution of downloads of Google Earth has made it a success.

11:04 Mayer talks about staffing needs on different products. The company identified need with maps and so made an acquisition. It rolled out Google Transit in Portland, Oregon. Google Ride Finder looked at GPS signals coming from taxis. It turned out to be not so useful. People can't get to street in time to hail the cab.

11:02 Eustace: Google has built one of the largest computational infrastructures in the world. "The reason that's important is because we are incredibly cheap." Competitors can not deploy infrastructure faster, cheaper or at scale. This gives Google a two-, three- or five-year lead over competitors.

11:00 Lee: China has 110 million internet users, and that's growing. Recently, Google has more than tripled its Chinese index size. User experience there is not as good as in the US. There are also four times as many computer scientists graduating from Chinese universities as there are from US colleges. The quality is high as well. Users love Google. (Lee's speeches to university students there have been extremely popular. There's even been some scalping of tickets.)

10:58 Eustace: Google has a challenge in engineering to distribute the site worldwide. It recently moved into Israel. That country has "tremendous technical talent". Coverage of Brazil came via an acquisition. The group is relatively small. The company improved search quality for Portuguese, a growing market for Google. Orkut is huge in Brazil. "This is not an outsourcing effort."

10:55 Rosenberg introduces panellists: Eustace, Lee, Mayer and Huber.

10:51 Rosenberg talks about Google Earth. The company's management told the team to build a great product and not worry about putting ads in it. The keyhole acquisition paid off. The company is now getting ads into Google Earth, he says. Google Local is now the number three site for classifieds. The company is experimenting with print ads. Google also acquired DMarc, which offers AdWords and AdSense for the radio industry.

10:48 Rosenberg: Google has defined the predicting of what ads will get best click-throughs. Advertisers can pay 9 cents per ad in a magazine. But on Google, for 23 cents they can get an ad that someone clicks on. It's a better return on investment with Google, he says. More can be done with even better personalisation. Money is flowing from offline to online. All of this is in the very early stages, he says.

10:45 The company doubled its index to more than eight billion pages, Rosenberg says. Google has improved personalisation, in news and search, and on the homepage. It's also added international languages.

10:44 A chart shows that core efforts are search and ads. Twenty per cent spent on adjacent products includes Google Video, Google Talk, Gmail, Google Earth, Local Search, Enterprise, Book search, AdSense, Desktop Search and Mobile Search. Ten per cent includes AdSense Offline, Google Suggest, Orkut and Google Reader.

10:40 Rosenberg discusses approaches to products. Big innovations in technology have complementary effects, he says. "We build an ecosystem." Google's philosophy is to not be constrained by things like storage, bandwidth, CPU power but to instead focus on the end-user, and revenue will follow. He also mentions making money without being evil.

10:34 Rosenberg says there is a "serendipitous element to the Google Economy". He talks about the company's international focus and shows photos of him and others in India and Dubai. "Capitalising on these big global opportunities is a predictable and respectable investment for Google," he says.

10:33 Rosenberg gets onstage for a panel discussion.

10:31 Today, click fraud "is not a material issue in the company," Schmidt says.

10:30 Schmidt: People wonder about keyword pricing and markets topping out. But the company has studied the situation carefully, and it doesn't look like any specific segment has topped out.

10:29 The company will focus more resources on the hottest properties. "We understand the impact that 10 million, a hundred million users can have," Schmidt says. Google is primarily focused on Microsoft as a competitor because of the software giant's history as a company but Google hasn't seen an impact from Microsoft's search products yet.

10:26 Priorities: Revenue mix will grow from Google.com and partners. International growth is "very strong and likely to remain so," Schmidt says. Eventually, there will be correlation with GDP so that even lower GDP countries have so many people that monetisation is very good. Many countries are still developing the infrastructure. "We are focused on the long-term," Schmidt says.

10:25 Goals: comprehensive index, most relevant search results, innovative and useful services, hardware and software. "Hopefully, Google will end up with the biggest footprint," Schmidt says.

10:24 Schmidt shows a chart of the $283bn market for advertising, including broadcast, radio, internet, print, cable TV and direct mail. Google will be in all of those markets over time, either directly or with partners.

10:18 Schmidt says it's clear the ad system is the "perfect system for midsized advertisers." But what about the largest advertisers? The company worked last year to call on them and offer a complete solution, Schmidt says.

10:16 The company says it cares about performance and was able to meet government SEC regulations. A slide outlining Google's strategic priorities for this year includes five items: search quality and end-user traffic, quality of advertisements as perceived by end users, building new products and services for publishers of information, growing our overall partnerships, and building the systems and infrastructure of a global $100bn company. "I'll leave it to you to judge whether that is $100bn in market capitalisation or revenue," he said.

The presentation experiences some technical difficulties, and Schmidt comments, to laughter: "At some point we're going to reboot the whole room."

People have missed the fact that improvements in the quality of search advertisements increase revenue, he says. The company says it's concerned with end-users first and quality of ads second. That model drives the ultimate long-term goal, which is shareholder value.

10:15 The high point of the year is the partnership with America Online, Schmidt says. Text ads are one of the issues. AOL has assets "we can integrate as we run that deal through our systems", he says.

The company has a strong cash position after secondary offering. "The company is end-user focused," he says.

China is important because there's more than a billion people there. "These people are doing amazing things, and the power of information or lack of information when the power goes out," is amazing, Schmidt says.

10:10 Schmidt talks about Google Analytics, Google Maps, Google Local and Google Earth. The tools are having a huge impact on the world today. Google Local will be big business, according to Schmidt. "We're learning how to exploit the platform we've invested in," he says.

"We're investing for the long term," he says. He shows a chart of the company's financial growth to more than $6bn in revenue from $440m in 2002.

10:06 Schmidt says that last night he read the founder's letter from two years ago. They are operating the company under those same principles. They are part of the culture of Google.

He says the company is running on the 70-20-10 principle: 70 per cent on core products, 20 per cent on adjacent products and 10 per cent on others.

10:04 Reyes opens the meeting by discussing the agenda for the day. "We are the largest single source of the world's information," he says. He then introduces Schmidt.

Elinor Mills writes for CNET News.com