Google is the most valuable company in the world. It has even gone ahead to Apple which was the largest revenue-generating company in the world. Have you ever wondered where Google generates such huge revenue as the core product that it owns is the search engine and it is free to everyone?
Let’s give you an insight into Google revenue according to its 2015 annual report.
In 2015 Google generated $75 billion revenue and around 92% of it was generated through advertisement.
The money came from the USA ($34.8 billion), the UK ($7.1 billion), and the rest of the world ($33.1 billion).
The revenue generated is more than most of the companies in the world.
Google earns through advertisement the most and it serves as the root of the company to stand as powerful as it is today.
Google Advertising Revenue.
Have you ever noticed and paid attention to the result that you get from Google when you search for a particular product or service related page. If you have paid attention to the results you must have seen that the first two or three results are marked with a green color Ad written box.
Do y’all know the reason behind that?
Let me tell you that indicates that those results are advertisements on Google that those products are running.
Advertisers bid to get their product on top of the advertisement on a relevant keyword or search query. The ranking of their advertisement depends upon the bidding as well as the quality and the relevancy of the query to the page. To encourage more advertisers to be a part of this race, Google conducts an auction to decide whose page will rank first for the advertisement.
As mentioned above they are judged on the basis of quality and bidding.
Bidders here won’t know the highest bid or their competent bid. When all the bids are in, the one who wins pays the price of the second-highest bid.
Google with the bidding takes the account of Quality score. That is the relevancy of the page to the query. The more close and specific it is the more quality score it will receive. So hence a generic page including the query will get less score than a specific page just made for that particular query.
Cost per click.
We willingly or unknowingly sometimes just click on any page and move back out of it soon. But do you all know that one click to such Ad marked pages cost them per click a certain amount of money?
Through the cost per click system, the advertiser has to pay each time a person visits the advertiser’s page. Advertiser finds this way of advertising helpful as the users has themselves shown interest in the product by searching for it and hence they will more likely buy it.
All this works through Google Adword which was released in 2000. It is the primary source of income for Google.
Besides this Google also earn through advertising even if you are not on the website at that time. It Adsense network places and also allows different kinds of advertisements on a particular site that is relevant for the advertiser.
This all contributes to the major chunk of the revenue that it generates.
Now you all know how Google is able to provide us the search engine for free to use, as indirectly that search engine contributes to the revenue that it generates using the data provided there.