The business of google
The Business of Google
Google (GOOG) is well known for its popular search engine, email service, web browser, and various online tools we use daily at work, at home, and on the go. What many don’t think about day-to-day, however, is that all of these services are free. So how does Google make money? (For more, see: Baidu Versus Google: Who Will Win The Global Search War?ADWORDS AND SEARCH ADVERTISING
The bulk of Google’s $66 billion revenue in 2014 came from its proprietary advertising service, Google AdWords. Of that revenue, 68 percent – or just over $45 billion – came from Google’s own websites.
When you use Google to search for anything from financial information to local weather, you’re given a list of search results generated by Google’s algorithm. The algorithm attempts to provide the most relevant results for your query, and, along with these results, you may find related suggested pages from an AdWords advertiser.
AdWords advertisements integration touches almost all of Google’s web properties. Any recommended websites you see when logged into Gmail, YouTube, Google Maps, and other Google sites are generated through the AdWords platform.
To gain the top spot in Google advertisements, advertisers have to outbid each other. Higher bids move up the list while low bids may not even be displayed.
Advertisers pay Google each time a visitor clicks on an advertisement. A click may be worth anywhere from a few cents to over $50 for highly competitive search terms, including insurance, loans and other financial services. (For more, see: Google Ads Vs. Facebook Ads.ADSENSE NETWORK
In addition to featuring search advertising on its own sites, Google’s AdSense program enables non-Google websites to incorporate Google display advertising on their pages. AdSense ads work similarly to Google’s own onsite advertising but are displayed on Google approved sites anywhere on the Internet.
When a visitor clicks on a display advertisement on a member website, a portion of the revenue is paid to the site owner while Google keeps part of the fee. According to Google Vice President of Product Management Neal Mohan, there were “well over a million” websites in the Google Display Network as of 2010. Due to the breadth of companies advertising through the network, entire businesses depend on AdSense as their primary source of income.Revenue from AdSense advertising made up 21 percent, or nearly $14 billion, of Google’s total 2014 revenue.
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