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Google’s Business Model That Makes Money

There is too much information on the net. Billions of people need exact answers to their questions. There should be a system that will display relevant search results. Fortunately, there is Google-the most popular search engine in the world. It gives no chance to Bing and other search engines due to a specific and revolutionary algorithm we have talked a while ago. Google’s ranking factors

 

Undoubtedly, Google is a tech leader focused on improving the way people connect with information. Many can think Google is so popular and has the second market capitalization in the world with $476.27 billion because it sells much. Surprisingly, Google has a business model that allows the company to earn money not selling its products but “working” on users, thus on you and me. Almost all products of Google are free for online users. And I have to say there is an array of products and services including search tools, advertising services, communication, publishing, development and security tools, map-related products, statistical and mobile-based software, hardware and cloud-related services. But let me don’t put all those products in one sack.

Google products for online users

Google web search – the main website of the company is Google.com, where we can enter a keyword and get relevant results. But what’s interesting we can customize our search process and look for something that we already know what group it refers to. I mean we can narrow the search area and look for news, business financials and stock information, maps, images, books, scholarly literature, and group info. This is implemented via Google News, Google Finance, Google Maps, Google Image Search, Google Book Search, Google Scholar, and Google Groups respectively.

Google mail (aka Gmail) – it allows users to get a webmail service sending and receiving emails. Plus, there is an instant messaging system integrated with Gmail called Hangouts. It offers voice, video calls as well as messaging.

Google docs – this is a browser-based system allowing users to create, view, and edit documents, spreadsheets, and presentations. All those docs are stored on Google’s servers and all the users can edit them in real-time.

Chrome – it’s a web browser for both the desktops and mobile devices as well. It’s thought that Chrome is the fastest browser available in the market, plus, it doesn’t crash and lets you stay incognito. Though we have to mention its disadvantages too-Chrome uses a lot of memory (RAM) and what’s surprising if you close the browser, all the opened tabs will be closed with no warning. Thanks to its features Chrome has the biggest market share (45.6%).

Google+ – this is Google’s own social networking site. Though it has already taken its place on the net, there are a few cons and pros you have to be aware of. As for the positive reaction, G+ has a Gmail and YouTube integration, Circles, communities, and Google authorship. Finally, there are a few shortcomings that should be changed in the future: limitation of SEO, no promotion, and it has to be more popular among other social networking sites.

YouTube – Though this video sharing site is not developed by Google itself, the company acquired it back in 2006, and now no one remembers who the former owners of YouTube are.

Android operating system – This is the most popular mobile operating system in the world with more than 70% of market share. It has become so popular thanks to a few features: it’s free; it’s fully open-source OS; any handset manufacturer can install on a device; any developer can use to create applications for mobile devices.

Google Play–It’s a cloud-based store for apps, books, music, and movies. There are more than 2 million apps.

Blogger – It’s one of the best tools for publishing blogs.

Google Wallet – it’s a payment system allowing users to send and receive money from a mobile device or desktop computer at no cost to either sender or receiver.

Devices–These include Chrome OS notebooks, Nexus smartphones and tablets, and Chromecast.

These products are more or less popular among online users. But as I said Google doesn’t earn at the expense of us-it earn at the expense of advertisers. The company has only a few products, but that’s enough.

Google products for Advertisers

Google AdWords – It’s an auction-based program delivering ads that correspond to users’ searches. The ads can be displayed either on Google’s sites or Google Network sites. In other words, AdWords is a cost per click service, which means that advertisers do not pay until their ad is clicked.

The business model Google earns money has many common features with pull marketing techniques. As you remember the mains philosophy of inbound marketing is related to the approach that we don’t push an ad to the users, but design a website and run it in the way to attract users. Thus the users should come to our ways. The same principle works for CPC-for example, you want Google to display your ad on the top for a certain keyword search. But there are other companies that “fight” for that keyword as well. Google offers to place a bid, and if you offer more, Google will display YOUR ad. But if no one clicks on the ad, the customer doesn’t pay a dime. Recently I have found a post explaining how much you have to pay according to different factors.

Google’s model is designed in the way that anyone, be it a large-scale company ready to pay millions of dollars for ad or an individual with only a few bucks, can place an ad. Moreover, the company places targeted search-driven ads via its AdWords platform to full-on video ads on its YouTube platform.

Obviously, there are many keywords that have high CPC. I recommend you meet the 20 most expensive keywords on Google. There are many people who earn on mistakes we make, so you can also take a glance at The 20 Most Expensive Keyword Typo’s in 2016.

Google AdSense – this platform is designed for content owners. It helps them to monetize their content. How AdSense works? It enables web sites to deliver AdWords ads that are relevant to the search results or content on their pages. This platform also serves traditional banners. There is also the premium version of AdSense called Doubleclick Ad Exchange that offers superior control and greater revenues over AdSense.

These two platforms (AdWords and AdSense) provide the company’s majority revenue. As the company confesses:

“Our proprietary technology automatically matches ads to the content of the page on which they appear, and advertisers pay us either when a user clicks on one of its ads or based on the number of times their ads appear on the Google Network.”

But let’s continue meeting the other products and come back to the money at the end.

Google products for enterprises

Google Earth Enterprise – It’s a firewall software solution for imagery and data visualization.

Google Cloud Platform – it’s a suite of products and services that includes:

    • Platform as a Service (PAAS) offering called Google App Engine
    • Storage through Google Cloud Storage
    • Real-time analytics through Google BigQuery
    • Structured Query Language (SQL) through Google Cloud SQL
    • Infrastructure as a Service (IAAS) via Google Compute Engine

Google Statistics

As you see there are many products that can help Google to earn money, but what’s interesting it’s an ad-driven company and the majority of its revenue comes from ads. Some people call it a revolutionary business model, some think there should be another search engine to provide equal competitiveness, but all of them agree that this is an advanced model, because of search and ad walk arm in arm.

Google has the biggest media advertising market share. It is even ahead of Facebook. Last year Google has 11.1% US digital ad revenue market share, while Facebook ended at 3.2%. It’s also predicted that Google will hold its positions in 2016. As for the revenue, it amounted to $74.54 billion in 2015, and 67.39 billion was made up of advertising activities. In comparison with 2014 data when Google’s advertising revenue was $59.62 billion, the company has increased it by 13%.

For the Q1, 2016 Google reports revenue of $20.3 billion, which is up from $17.3 billion in the same quarter last year.

The bottom line

The business model of Google can be described in the following way:

  • Google has many useful products that are mainly free.
  • Google uses its products, tools and search algorithm to provide relevant organic and paid search results.
  • Google gets money from companies and individuals to display ads relevant to their preferred keywords.
  • As there are many keywords with high competitiveness, Google offers an auction-based system.
  • Many keywords have high CPC, but they bring high incomes.
  • Google places ads on its own and Google network websites (though two-third of the revenue comes from its own sites).
  • Google network websites use Google AdSense to monetize their content.

Google gets much but it shares it with users too.

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