Yes, Google beat Wall Street’s hopes today with a 42% surge in revenue. Some of this is driven by growth abroad; the UK Times notes that for the first time ever, overseas business garnered more revenue than U.S. operations.
But the real story may be Google has figured out how to raise its advertising prices. Here’s the story of sticker shock in 3 easy steps.
1. Competition to place ads on Google is now fierce.
2. Increased competition has driven up bids, or the cost, to place ads for popular search terms.
3. Ah, and for all those obscure phrases that few of your competitors think to bid on … these once were a bargain, but Google is now using a “quality score” evaluation of your web site to determine whether it should block you from bidding on these ads.
Hmm. Increased prices for popular ads; a way to block you from buying cheap ads. No wonder revenues are up. Dear advertiser, Google has just optimized you.
In a rare bit of good news, the intersection of supply and demand slipped a bit at Harvard University yesterday. Harvard announced it would slash its tuition to a new scale based on a percentage of a family’s income. Families earning more than $60,000 a year would pay just a fraction of their annual income as tuition, and families in the mid-tier of $120k to $180k would pay only 10% of their income. This means a family earning $140,000 a year would pay only $14k annually to send young James off to a top school … a far cry from the 200 grand it now takes to send kids to four years of Ivy League ed.
This is an extraordinary move. Is Harvard’s enrollment down? Is Harvard positioning itself as an industry leader? Does Harvard think the future of elite intelligence lies in Middle America? Doe Harvard find those bratty kids from private schools just too annoying? Dunno. The competitive advantage or PR buzz may not last, as other colleges and universities pick up the wave. We hope. Schools here in the states are way too damn expensive. As the elite schools compete fiercely for elite students, the elite students with less means will now flock to Harvard.
Of course, today 90% of Harvard’s students probably come from super-elite families earning more than $180k a year … and if so, Harvard just won a PR coup while putting a fraction of its revenue at risk. Nice pricing strategy.