How does Google work out ROI on Chrome?

Google is gaining market share with Chrome. But is it actually making any money off it? That’s the question that came into mind when I read Mathew Ingram‘s story on GigaOm about Chrome’s rise in share.

In particular, I found this part interesting:

“StatCounter said that in May, usage of IE 6 fell below the 5 percent mark in the U.S. and Europe for the first time, with overall usage of Internet Explorer at around 53 percent, while Firefox remained relatively flat at about 31 percent. Chrome’s share rose to 8.6 percent from the 6 percent mark at the beginning of the year.”

This rise in share is, I suspect, at least in part down to Google’s decision to use print (yes, print) ads to increase the awareness of Chrome as an alternate to Internet Explorer. Certainly, it’s one factor which is spreading knowledge of Chrome beyond the usual geek enclaves.

Cover wraps don’t come cheap, though, which means that Google must have spent a fair amount of cash on attempting to increase Chrome’s market share. Certainly, it will enable Google to do a decent attempt at working out a cost-per-acquisition for Chrome.

But what I’m also intrigued about is the ROI model that Google must have . Google derives almost all its revenue from advertising, so in order to justify its existence Chrome needs to increase the number of ads viewed (and, if it’s a CPC ad, clicked on too).

In theory, Google can measure this. It would need to monitor the browser that it’s serving up ads to, and see whether the number of ads served to Chrome increases faster than the increase in usage of Chrome. This would show that Chrome users, on average, consume more ads than non-Chrome users, and so justify the browser’s existence.

It’s easy to understand how Chrome provides a better browsing experience than, say, Internet Explorer 6 and so how it might mean more revenue for Google. But does it provide such a significantly better experience than a recent release of, say, Firefox or Safari?

My guess is the answer is no. While Chrome is certainly faster than Safari 4, for example, it’s not so fast that it makes the experience of the web much, much better – and what’s what it would take for me to switch and use the web much more than I do now.

The only people with a real answer, though, are Google – and that’s if they’re even working out ROI on Chrome. It could simply be that the company has so much money its projects don’t have to show any return. Only Google knows the answer to that one – but having parts of the company which don’t show ROI is a long-term mistake of the kind that Microsoft has made, and which has cost them dear.

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  • Johann

    Yes, Chrome does provide a better browsing experience than Safari. It’s not about speed, it’s just about the smoothness and ease-of-use. Give it a couple of weeks.

  • Ian Betteridge

    I gave it a month. The drawbacks were too high, and the speed wasn’t so great that I cared.

  • Phil

    Their aggressive rollout of Chrome is laying the foundations for their next moves within a much more sophisticated extensions model, which I’m sure will based web apps. It’s slowly rolling out an OS that’s still in the making. This tactic tactic goes far beyond just creating a mere browser…

  • Ian Betteridge

    But even if they have some sophisticated extensions model, Phil… where’s the money? How does the existence of Chrome help them sell more ads? How much does it cost them, if you compare the cost of development and advertising of Chrome to the incremental revenue?
    Show me the money, as the old saying goes. :)

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  • James Remeika

    I imagine that Google works out ROI on Chrome by asking, how many people own a computer capable of providing a compelling web app experience? Google obviously sees value in access to personal information, which it uses to target ads. And judging from its investment in building world-class email and map applications on the web, I would hazard a guess that it believes consumer adoption of these apps helps it collect personal information faster and/or better. I bet that Google looks as Chrome just like an upgrade to Gmail or Google Maps that allows more consumers to run them to run them faster and/or better.

    As for why Google isn’t satisfied to rely on the nearly equivalent performance and standards compliance of Safari and Firefox, I will make three guesses.

    1) Like any smart company, Google wants to eliminate the number of other organizations who stand between its products (consumers) and its customers (advertisers). The worst disasters are the ones you never see coming; the duplicated effort Google might be putting into the modern browser industry might be written off as disaster insurance. If a blight wiped out Apple and the Mozilla Foundation tomorrow, Google could still get its product to market.

    2) Perhaps Chrome was created in part so that Google could spend a bunch promoting it. If you are planning a significant media buy to convince consumers to switch to a modern browser, why not use the Google brand instead of Mozilla? I wonder how much Chrome cost to develop versus how much Google spend on advertising?

    3) Lots of the engineering work behind Chrome must have ended up in Android. How Google calculates ROI on Android devices is another question, but it certainly needed to bake its own browser for that project.