Google business model

Google business model

Hello friends , my name is gauhar ali

I want to walk you through

how Google makes their money.

In other words, I’m going to

explain Google business model.

Did you know that Google’s

parent company, Alphabet,

in spite of owning several companies

in many different industries,

besides Google itself,

got as much as 85% of its

revenue from advertising in 2018?

That would account for

roughly $116 billion

according to Statista.com.

That’s a lot of money,

but how does Google make all

its money in advertising?

Well, let’s dive a little bit deeper.

If you had to break it down,

Google relies on three key players.

Users, businesses and publishers.

For users, Google has a simple,

but powerful value proposition.

I can find the answer to anything.

If Google didn’t have

an amazing search engine

that millions of people would

use each and every single day,

well, you wouldn’t be

compelled to use it then.

The secret here is how they

organize the information

that is available on the web

and they made it through simple search.

They can scan millions of

webpages in less than a second

and deliver that search to

literally anyone in theory,

and it will be relevant

to whatever search phrase

that you entered in the browser.

That makes your life easy

because you don’t have to

keep searching different

and different browsers and websites

to find the information

you’re looking for.

So in essence, users

don’t have to pay anything

in order for Google to make money,

which is where I’m getting to next.

For businesses, it doesn’t

get much more complicated.

The value proposition is I get more sales

through targeted ads.

As Google makes a bulk of its

revenue through advertising

and that revenue is generated

from two types of advertising,

search ads and display ads.

Search ads are the ones that you see

when you do a search on Google.

These ads are extremely powerful

because it allows a business

to pay a certain amount of money

to get in front of

precisely the right audience

that they want to sell to.

Whether user is a searching

financial information,

product comparisons, want

to buy something specific

in their local area,

businesses are willing to pay

a lot of money to get in

front of the right customers,

and advertisers pay Google each time

a visitor clicks on that ad.

In other words, it’s a

cost per click model.

A click could be worth

anywhere from a few cents

to over $50 for a highly

competitive search term

like auto insurance or loans

or other financial services.

Now display ads are a bit different.

Google has many places where

it can show ads to users.

Gmail, YouTube, Google Maps,

even Google Adsense Partners,

heck, even mobile apps,

and the list goes on and on

as Google acquires more

companies and innovates

just like how they acquired Waze.

The big thing about this

form of advertisement is

Google analyzes the context

of every single webpage or app

as well as matches what

you’re looking to get

from a customer standpoint to your ad.

So they’re marrying the two together.

They’re not just putting

your auto insurance ad

on a random site, they want to make sure

its relevant to that site,

and the users also looking for

the product or service

that you’re selling,

and for publishers, the value

is the money that you can make

by monetizing your content,

your organic traffic

through Google as well.

Website owners have the

chance to insert Adsense Ads

on their websites and make money

every time someone clicks those ads.

Mobile app developers have the chance

to monetize their app

in the same kind of way.

Not only that, but each

time they’re putting out

more and more content on Google,

you can also make more money

by getting more organic traffic,

and some of those people will

potentially click on your ads.

Google’s revenue is still

largely growing at a fast pace

just like it did over 10 years ago.

The tech giant still reports

revenue growth around 20%,

and that’s kind of crazy

considering how big the company is

and they’re already doing

over $100 billion in revenue.

But Google is not willing

to rely on ads alone.

They’ve gotten revenue

from other bets as well,

other subsidiaries that they’ve acquired

and developed over the years.

From .8 billion in 2009 to

over 20.5 billion in 2018.

It went from 3.2% of the revenue in 2009

to over 15% in 2018,

and that number is continually growing

from 2019 to 20 and 21, et cetera.

Expect that number to continue to rise.

Google’s app store alone

has had revenue growth

of over 27.3% over the previous year

according to Sensor Tower.

Now, Alphabet is a massive corporation

that encompasses everything

from internet beaming hot air balloons

to self driving cars to Google Cloud.

As long as people keep using Google,

more and more to find information online,

it will continually grow their revenue,

which in turn, will help other areas

of all the other business

plus you as business owners

because the more people Google

attract to their ecosystem,

the more potential you

have to drive more people

to your business from both paid listings

and organic as well.

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