Google’s infrastructure must be huge to send results so quickly, but who pays for all this? I once read that this all comes from advertising. That they earn enough from that, but it’s hard for me to imagine? Because I think Google has a huge amount of staff worldwide, and new services are added every month, so does Google get revenue other than from advertising?
Answer
Hi Jeroen,
The short answer is: Google does indeed live off most of its advertising revenue: its recently released Q1 2010 results show that advertising revenue (through Google sites and partner sites) was nearly $6.5 billion. (96% of total turnover). In this excellent article on Wired.com, Google’s Chief Economist, Hal Varian, also confirms that advertising is the major source of revenue.
However, a few things preceded this; moreover, the way of “selling” the advertising has become very sophisticated over time. And then we come to the long answer.
Google started as a free search page, based on an ingenious way (“PageRank”) to determine which pages are important as a result of a web search. When Google started, other search engines were already active, but Google was different in that most users felt that the most important search results were at the top of the list (which can be explained by the well-thought-out PageRank system). This has led to Google quickly becoming the most popular search engine: it is believed that more than 60% of web users use Google as their main search engine. According to Alexa.com (a site that measures the popularity of websites), Google.com is the most visited site on the web, with 42% of all Internet users currently visiting Google’s site(s) every day.
Soon, in addition to the regular search results, company-paid results (the so-called “sponsored links” that you often see on the right side of the Google results) were shown, still based on the same principles as the regular page ranking. There have been a few versions of this, but the current version, AdWords, works like a sort of auction system: companies interested in getting listed as sponsored links when a Google user searches for a certain word bids a certain amount that will be paid. to Google when a Google user clicks on the sponsored link. Every time someone searches for something via Google, a list of sponsored links to be displayed is drawn up based on the search terms and the amounts offered. If you then know that it is estimated that more than 1 billion searches are performed per day via Google websites, you do not need a large percentage of clickers to generate a nice and continuous stream of income.
Moreover, the knowledge about the search behavior of worldwide internet users is an inexhaustible source of information, which Google uses to respond even better to its users. By the way: the investments that Google makes in free software (Chrome, Docs, Apps, Android, …) only serve 2 goals: improving image and attracting even more people to the web.
The Wired article mentioned above is definitely recommended if you want to gain more insight into the philosophy behind the Google business model.
Regards,
Wim
Answered by
prof. dr. Wim Lamotte
Informatics Multimedia Networks Internet Networked virtual environments
Agoralaan University Campus Building D BE-3590 Diepenbeek
http://www.uhasselt.be/
.