In 2011 96% of Google's revenue came from selling ad space.
Even if you don't know too much about the online world of business, it's no secret that Google is making a lot of money. However, what may surprise you is exactly where Google is making the majority of its money from: selling online advertising space.
When you type in a search into Google's search bar, you're asking them to supply you with information about what you're looking for. Want to find a good restaurant near your home? Google will come up with search results showing you the possible places to grab some dinner.
And those links at the very top of the page and to the right-hand side? If you look closely you'll see that they have a different shade in the background. Google's made the shading so subtle it's nearly impossible to see, but it's there.
Those are paid ads. Before you ask if anyone pays for the privilege of being at the top of the first page of search results, yes, they do. And before you can ask the question whether those paid advertisers are seeing any positive returns on their advertising spending, the answer again is yes.
A very, very big yes.
Why Paid Advertising Works on Google
Advertisers wouldn't be spending $38 billion dollars a year with Google if they weren't seeing results. People click on those ads because they have given their trust to Google and view them as an authority on whatever subject matter they are seeing an answer or result for.
It doesn't matter if you don't click on those ads or if your personal circle of friends don't click on them, a lot of people do click on those Google ads. And a percentage of those site visitors then turn into paying customers for the business.
According to the CNET article where I found the infographic at the top of this blog post, The Home Depot retail chain is estimated to have spent $100 million dollars on its own advertising on Google. That's a lot of money to spend for a publicly traded company. You better believe that The Home Depot is getting its money worth from taking out all those ads.
Small & Medium-Sized Businesses Also Spend Too
It's not just the giant companies that are spending on Google. Smaller businesses are also seeing tremendous success advertising on the search engine, especially ones that cater to a particular niche or region.
Let's go back to that local restaurant as an example. The owner buys online advertising space on Google's Adwords. Using the services of a company like Snaptech that has a Google advertising specialist on staff, keywords are selected that will draw in targeted site visitors. Perhaps it's for people looking for a Valentine's Day dinner, so the ads go to a page on the restaurant's website which offers a special romantic dinner for two. The restaurant owner sees his reservations fill up for February 14. Now that he's tested Adwords and sees how it can bring his restaurant new business, he launches a new ongoing campaign that offers a special dinner package that happens on the slower nights.
This kind of advertising campaign successfully works for any business. It takes some preparation, a little planning and strategizing and some ongoing tweaking to make sure that you keep on top of the listings, but once it's running, time after time, the business sees instant results.
The Top Industries Spending on Google
Back to the infographic. Here's that list of the top 10 industries that spent for Google advertising last year:
- Finance & Insurance -- $4.0 billion
- Retailers & General Merchandise -- $2.8 billion
- Travel & Tourism -- $2.4 billion
- Jobs & Education -- $2.2 billion
- Home & Garden -- $2.1 billion
- Computers & Consumer Electronics -- $2.0 billion
- Vehicles -- $2.0 billion
- Internet & Telecom -- $1.7 billion
- Business & Industrial -- $1.6 billion
- Occasions & Gifts -- $1.2 billion
See the top 5 advertisers in each industry and some of the keywords that they used in the full infographic chart.