What Is the Google Business Model?

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Founded in 1998 by Stanford graduate students Larry Page and Sergey Brin, Google is the dominant search company on the Internet. The company's primary revenue source comes from advertising related to Internet searches. But it is not the only revenue source.

AdWords and AdSense

  • Google is where it is today thanks largely to the revenue produced by its AdWords and AdSense programs. When a user performs a search on Google, the results are shown in two columns. The main column contains search results based on algorithms designed to provide the most relevant search results based on the keywords typed into the search box. To the right of this column are a list of paid text advertisements that are limited to four lines of text.

How it Works

  • When a user clicks on an AdWords text ad, the company or individual who composed the ad is charged a fee every time someone clicks on the ad. This type of advertising is known as pay per click (PPC) advertising. Additionally, Google pays a commission to websites, blogs, and other online destinations to display the Google ads on their sites. This is the AdSense program.

Advantages

  • The Adwords and Adsense programs work well because the ads are targeted to what the user is looking for.

YouTube and Facebook

  • Google owns both YouTube and Facebook. Both of these social media sites are free to users. Google has yet to figure out a way to monetise these two sites. As a result, both sites continue to spend more money than they take in through advertising.

Other Google Interests

  • Google is also investing heavily in the following areas: cloud computing, Internet browsers, Google maps, Google earth, online software applications, Android operating system for mobile devices, mobile phones, and a number of other media-related initiatives.

References

  • "Googled;" Ken Auletta; 2009
  • Photo Credit Image by Flickr.com, courtesy of Yahoo! Blog
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