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. 70% of google revenue comes from AdWords about 20% from AdSense and the rest from other google projects. Now how AdWords is different from AdSense. Let’s take example you searched in google for some book.
By just clicking the search icon you get websites which sale books. Since you are intent is likely to buy what you are searching for and in order to appear on top of these search results companies bid various amount of money on specific keywords, they pay per click. Basically when you click on that link that company will pay from few cents up to fifty dollars for the most competitive industries to Google.
Google itself got as much as 85 percent 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 this money in advertising. Well let’s dive a little bit deeper. Google relies on 3 key players’ users, businesses and publishers.
A small business or a large one it doesn’t matter when you are a company you need to find clients that why you invest in advertising. You pay to show your products to people that might potentially be interested in buying it and obviously the key here is targeting. If you don’t target well you will end up spending a lot of money to show your product to many people who don’t care at all. Google can scan millions of web pages in less than a second and deliver that search to literally anyone and it’ll 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 in different browsers and websites to find the information you’re looking for.
Google makes a bulk of its revenue through advertising and that revenue is generated from two types 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 users is searching financial information, product comparisons, where to buy something specific in the local area.
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 acquired more companies. Google analyses the context of every single web page or app, as well as matches what you’re looking to get from a customer standpoint to your Ad.
So they’re merging the two together they’re not just putting your auto insurance ad on a random site they want to make sure it’s relevant to the site and the user is also looking for the product or service that you’re selling. Same In Facebook when you are browsing the newsfeed you’re not actively looking to buy something but you still see a lot of ads of products that you might be interested in and more and more businesses are paying Facebook for these ads
Google is not willing to rely on ads alone they’ve gone revenue from other bets as well other subsidiaries that they’ve acquired and developed over the years. Google’s apps store alone has had revenue growth of over 27.3 percent over the previous year according to sensor tower.