To those that are unaware of how Google make money.  We will look at Google’s core business and reveal how this seemingly simple search engine grossed over 20 billions in 2008.  “Google provides a free service, how does Google make money?”; well this in part is correct, Google Search, Gmail, Google chat, Google maps and many other useful applications are all free to the end user.  The end users are never charged for anything.  So then “How does Google make money?”, very simple “AdWords and AdSense.”

AdWords

AdWords is the term Google uses to describe the process advertisers use to bid for  advertising space on Google’s search results and  content network.  The process works like this:

An end user enters the term “make lots of money online” into Google’s search box and a second later the results of the search appears on the page:

Advertisers place a bid price on the term “make lots of money online.”  Who ever has the highest bid gets their Ad displayed at the top of the Sponsored Links boxes (yellow box on top and white box on the right side) whenever a user searches for the term “make lots of money online.”  The cost of being on top can range from 5 cents a click to over $50 a click, depending on the term the advertiser is bidding for.  In the above example, the term “make lots of money online” is estimated to cost about $2 a click to the highest bidder.  With millions of searches done on an hourly basis, you can imagine how much revenue is being generated by Google.  On a side note, unlike a few unnamed search engines, Google does not display their sponsored results with regular search results.  Google has taken a stance to not follow this practice and on each results page, the sponsored links are clearly defined.


Part II: of How does Google make money?

…and how you can get a piece of it.

AdSense

Adsense is the second big money maker for Google.  Now the question is how does Google make money from Adsense?  Adsense allows web developers and bloggers or anyone who wants to develop a web page, to generate income from their website/blog.  This is how Adsense works:

A web developer or blogger creates content on their page and in exchange for a few spots on their content page, Google will give them a percentage of the revenue generated when an Ad is clicked from their web page.  What makes advertisers want to advertise on certain pages is the intelligence of Google’s Adsense platform.  Adsense is able to scan the content of a webpage and display relevant Ads on that page.  This makes the advertisers happy as it will lead to clicks from customers who has an interest that is related to their product.  It also satisfies most content publishers as the Ads relate to their content and of course they get the additional income. Samples of advertisements that appear on a typical website is shown on the right hand panel of this website. As you can see the ads are very relevant to the content of this page.

Since Adsense is available to anyone that has a presence on the Internet, either via website, blogs or other methods, you too can get a piece of Google’s pie. We will return next week with the segment of “How does Google make money.” Next segment is: How you can profit from Google.


Feb. 9th, 2009


Reflecting on last week’s article on “How does Google make money.” We will now discuss how you can profit from Google. Well there are several ways to do this. The first and most widely used method today is Adsense. As we discussed in last week’s article, Adsense is Google’s way of allowing web developers to easily put advertising on their website. Adsense is a great way to earn some extra income to help pay for dinner or other leisure activities. There are some that use it to make a living but realistically, it’s more of a side income. The average Adsense web publisher makes about $100 to $200 a month. Since it doesn’t cost anything to sign up for Adsense, it makes sense to sign up and have it on your webpage. It’s not too difficult to sign up for Adsense. The most important part to getting approved for an Adsense account is to have a website that is fully developed. The website should have content that is unique and be useful to the public. If your website satisfies both these condition, your chances of getting approved for an Adsense account is very high.


To sign up for Adsense you can visit this site:


http://adsense.google.com


Once you have your Adsense account, the next step is to decide where you would like to place ads on your website. Typically the area that generates the most clicks and visibility is the right side column of the web page. Remember you only get money when your website visitors click on Google’s ad. So your goal is to place ads in an area that would generate the most clicks. Oh the most important thing to remember is to NEVER click on the ads yourself. Google uses many algorithms to track who’s clicking on the ads. It’s not too difficult to trace you back to your computer.


Once you figure out which area of your page you would like to have ads, your next step is to generate the ad codes from your Adsense account. This is quite easy if you follow the step by step instruction provided by Google. Adsense is very flexible and allows you to create ads of different sizes and shape to fit your website perfectly. Some samples of Google’s ad is on this page so you can see how well it fits into the page.


That’s basically it, to getting ads on your website. If you have a site that is very popular, you can generate yourself a handsome side income. Typically the ratio of visitors to clicks are about 5 - 10% of your visitor will click on one of the ads that interest them. Each click can range from a few pennies to a few dollars, depending on the topic of your website. We’ll get into niches and more in the weeks to come. Visit us in the following weeks to find out more ways to profiting from Google.