Table of Contents
Larry Page and Sergey Brin established Google in 1995, and they now serve as co-CEOs of Alphabet Inc., Google’s parent company. Sundar Pichai was appointed CEO and Chairman in December 2019, succeeding the company’s original founders. Google’s mission statement is to “Organize the world’s information and make it universally accessible and useful”.
What Is the Google Business Model?
Google uses a hidden pattern for its business model, which means that the consumer is not the one who is responsible for paying the cost. It relies mostly on income from sponsored media. Businesses invest in SEO by purchasing ads that appear at the top of consumers’ results pages. Due to its dominance in internet search – which accounts for 90% of all queries made annually, this is a terrific bargain for marketers.
Business Segments
Search Engine Segment
This is the most lucrative business segment that Google has. It encompasses a wide range of products, which include: Google Search, Google Books, Google Photos, and Special Searches.
Advertising Segment
It includes Google Ads, Google Analytics, Google Adsense, Ad Mob, and Google Apps.
Productivity Tools Segment
Gmail, Google Drive, Google Docs, Google Code, and Google Calendar.
Additional Products
Google News, Google Phones & Android OS, Google Fiber, Google Chrome, Google Lens.
How Does Google Make Money?
Google Advertising (around 84%)
Google Ads, Google Shopping, Google AdSense, Google AdMob, and YouTube.
Google Pixel + Youtube Premium (10.5%), Google Cloud (5.5%)
Google’s Competitors
Search Engines: Bing, Yahoo, DuckDuckGo, Baidu, Yandex
Advertising: Facebook, Amazon
Video: TikTok, Instagram
Mobile Industry: Apple
Cloud: Amazon Web Services, Microsoft Azure
Why Google’s Business Model Works?
Search Engine
Advertising is the principal source of revenue for commercial search engines. It is the website that receives the most visits from users all around the globe, making it the most widely used search engine.
Advertising
In the CPC strategy, Google will not get paid by advertisers unless and until a user interacts with one of the advertiser’s adverts. Besides, Google uses auction theory as a tool for internal analysis, those ideas make use of a fundamental algorithm. AdSense programs help users to get a varied amount of money regularly in return for Google’s ad banners to run on their websites.
Technology and Innovation
The search technology used by Google is built on a complex network of algorithms. This helps determine the PageRank of a website as well as for performing hypertext matching. By using a wide range of innovative approaches, Google was able to create several notable web applications. The majority of the company’s offerings are made available to clients at no additional cost. It includes Map, Gmail, Google Scholar, Android System, Google Earth, etc.
Focus On Costs and R&D
Four primary tenets serve as the foundation for the company’s expansion plans. Examples include R&D, sales & marketing, the acquisition of new customers, and data centers. It is also responsible for bearing the expenses associated with compensating the member websites for the AdSense program.
Business Model of Different Products
Google Adsense
What is Google Adsense?
With Adsense, you can put ads on your website and earn money whenever one of your visitors clicks on one of the adverts.
Examples of Adsense Sites
Healthline.com for health information & Screenrant.com for movie news.
How does Adsense work?
Make some space for advertising, normally by inserting ad codes into certain places – Set a time for the bids to be submitted – Receive payment.
The Pros of Adsense
Relevant ads: it will tailor its selection of ads to the particular subject matter/theme of your website.
Easy to handle: it is very easy to run the AdSense program on your website.
Easy to track: AdSense pays around $18/1000 views on average, you’re able to check both your click-through rate and profits in real time by going through the Adsense dashboards.
The Cons of the AdSense
It supports only 50 different languages. If your Ads reach a threshold and demand payment, Google will ask for evidence of your identification before payment. If you utilize AdSense, which serves ads using Java, the loading time of your pages will suffer a lot.
Google Chrome Business Model
Chrome generates revenue for Google in a variety of additional ways. Users of Chrome are more likely to also utilize other Google services due to the strong integration that exists across the company’s many products (Gmail, Apps, Docs, etc.). Visits to the websites and revenue from advertisements both increase with each usage.
Google Maps Business Model
Used normally and can be explored using both the street view and the satellite view options. View of a street in a full 360 degrees. When you use route planning and navigation services, it helps you arrive at your destination more quickly and safely. A new innovation is navigation with augmented reality using live view. Using the “Google My Business” tool, Google can add their physical locations to Maps.
How does it make money? “Ads at the top of a local search list + Custom pins with your logo + Turn left after the Starbucks ($3.5 per users*1 bn users = $3.5 bn)”; “Maps API in your business + Exclusive partnership with UBER, integrating them into maps = $0.8 bn”, total $4.3 BILLION/Year.
Android and Play Store Business Model
Organizational Structure of Google (SWOT)
Google’s Strengths
Leadership
There are no significant competitors to compete with it, Google has solidified its position as the premier web search engine.
Brand
Google is the 2nd most valuable company in the world.
Technology
Over 40,000 queries can be answered by Google’s system per second, which equates to 3.5 billion daily.
Revenue
Its enormous profits ensure it has one of the quickest growth rates in the world and allow the company to continually reinvest in R&D as well as to make strategic acquisitions.
Google’s Weaknesses
Privacy Policies
Its algorithms and internal practices are regularly the subjects of scrutiny.
Overdependence on Advertising
It accounts for >80% of overall sales, and it is susceptible to the negative impacts of over-saturation in the market, the introduction of new technologies, and political and economic instability.
Boycotts
With their adverts being placed next to content deemed to be extremist, a number of prominent companies have opted to avoid Google and YouTube.
Google’s Opportunities
Wearable Market
Google acquired Fitbit in 2019 in order to strengthen its position in the fast-growing markets for smartwatches and fitness bands.
Cloud Services
Google is the 3rd place in the cloud computing industry, and now it is making considerable investments in this sector in order to both improve the market and diversify its sources of revenue.
Google Meet
Due to the pandemic, there has been an increased demand for telecommuting services, which Google has taken advantage of.
Expansion
Cloud computing and high-speed internet are often met with a positive reception in economies that have just begun to experience growth. Providing opportunities for future expansion.
Revenue Diversification
Google has non-advertising-dependent products, so it doesn’t have to rely on advert revenue. Those products include Google Cloud, Google Play, YouTube TV, and hardware, among others.
Google’s Threats
Market Share
Google is watching as its share of the pie falls as a result of competition from companies such as Facebook and Amazon, which are becoming competitors in the online advertising market.
Anti-encryption
Encryption tech is being targeted by governments and groups that safeguard children to get it outlawed so that online child molesters may be found and brought to justice more swiftly.
Political Tension
Google abandoned its intentions to deliver cloud services in China because of worries related to China’s geopolitical landscape. If this happens in a lot of different countries, it can have an effect on the company’s worldwide operations.
What Makes Google’s E-business Model Unique?
Sustainable Competitive Advantage
Google’s share of the market for search engines accounts for more than 60%, more than a billion user inquiries can be handled by the company’s servers in a single day. Its R&D division is one of its strengths, which contributes to the company’s competitive edge both in the market and overall.
Unique Network Presence
Google’s search engine is used by millions of people every day, and the advertising business of the corporation has a significant advantage over its rivals. By placing of more of an emphasis on Android applications, Google will be able to appeal to a more diverse population of prospective ad buyers.
Revenue Predictability
Google’s self-service platform was specifically built to function in the way that it does so that companies might get the most possible financial value from their efforts. As more and more businesses move their operations online, it is reasonable to predict that Google’s business model will continue to generate enormous profits for the company.
Customer Retention Strategy
Keeping customers happy is relatively simple for Google, the company’s goal is to transform its customers into ardent supporters of the brand. Google has successfully entrapped its consumers by providing them with a single platform from which they access all of their various internet needs.