How Does Google Make Money

To the layman, the thing is simply a search engine - a fairly convenient device on a white background where you type in your query and get your answers. The search engine is more or less the best one that exists, and if you've ever been on the Internet, you've probably used it.

You've also probably noticed that the Google search engine is free and you need to pay zilch for using it. It's no 'demo' version either, and you can use it repeatedly and will still be free of cost.

And then you hear about the Googleplex―the creatively designed, sprawling office which houses their heftily paid employees. You hear of the profits they are raking in―all on a service which is provided free of charge and no caveat emptor clauses for use.

Now, if their services were really as free as one thinks they are, they'd probably be broke by now. But Google have a sound business model. It is not a charity that provides help to people without a charge or a fee. It is a business.

"So you want your website to be on top of everything, eh? Well, give us some money and we'll put you there," promises Google. Advertising is the way they have chosen. When you key in a query in Google's search engine, it gives you a bunch of results.

On top of the page in a faint beige background, and on the right hand side, we have Google's primary source of income―the sponsored links. Google accepts money from websites who wish to push their offerings slightly higher up the search engines' pecking order. This is perhaps their oldest and one of their most remunerative business ideas.

Google AdSense is a money-making machine, not only for Google, but for the entire Internet so to speak. AdSense is a program which helps advertisers put their ads on websites. Google - one can say - acts as a liaison between advertisers and websites.

Websites rent out empty patches of their websites to advertisers (the ads are hosted by Google) and the whole system works on a pay-per-click advertising basis.

When an Internet user clicks the link to a particular advertiser site, that site has to pay Google a certain amount towards hosting charges. They send a part of that to the host site which hosted the link clicked, for 'renting' space on the website.

It is largely agreed upon that the AdSense program is the biggest revenue sources for Google, and for several websites who run on that business model.

This is an interesting revenue source which comes rather easily to Google what with it being a search engine. As it is an extremely good search engine and is opportunistic enough to know a business opportunity when it sees one, Google realized that what the people search for can actually be recorded and then sold to people who are willing to pay for it.

Since Google knows what people are looking for, they are willing to sell this information to website owners to help them search-engine-optimize their website for Internet advertising. By targeting all the important AdWords, people can push the popularity of their website higher by ranking on those keywords.

Google still is and will enjoy the advantage of being the first entrants in this unusual market. And the popularity of the Google search engine too will keep them going for years to come.

Also, being an infinitely intelligent company, their revenue model is one which will last for a long time, since the money they generate is not one-time but recurrent, and will continue to do so for years to come. And they deliver the desired results for the people paying, hence their popularity is unlikely to wane.