How Does Google Make Money? Google Business Model Explained

Executive Summary:

Google is an American multinational technology company that specializes in Internet-related services and products, which include online advertising technologies, a search engine, cloud computing, software, and hardware.

Google makes money from advertisement services and from cloud computing platforms.

Google was founded in 1998 by Larry Paige. It is considered one of the Big Five technology companies in the U.S. information technology industry, alongside Amazon, Facebook, Apple, and Microsoft.

What Is Google & How Does It Work?

Google is commonly known for Google Search Engine, but it also provides advertisement services through its platform of Google AdSense. It also provides cloud computing services like Cloud Storage and various applications in the field of information technology.

Google Is the largest search engine providing information to about 3.5 billion searches per day as of 2019. Google is the biggest social-media advertiser providing its services through its web pages and also by Ad-sense on non-google platforms such as YouTube and Facebook.

Google’s cloud computing services are used by millions of people worldwide whether it’s cloud storage or other office applications.

Most google products are fairly simple to use, as most of them came pre-downloaded in our electronic devices. Most importantly they are user-friendly that’s why easy to use. They can be used on any electronic device from laptops to smart-phone and on various other devices.

It’s the widely used search engine because of its availability in almost all languages and the way it process the searches to provide the user with relevant and useful information.

It helps us save time by providing relevant products we are looking for.

A Short History of Google:

1996 – Founders Larry Page and Sergey Brin met at Stanford University in 1995. By 1996, that they had built an inquiry engine (initially called BackRub) that used links to work out the importance of individual webpages.

1998 – Larry and Sergey named the program they built “Google,” a play on the word “googol,” the mathematical term for a 1 followed by 100 zeros. Google Inc. was born in 1998 when Sun co-founder Andy Bechtolsheim wrote a check for $100,000 thereto entity—which until then didn’t exist. 

The primary “Google doodle” in 1998 was intended to let visitors to the homepage know that Google’s minders were offline at the Burning Man Festival in Nevada. There’s now a team of “doodlers” and Google posted quite 2000 different doodles on homepages worldwide.

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2000 – In 2000, Google introduced AdWords, a self-service program for creating online ad campaigns. Today Google advertising solutions, which include a display, mobile, and video ads also because of the simple text ads Google introduced quite a decade ago, helping thousands of companies grow and achieve success.
2004 – On April Fools’ Day in 2004, Google launched Gmail.

Google’s approach to email included features like speedy search, huge amounts of storage, and threaded messages. Google Initial Public Offering of 19,605,052 shares of sophistication a standard stock happened on Wall Street on August 18, 2004.

2004-2005 – Google acquired digital mapping company Keyhole in 2004, and launched Google Maps and Google Earth in 2005. Today Maps also features live traffic, transit directions, and street-level imagery, and Earth allows you to explore the ocean and therefore the moon.

2006 – In 2006, Google acquired an online video sharing site YouTube. Today 60 hours of video are uploaded to the location every minute. Cat videos, citizen journalism, political candidacy, and double rainbows haven’t been equivalent.

2007 – Amidst rumors of a “Gphone,” Google announced Android—an open platform for mobile devices—and the Open Handset Alliance, in 2007.
2008 – Word got out about Google Chrome each day before schedule when a comic book introducing Google’s new open-source browser was shipped before planned. Google officially launched on September 2, 2008.

2011 – Larry Page, Google’s original CEO until 2001, took up the title again in April 2011. Eric Schmidt, now Google’s executive chairman, served within the role for 10 years.

In June 2011, Google introduced the Google+ project, aimed toward bringing the nuance and richness of real-life sharing to them online and making all of Google better by including people, their relationships, and their interests.

Google company has packed tons into a comparatively young life. Since Google was founded in 1998, Google has grown to serve many people around the world.

How Does Google Make Money?

Google generates most of its revenue through advertisements in-fact google generates 85 percent of its revenue through advertisements that make up a whopping total of 162 billion dollars as of 2018.

Not only that it also generates revenue through its various platforms like cloud computing services, app store, various google applications, and google’s very own electronic devices such as android phones and Chromebooks. In-spite making a huge amount of money from other sources most of its revenue comes from its advertisement services which are mostly provided by Google Ad-sense.

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Google’s business model relies on three basic keys Users, Businesses and publishers.

As far as users are concerned in this regard it provides users with the most important thing that is “information” information about anything. The basic approach that google use in this regard is I can answer all your questions.

So, anyone, who wants to get any type of information he’ll have to use google’s search engine. It draws users by analyzing piles and piles of data in fractions of seconds and provides highly related information that a user has searched for.

In case of businesses they get the advantage by getting more customers that are provided by the targeted apps that google displays on its platforms.

The way google generates most of its revenue is through advertisements for businesses. They pay for the ads and in return, they get a lot more customers. Google uses two types of options in this regard and they are search ads and display ads.

Search ads are where google generates the most revenue as when someone searches for a particular thing google recommends them the business that is using google as its advertiser. The thing that most businesses use google as their advertiser is because they not only show your ads to users but they show ads to potential customers.

Like if you are looking for a car on one of google’s web pages it’ll show you the ads of car insurance companies in this way it increases the possibility of the user to click and see that ads.

Advertisers want the precise public for their ad so that they reach potential customers and for that, they are willing to pay a lot of money. They pay google on the number of clicks per ads so the precise public not only increase the reach of the businesses but also increases the chance of google getting paid. A single click can make from few cents maybe 50 dollars depending upon the kind of business.

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Google also uses publishers for its advertisement purposes. Publishers publish their products on google platforms or google linked platforms. Whenever someone sees their content and if they click on the ad shown on their content they get a fraction of the amount paid by the advertiser to Google. In this way, publishers get money too that supports them and google generates revenue too.

So the google business model is as simple as they provide customers to the businesses and they provide users with the stuff they are looking for and in return, they get paid.

Google not only uses just its own platforms for advertisement purposes but also on non-google platforms by Ad-sense by providing a fraction of the amount to that not google platform.

Advertisements are not only thing google uses its products for but also it generates some revenue by charging its users for specific products like cloud storage etc.

Conclusion:

So the basic business model of Google is as simple as they provide businesses with more customers and their user the right thing they are looking for, so they just join the relevant customers to businesses that help users in a way that they get what they are looking for also the publishers get revenue that supports them to work and create content and in return people see an advertisement on their content. So the publisher gets a fraction of revenue when a user clicks on relevant ads.

Simple is that the publishers as well as google generates revenue while the users get relevant advertisements.

Google Funding, Valuation & Revenue

 In the most recently reported fiscal year, Google’s revenue amounted to 181.69 billion US dollars. Google’s revenue is largely made up of advertising revenue, which amounted to 146.9 billion US dollars in 2020.

As of June 2019, parent company Alphabet ranked fourth among worldwide internet companies, with a market capitalization of 741 billion U.S. dollars.Screenshot (38).png

This is how google turned its 0.4 billion company to 181.69 billion dollar company just by following the simple approach of advertisement. Google is not relying on just advertisement services it’s working on other platforms that can generate revenue for them.

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