How does Google make its money?

Google Adwords, the advertising platform that earns Google the overwhelming majority of its multibillion dollar monthly revenue, is the dominant force in internet advertising. It’s helping to turn Google into one of the largest and fastest growing tech companies ever. It is on track to report US$60 billion revenue in 2014, equivalent to the GDP or Switzerland or Argentina.

How does Google make its money?

So how does it turn a buck?

  • 1. When you click on a sponsored advert displayed at the top and right of Google’s SERPs (Search Engine Results Pages), Google bill the advertiser a fee. These fees are determined by an auction, with the amount of an advertisers bid greatly influencing the ranking position of their ad.
US$60 billion revenue in 2014, equivalent to the GDP or Switzerland or Argentina”
  • 2. Google’s search technology is used on many other sites to trawl and contextualise content so relevant ads can be run alongside those searches which, in turn, earn revenue for both Google and the site owner.
  • 3. Google Adwords is not just for contextual ads, its Display Network serves display ads on some of the most visited publishers’ sites across the web which, of course, earns Google revenue when clicked.
  • 4. Finally, Google owns YouTube so the video ads you see before a video is played is part of their Network and they bill the advertiser per complete view.  Of course, there’s plenty of text advertising alongside and overlaying the video which is, of course, part of Adwords!
  • 5. I know I said finally, but better also mention Google Shopping – those images with prices that you see at the top of the SERPs when you search for particular products. Up until last year it was a free listings service but now, you guessed it, it’s part of Adwords and clicks on the ads are billed.

 

There are plenty of resources and commentary available with tips and advice on Adwords advertising strategies, so here’s just one that we at Tiga Creative Marketing often find provides clients with their best return on investment – Remarketing.

 

When a user visits a page on your website – from any source, not just through Google – a small file can be downloaded onto their device. This file can then be used by Google to serve your display ad to that user when they visit other websites that are part of Google’s network. You are billed by Google when your ad is clicked.

 

If your website has regular footfall, we have found that Remarketing can often produce click through rates (the number of times your ad is clicked as a percentage of the number of times its served) that greatly exceed Adwords contextual ads.  Additionally, they usually cost you less per click too!

Related Reading

 

This post was written by:

Steve Chatman

Steve is co-owner of Tiga Creative Marketing
Read team biographies