How does Google earn their money?

By Emma Meins, April 06th 2017 in Ad words
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In February last year Google briefly surpassed Apple. For a while they were the most valuable company in the world.
Google gains most of its revenue through search, but how can this be, when it’s a free platform to use?

How does Google earn their money_

This is a question that many may have wondered about and a question that this blog post will help clarify.

Google has a yearly revenue of 520 billion dkk having a 160 billion dkk operating profit. It is reported that Google earns 15.000dkk a second. Where in the world does this revenue come from?

  • 240 bn dkk United States of America
  • 50 bn dkk United Kingdom
  • 230 bn dkk Rest of the World

Out of these 520 billion dkk, 469 billion dkk come from advertising. Compare Google’s yearly revenue to Coop, a wholesale distributor, who has a yearly revenue of 187 million dkk.

  Jaw to the floor

How does Google search work?

It is through advertising on Google Search and adverts served by Google on other websites, that Google earns most of it’s money.

What is the world searching for right now

But how does the Google Search system work? We have broken it down into three factors: keywords, bid and relevance.

Keywords

  • Google search is based on Keywords. Keywords are words or phrases that are used to match your advertisement with what people are searching for. In order for your advertisement to show when people are searching for what you offer, your keywords need to match the words and phrases that people are typing in on Google Search.
  • The key is to choose relevant and high quality keywords in order to drive relevant traffic.

Bid

  • Advertisers bid on their keywords, in order for their product or service to show up as a result to a relevant search query.

Relevance 

  • But it is not just the bid that determines which ads will be shown. Google will also look at the relevance of the advertiser’s landing page in connection to the keyword that has been typed in.
  • Example – You have a webpage where you sell “hiking shoes”. You don’t have to bid as high, in order for your ad to appear to a person googling “hiking shoes”, compared to an advertiser whose page is about “shoes” in general. Meaning that it is not just the bid, but also how relevant your content is, compared to what is being searched.

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Having a high relevance, together with the highest bid (which, as explained above, is reliant on the relevance of your website), will make the advertisement show on top of the Google Search page, where users will be more likely to see and click on it.

Why is this so attractive to use? 

What makes this service that Google provides so attractive, is that you can target your ads to users on Google who have shown an interest in what you offer, and ignore those who haven’t.

Besides this, advertisers only pay for their ads when someone actually clicks on the paid ad. If they don’t it’s free brand awareness. But don’t worry, it is possible to set a budget in order to control the daily or monthly spend.

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Since its release in 2000, Adwords has been Google’s primary source of revenue. Another revenue source is Google’s Adsense network, where your advertisements can be placed on partner sites. These include everything from blogs to newspapers, where you don’t just advertise with text (which is the case of Search advertising), but have the option of utilising images, videos, audio etc. Google has millions of partner websites and this increases daily, thereby having an extremely broad reach. This is called Display advertising.

It works!

To sum up, Google Search is the perfect way for you to reach customers who are searching for what you are offering. You can choose not only to utilise Google Search, which has been explained in this article, but also Display advertising – where you show your adverts on other websites to which Google is a partner – thereby gaining an even stronger online presence.

Customers want relevant information and to find what they are actually searching for, so why not give it to them?

A lot of people are utilising Google AdWords and have gained from it – why aren’t you?

Are you considering grabbing this opportunity and want to speak to us?

If you are in Denmark give us a call on +45 78 76 92 05 or meet us in our office at SOHO, Kødbyen.

U.K. team on +44 203 005 9878 based in London.