How does Google make money?

Have you ever wonder about this?

Well we're not actually paying anything to Google, Mozilla or Facebook a penny for using them right?

So how does Larry Page and Sergey Brin and Mark Zuckerberg sustain their server all these years?

  They don’t sell any product, everything you use from them is free and on top of that they seem

to be very active in the “open source” community. So how the hell can they cash-in?

Here's the answer.

Advertisement

Advertisement, that’s how Google is making its money. Every time you do a search on Google, 

you’ve probably noticed that there was a section called “Sponsored Links”. Every time you click on

one of those links, Google charge a certain amount of money to the website for the click. When you go

on a website you’ll notice advertising from Google too. Daily Common Sense has ads from Google. 

Same thing happens here, when you click, Google charge a certain amount of money to the website

you clicked on and part of that money is given to the webmaster publishing the ads. This is

called AdSense and is an enormous source of income for Google.

 

How much does Google charge for a click?

The price advertisers pay for a click depends on a lot of factors and this is where 

Google is playing smart. They use some sort of bidding system. When you want to advertise

with Google, you select keywords you are targeting. Let’s say I own an online guitar store and

I want to bring potential customers to my website. I’m going to bid on the keywords “guitar” and 

“buy guitar” for example. The price I’m going to pay will depend if there is other companies bidding

for that keyword. The more companies are fighting for a keyword, the more I’m going to pay

for a single click to my website. The price can vary from 0.01$ to 100$ and more. Not to bad 

for a click hey? You can imagine that for highly competitive keywords like finance and health it

can cost quite a lot of money for a company to advertise with Google.

No production cost

Google doesn’t sell any tangible product and that’s the beauty of their business. 

They sell something that doesn’t really exist. They really sell traffic. 

It mostly comes down to this: They get paid for sending traffic to other websites. 

That’s why Google seems to be everywhere now :) 

*The same thing applied to any other services that we uses such as Thunderbird and Youtube.