Have you ever wonder how Google makes its money without charging us for anything. You will get your answers in this post. Just keep on reading.
Google 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.
Google is an advertising company and its biggest product is you, the user. The company controls almost 90 percent of the search market in the UK, and almost 96 percent of Google’s revenue still comes from advertising.
Every day the site returns 1 billion search results globally and serves up billions of ads alongside. The secret to success is in the scale of its operation. Your online habits from YouTube, search and Gmail are all used to profile your behavior. On top of this, it follows your surfing habits through its Analytics and Adsense codes, embedded on web pages to track your interests outside of search.
Google Ads and Search Advertising
The main way Google generates its revenue is through a pair of advertising services called Ads and AdSense. With Ads, advertisers submit ads to Google that include a list of keywords relating to a product, service or business.
The bulk of Google’s 162 billion dollar revenue in 2019 came from its proprietary advertising service, Google Ads.
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 a Google Ads advertiser.
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 the company 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.
The point is that not everybody will see the same ads, but they will be personalized through many filters like age, gender, location, interests, etc. Since Google’s audience base is so big, they can segment it pretty well. And this is why Google is so successful in advertising.
Google AdSense provides a way for publishers to earn money from their online content. AdSense works by matching ads to your site based on your content and visitors. The ads are created and paid for by advertisers who want to promote their products. Since these advertisers pay different prices for different ads, the amount you earn will vary.
Google’s algorithms analyze your blog and note what type of content you produce.
Then, according to that, it chooses certain ads that are relevant to your site. You can choose the location on which Google can post ads, and change it over time.
When your visitors click on those ads, you receive a percentage of the revenue (68% to be exact), and of course, Google takes the rest of it (32%).
The feature that works on mobile apps is called Google AdMob. The ads that will go up on your website are not only chosen by the relevance and the keywords. The advertisers, once again here, bid to place their ads on your site in real-time. Those that are highest paying will be the ones to show on your site.
Collecting user data
Google’s browser Chrome holds a 30 percent market share, allowing the company to generate search queries without having to share revenue, as is the case with Firefox and Safari. Chrome provides valuable data about browsing habits for the company and has been described as an “exceptionally profitable” product.
It even collects information on the exact location of users, using Chrome and mobile devices.
The company assures users that it anonymizes any collected IP addresses after nine months, and cookies in search logs after 18 months, saying this “strikes the right balance” for privacy concerns.
For example, when you visited the guitar site, it used an advertising service to save a cookie from your browser to remember you visited the lessons page.
Later, the site can use its advertising partner to show you ads on other sites, encouraging you to come back. This all works because the guitar site asked their partner to save this signal when you visited the lessons page.
How does Google Pay make money?
It works fairly easily. In stores that support Google Pay, you just need to unlock your device and hold it over the terminal until it’s through. (like with Apple Pay!)
Can it be simpler than that? You don’t even have to open the Google Pay app at all.
When it comes to online purchases, you just need to look for a Google Pay icon and press it.
Now, the Google Pay business model is made in a way that Google does not make significant revenue directly from it, however, it is a part of the Google ecosystem and it has huge opportunities for revenue in the future. (For instance, using your purchasing history to recommend you related products through ads)
Besides all these well-known ways in which Google makes money, they also have other projects and sources of revenue.
Some of the things that are into this other revenue are Play Store, Android, Google Apps, the Google Cloud platform, etc.
Self-driving company Waymo was started out of Google’s X (its development facility for “moonshot” projects)
It is a fully self-driving service that is expected to become even bigger in the future. Other offline projects under the X Development facility include Google Glass which didn’t really blow up, project Loon, project Wing, etc.
In the third quarter of 2019, Alphabet properties/websites made more than 70% of the company’s revenue. These include Google.com, YouTube, Gmail, Google Play, Google Finance, and Google Maps.
Google Maps also earns money from partnering up with companies that benefit from the navigation or tracking like ride-sharing companies, trucking companies, etc. Specifically, Uber/Lyft pays Google to use its maps when routing drivers around the city.
We can’t leave out Google My Business of this conversation. As I previously mentioned, Google is used to building its products for a long time before monetizing off of them.
The same goes for Google my business which is a feature of pinpointing the location of your business, where you can present your products, new offers, etc. It looks like in the future, they will try to monetize off of this.
G-suite also has a portion of Google’s revenue. G-suite is the cloud platform that includes Google Docs, Google Drive, Sheets, Slides, Forms, etc.
You can pay to have an upgraded version. More team possibilities are available like shared Hangouts, shared calendar, etc, or more drive space and other advantages for a monthly fee.
Another well-known service is Google translate. It surely helps with the world’s communication. Even though the version that we use on the web is free, the feature can be used by other applications which load the translations via API calls.
Today, 2.5B devices use Android.
The super-popular OS is a great indirect revenue maker for Alphabet. With Android, it learns your mobile usage patterns, can pre-install Google Chrome for your search habits, and sell you apps through its Play Store.
Do Google sell your Personal Data
Google never sell your personal information
While advertising makes it possible for the company to offer their products free of charge and helps the websites and apps that partner with us fund their content, your personal information is not for sale. Google keeps your data private at every point in the process of showing you ads. Data helps the company to personalize ads so that they’re more useful to you, but it never uses the content of your emails or documents, or sensitive information like health, race, religion, or sexual orientation, to tailor ads to you.