How does Google make money?
We all know how Microsoft makes money. Most of their revenue comes from the sale of their flagship products – Microsoft Windows & Microsoft Office. But have you ever wondered how does Google make money?
How is it really possible to make money when you don’t have any tangible products or when you don’t charge a penny for any search on Google? So, where does this revenue comes from? Well, Search engine giant Google is making billions of dollars in advertising!
So How Does Google make Money – Advertising!
It’s advertising and again advertising, in fact over 95% of Google’s revenue is from advertising only. You might wonder who is spending these big dollars on ads. The major part of this money comes from the ads that appear when you do a search on Google.
During any of your searches on Google, if you notice carefully, you will find that there are listings at the top and right side of your search results. These are contributions by advertisers and Google charges money for these ads. Every time someone clicks on any of the links, the listed company gets charged.
Earlier Google was mainly known as a search engine only. But its founders soon realised that if people were going to visit the site for search and enter a term in the search box, they could be motivated to buy a product from any advertiser who has placed an ad there.
Cost Per Click Advertising … 32% kept by Google on Display Network
Today, companies use Google AdWords to advertise their business and have their results displayed. Google runs these ads on the participating websites as well. The advertiser pays Google for each click and 32% of the money is kept by the Google and 68% is passed onto the website that ran the ads. It’s a cost per click service. If there is no clicking on the link, Google doesn’t get paid any money from the search. AdWords is responsible for major part of the Google’s advertising revenue.
Advertisers can also join Google’s AdSense program to display their ads on its website. Google also runs these ads on the participating websites of the Google’s AdSense program. A large number of new websites participate in this program.
Google Keywords Tools
Google advertisers using these tools can have great search result exposure to their advertisements by getting more people clicking on them. When you surf the internet…Google not only makes the money, it also learns more about your browsing habits. Google follows your surfing habits through its Analytics and AdSense codes that are embedded on web pages. Plus by installing cookies on your machine to further track your web surfing habits – sound a bit like Big Brother? These surfing habits from your search are then used to profile your behavior. This tracking goes beyond the time you spend on google.com. This tracking helps Google in targeted advertising specifically to your recent internet usage.
AdWords is contributing around 70% of Google’s advertising revenue, the rest is from AdSense. All other services Google offers – from Google Maps, Google Earth to Gmail to Google Docs to Drive…exist just to promote the primary business of Google. Google’s amazing success is all the more remarkable looking at the fact that this is accomplished without contracts. The advertisers are free to cut their links with Google at any time.
You might be wondering how much Google charges for a click?
Cost per click that an advertiser pays to Google actually depends upon a lot of factors. Google uses an auction kind of system. The price actually depends upon the competition for that particular keyword or keywords. You select the keywords for which you want to show your ads when someone searches for those keywords on Google. If there are many other companies bidding for the same keyword, you will have to pay more or outbid them. The cost per click or simply CPC may vary from one cent to $50 or may be more. Insurance and loans advertisers are paying the highest money for ads on Google.
..$22.51 per Click for the Keyword “cars”
We did an exact match keyword search on the term “cars” and it was interesting to see that the cost can vary from $0.10 to $22.51. It all depend on the day the traffic and the competition of who is trying to win traffic on the keyword for the day.