Ever wondered how does Google make money? Well, you might not be the first person to do so. There have been dedicated studies on how this tech giant enjoys an Everest position in the world IT industry.
Google offers a wide range of services to the user free of cost. Still, it makes so much money and presents an enigma for netizens. So below is the breakdown of how does Google make money.
Let’s have a look at how does Google make money.
Even if you are living under a rock, there is no way that you might not have heard about Google, at least not while considering you are reading this article. Google LLC is an American company owned by its parent company Alphabet Inc which gives a spectrum of internet-related services.
Most popular is the Google search engine that has been defeating all the other search engines for a long time now. Founded by Larry Page and Sergey Brin, the market giant Google provides a range of Google products like Google cloud platform, other software, and hardware.
Keep reading to know more about Google and how does Google make money.
The Ultimate Tech Giant
It has seen rapid market growth and is one of the Big Five Information technology industries that dominated an enormous market share in the United States for the past few years. Which is one of the visible answers of, “How does Google make money?”
Google is the world’s most visited website. This valuable brand also owns many other websites that help Google make money.
Google has also been at the center of the discussions involving market monopoly, data security, privacy concerns, skewed censorship, and taxation. Some sources also claim significant figures of tax evasions by Google by shuttling non- US profits through other countries.
How does Google make money then
All and all, we all use Google in our day-to-day lives for search results. Every day there are two trillion searches on Google. Some of us have become so dependent on Google that studies suggest an average person fires three to four search queries every day. So do you ever remember paying for any of your search results? So how does Google make money?
Well, you might have heard this famous saying: If you are not paying for it, you are the product. So how exactly and what are you charged off? YOUR DATA. Yes, data is the new oil in the twenty-first century and is more precious than you might think. And that, of course, includes your data.
Google collects user data and uses it for its Google business model, which consists of Google’s algorithm to show you relevant ads based on recent Google searches.
And this is how the data is collected…
How does Google make money? Google Search Engine is the main instrument of data collection for Google, through which Google obtains necessary data of user habits.
You might have noticed one thing while surfing on the net. Suppose you searched on Google for a tutorial on playing the guitar. Later, while you might even have jumped to another topic, you start noticing Google ads appear.
And yes, these are advertising guitar or maybe capo or strings. Every time you search about some competitive examination, you glimpse a Google ad appearing for advertising relevant books.
Google says this is the personalization to give enhanced quality of services. But this is the way Google makes money. So the keywords of your Google searches are used to show you relevant content in Google ads.
They do it by feeding your search ( including Google AdWords ) to Google’s algorithm, a machine learning model- that improves and adapts to your behavior, giving you a personalized experience. And these advertisements are displayed on web pages that you visit. Thus, advertisers bid for ad space, and google charges them to earn money.
These ad formats are specially devised for displaying advertising content on the Android operating system or other mobile devices, laptops, and other devices. These are the ads given by other website owners like Amazon and directed to reach the relevant users, and it adds to Google’s revenue. Generally, this user data is linked to one’s Google account.
Business owners have grasped this funda of digital marketing. Upon this, they base their business model. Hence, generating revenue through advertising is what pays Google. Digital advertising stands at the center of Google’s business model.
However, for this, Google accesses a lot of user data. It includes your Google search, user clicks, searches on Google PlayStore, YouTube videos, data like your location or your active time, and the data generated through smart devices like Alexa.
It is where privacy concerns shroud the minds of a lot of people. It even made the US Congress summon Google CEO in the year 2018. However, Google has been clearing its stance by stating that it does not share any user’s private data with third parties.
Many other companies, including e-commerce companies like Amazon and Flipkart, are clients with Google for digital marketing. Google’s business model is similar to that of Meta. Yes- the same company that owns social media platforms like Facebook and Instagram.
It provides a great user experience and social media services like sharing stories and all. You might think it is free of cost. It could be too- if you consider your data has no value. However, it is valuable to these tech giants, irrespective of your opinion. Now, you might realize that they don’t call data the new oil for no reason.
So, Google’s advertising business model has a dedicated Google AdSense program using which other website owners not affiliated with Google can place a bid for advertising. You might not imagine, but each ‘user clicks’ costs a business owner an advertising revenue ranging from a few cents to whooping dollars. It means that by clicking on a Google ad, you are initiating a pay to Google. Now you might get the picture of how does Google make money.
Role of YouTube
How does Google make money using YouTube? Affiliated with Google, YouTube tracks your data based on your YouTube search.
Online advertising is at the beginning of each video, and there are ads displayed for a certain amount of fixed time. There are a few advertisements below the YouTube video space. Based on the YouTube videos you play or any of the data associated with your Google account, there are relevant Google ads displayed for advertising the products you need the most, again guessed using Google’s algorithm.
So YouTube, business models of other advertisers, and you- as a user are involved. But then, where do the YouTube creators stand in this business model?
So even the YouTube Creators are paid by YouTube, based on the number of advertisement goals fulfilled by their videos. Because they provide an interface to both, first to generate the user data and second but most importantly- to display the ads through which YouTube, and thus Google makes money. Some money also comes from many revenue streams by Google itself. For this, you need to pay a certain amount of money.
It also provides the YouTube premium service, devoted to giving you an ad-free experience. But then how will the advertising revenue get generated; since there is no room to display advertising content? Easy. You will need to pay Google for YouTube premium. This way, whether YouTube is displaying advertisements or not, it makes money.
How does Google make money using the Google Cloud Platform
How does Google make money using Google Cloud?- Google Cloud is a growing service by Google. It provides storage and other computing services to the user, charging a certain sum of money.
Google provides the Google Cloud platform for data storage, computing services, data encryption, and many other services and tools. Clients utilize these cloud services for storing and processing market data and other issues.
These services are paid, which means there is a direct business relationship between the client and Google. Google Cloud platform is rapidly growing and now is in collaboration with other services like Kubernetes and Big Query. These are dedicated Google Cloud products and are very crucial to the development of Google as a multinational company in technology.
How does Google make money using Google Play App Store
How does Google make money using Play Store?- Google earns dollars from Play Store by hosting apps.
You might be habitual to using apps on your android phones. Just within a few taps, you can download the best service for your need, which could include any meeting app like Microsoft Teams, any image editing app, or others.
You can download these from Google Play Store, mostly free. So the app developers need to pay Google for hosting their app on the Google platform. Then why would the app developers pay? Just to serve? Again, developers earn money through a Google Ad space that displays Google ads to the users.
Google’s algorithm is again involved here, and the ads are relevant to you, based on your data collected. So, the developers and Google earn money from its clients who give advertisements. It is similar to the YouTube business model.
Sometimes app developers might also include premium features to their services that are only available to premium users who buy a subscription for the in-app purchases. Thus, data is collected from your mobile phones, and you might not even know that one clicking action of yours and there…, Google makes money again.
Apart from other apps, many Google apps provide services to users. It includes Google Play, Gmail, Google Pay, Google Maps, etc. These apps help to yield a considerable amount of Google’s revenue. We will talk about a few of them later in this article.
How does Google make money using Google Maps API
How does Google make money using Google Maps?- This is another strategy of Google- one of the most talked-about aspects of the Google algorithm.
Each of the services that Google provides has brilliant tactics to earn money. Google Maps is another unique way of doing this. Ever stuck in an unfamiliar place and can’t find any restaurant near you while being ravenously hungry?
Again, smartphone to the rescue! Just in a single Google search, you can find a variety of outlets near you, ranked as per distance from your current location and reviews. Of course, free of cost. But you might not know how incredibly Google makes dollars from this too.
You might not see the typical Google ads bombarded on you here. But Google has a collaboration with various brands. For example, many housing firms pay Google every time a user buys a house from Google Maps. It happens because Google Maps are embedded in the websites to provide enhanced service quality. But this might not be the only way Google Maps makes money.
What if you search the term coffee around you. You are going to see all those coffee shops in your area. You are served, aren’t you? But where is the money part then? Well, you might not know, but this keyword coffee gives an attribute of your habits.
This data is collected by users and used by many companies to target you with relevant services. Again- the new oil ‘Data’ comes into the picture. Google maps get more of your information because they understand your location, name, email address, and sometimes even sensitive information like a credit card through apps like Google pay or any other payment gateway.
Through all this, Google Maps Revenue contributed a massive amount of 3 billion dollars in the year 2020, giving you a slight idea of how does Google make money.
The Google Business Model
How does Google make money using Android?- Google owns the Android operating system, which is widely used by mobile phones. It is another effective way of data collection.
Now a little more shocking fact- Google also does not fail to earn money from you indirectly. Let’s see how. Google sells its variety of pre-installed apps to the companies in the mobile market so their phones could have these apps at the time of purchase itself.
This money, in turn, is added to the price of the device that the customer pays. It is important to note that the widely used Android operating system is also provided by Google only.
Thus, the Google business model is indeed one of its kind, holding many hidden revenues. Google has the information about the frequency of the keywords typed by users on Google Search. In what is termed revenue streams, Google AdSense sells these keywords and relevant information to the companies.
Companies analyze this data and understand the trends in society. It could be a soft sentiment analysis that helps suppliers to understand the demand. Understanding the exact requirements of the target audience proves to be a boon for the businesses, no matter how small or big they are.
And this is exactly what Google has and is also willing to sell. And these, fellow netizens, is known as the Google business model.
How does Google make money: The breakdown
So, we discussed some of how does Google make money. Yes, these are not all; there could still be much more hidden! Anyways, this is the breakdown of the complete business model of Google. It has also launched smart devices like Google Home and aspires to be an Internet carrier with Google Fiber.
You may not figure it out, but there are high chances that Google pretty much influences several things you see around you. And that gives it a monopoly. Google also claims to go eco-friendly with its venture Google Energy to invest in renewable energy projects.
It also carries out many philanthropical activities through Google.org. These could be its ways of paying back.
So, how much does Google make exactly
Just through online advertising, Google generates about 83 percent of its total revenue.
In the year 2019, Google made a total revenue of 181 billion dollars. Analysis shows that 60.8 percent of Google’s revenue comes through Google search. 13.4 is generated across the Google network, and the YouTube ads contribute around 9 percent.
Google cloud brings 5-6 percent of Google’s income. Other sources contribute around 11 percent.
Google’s revenue is skyrocketing every year, and Google continues to occupy a large portion of the market share. Although many users on the Internet have started using ad blocks to get an ad-free experience, its monopoly does not seem to wane.
It has just surged the competition among the advertisers to bid more and more. Every business owner now knows the importance of digital advertising and Google ads. We might say that this Google business model has helped local businesses bloom and thus contribute to the economies around the world.
But every involvement gives it a considerable amount of share. It has benefited Google to expand into many other fields like Fitbit, self-driving cars, and artificial intelligence. One might even say that indirectly every user of the Google search engine or other products is charged.
It could not be in the form of direct money, but Google for sure makes enormous profits and continues to be one of the most significant marks of globalization and capitalism.
I hope we have answered your question, “How does Google make money?” Let us know in the comment section below if you liked it.