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Summary:

Ask your friends what business Google is in and the answer you’ll most likely get is “search.” And they would be wrong. Google is, first and foremost, an advertising company. A full 97 percent of its revenue comes from advertising on its various properties, including YouTube, […]

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Ask your friends what business Google is in and the answer you’ll most likely get is “search.” And they would be wrong. Google is, first and foremost, an advertising company. A full 97 percent of its revenue comes from advertising on its various properties, including YouTube, plus partner sites through its AdSense product. Sure, Google has Android and Chrome OS and everything else, but it doesn’t make money from them — they’re just there to get people to watch more ads.

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  1. Very easy chart for the accounting folk to plot :-)

    1. Yes, Taj Mahal is a white building and Google makes money from ads. I would expect GigaOM to go beyond the obvious – in this case, to give a breakdown of the 97% – what properties of Google contribute to this 97%? How much does google.com bring in vs google sites per country? How much does youtube bring in, and how much does Ad Sense? What about other google sites (scholar, docs, picassa…)?

  2. Similar question: What business is television in? If you answered, “entertainment” you’re wrong.

  3. satish sharma Friday, July 17, 2009

    This is truly an absurd conclusion. Such conclusions have no no place in this blog — maybe on a tabloid.

    It’s akin to saying banks don’t make money by charging interest but only by issuing bonds or credit cards.

    Most of the advertising is on the keywords; “search” is the method by which it is monetized.
    If you ever search anything in google — you an see the paid advertisements on top and right hand panel. Pray tell why would I see this unless I searched for something in the first place.

    There is another method of keyword advertising that’s placing related keyword ad’s on websites. That too is only money maker for search reasons — otherwise why would you, as a website owner, accept “rival” ads.

    1. indeed. the author barely knows his elbow from his ass…

  4. Same could be said of GigaOM. Right? So is Google GigaOM and visa versa? or is GigaOm an extension of Google. The interperative arm of Google?

    Hey I don’t see you name on the Editorial Masthead…what’s up with that?

    1. Jordan Golson Rich Friday, July 17, 2009

      Ah, but GigaOm (and TechCrunch, and VentureBeat) also make money from conferences and subscription services and the like.

      Magazines make money from ads, but also from subscribers and single-copy sales. Same with newspapers.

      Google makes almost all it’s money from ads — not from Gmail, Android or the Chrome OS.

    2. Jordan Golson Rich Friday, July 17, 2009

      As for the masthead, you’d have to ask Om about that. :-)

  5. and that 97% which is advertising is derived from search terms. So what on earth are you talking about?

    1. Now that’s a valid point. I agree with Martin..

  6. Digitale medier, koncepter & samfundet som sådan – Google er én stor reklame Friday, July 17, 2009

    [...] faldende CPC priser. Træerne vokser altså heller ikke her ind i himlen. Og for det andet kommer 97% af indtægterne stadig fra annoncer – annoncer som ikke ret mange af brugerne vel reelt set har bedt om endsige synes [...]

  7. Anthony Wang Friday, July 17, 2009

    it might not be 100% clear, but I think the point is that Google is an advertising company, not a software company – people think of the search engine as the product, but our searches and clicks really are

    http://anthonywang.com/2009/07/16/you-are-googles-product/

  8. Ohio drops 2 standardized tests to save money – Coshocton Tribune | How To Create Passive Internet Income Friday, July 17, 2009

    [...] Where Does Google Get 97% of Its Revenue? – Gigaom.comAsk your friends what business Google is in and the answer you’ll most likely get is “search.” And they would be wrong. Google is, first and foremost, an advertising company. A full 97 percent of its revenue comes from advertising on its [...]

  9. Friend: ” Most of Google’s revenue comes from search.”
    Reader: “No, your wrong, revenues come from “Search Advertising.” (say advertising slowly)
    Friend: “Oh, you’re really smart. That changes everything.”

  10. -1

    Only for the most naive definition of business. The NY Times is in not in the journalism business because it derives the majority of revenues from ads? That’s just ridiculous. The Times is in the journalism business and Google is the research business. The only reason I buy the Times (and thereby read the ads) is because of the great reporting. Same with teh google.

    This is an attention getting story not worthy of gigaom.

  11. Shahab Khan Friday, July 17, 2009

    I thought that revenue for google through search would be on top..Anyway this is nice interesting fact!

  12. Google 97% 的收入都来自于广告 | 谷奥——探寻谷歌的奥秘 Friday, July 17, 2009

    [...] GIGA OM 本站文章除注明转载外,均为本站原创编译 [...]

  13. I failed to understand what is the meaning of this post. Is it a news or surprise for author.

  14. CJ Millisock Friday, July 17, 2009

    This article is bunk.

    Just because Google gets 97% of its revenue from advertising, it doesn’t mean Google is an advertising company.

    A company isn’t necessarily defined by its monetization strategy.

    1. Google might be a search/software company, but it’s an advertising *business* – a business is an entity that exists to make money, and ads are how Google makes money (well, 97% of it)

      the company (people and projects) makes software, but it wouldn’t exist in its current form without the ad business (monetization) – it would still be a grad school project running out of the Stanford CS lab

  15. Wow. Here’s another fact. Did you know that 100% of the person who made this chart is a Giant D Nozzle? I’m always amazed at those who complain about a company that gives things away for free.

  16. Libran Lover Friday, July 17, 2009

    VERY informative article! Especially for Gigaom’s tech-savvy readers who had no idea of this SHOCKING fact! The chart made it EXTREMELY EASY for me to understand the complex economical concepts lucidly explained in the article. Will read again. A+++++

  17. Where Does Google Get 97% of Its Revenue? « Quasi.dot Friday, July 17, 2009

    [...] doesn’t make money from them — they’re just there to get people to watch more ads.Where Does Google Get 97% of Its Revenue? linkscolor = "000000"; highlightscolor = "888888"; backgroundcolor = "FFFFFF"; channel = [...]

  18. Hot Links: Goodbye Walter Cronkite « The Reformed Broker Saturday, July 18, 2009

    [...] A pie chart of how Google makes it’s money, 97% in one slice.  (GigaOM) [...]

  19. Von wegen Suche: Womit Google wirklich Geld verdient | freshzweinull +++ Saturday, July 18, 2009

    [...] aus dem Geschäft mit Lizenzen für Suchalgorithmen sind verschwindend gering. Nur etwas mehr als 3 Prozent nämlich: 187 Millionen der 5,52 Milliarden Dollar Umsatz macht Google demnach mit Lizenzierungen [...]

  20. Did you know that GigaOM is not a blog? Sure they post a lot of poorly-thought-out blog posts, but they don’t make any money off them. They just post silly pie charts in order to get you to see more banner ads.

  21. Webhamer Weblog: Search & ICT-related blogging » links for 2009-07-18 Saturday, July 18, 2009

    [...] Where Does Google Get 97% of Its Revenue? Ask your friends what business Google is in and the answer you’ll most likely get is “search.” And they would be wrong. Google is, first and foremost, an advertising company. A full 97 percent of its revenue comes from advertising on its various properties, including YouTube, plus partner sites through its AdSense product. Sure, Google has Android and Chrome OS and everything else, but it doesn’t make money from them — they’re just there to get people to watch more ads. (tags: google marketing) [...]

  22. Tech News » The Power of Opaque Selling Sunday, July 19, 2009

    [...] Where Does Google Get 97% of Its Revenue? [...]

  23. Om should fire you for this jackass post of yours..

  24. Tech News » Apollo 11 Moon Landing: A YouTube Timeline Sunday, July 19, 2009

    [...] Where Does Google Get 97% of Its Revenue? [...]

  25. StareClips.com Sunday, July 19, 2009

    The big debate, really, is what constitute “the business” that someone is in. If someone makes lemonade and sells it, then it’s pretty safe to say they are in the business of making lemonade. However, if someone makes lemonade, goes to local businesses and offers to place advertising on the cups and this exchange of money helps the person to give lemonade away for free, then what business are they in? The business of making lemonade or the business of providing advertising?

    To understand this, you need to break it down into two parts.

    1) What benefit is the company providing to consumers?

    2) What service is the direct result of the exchange of money?

    In the case of a simple lemonade stand, the benefit to the consumers is a nice refreshment… the service which results in the exchange of money is simply providing this lemonade to the consumer. In the second example, the second part has changed… the exchange of money is the direct result of advertising on the lemonade cups.

    Given this, Google provides various different services to consumers. In turn, they gets lots and lots of traffic. They then monetize this traffic using ads. So, the benefit they are providing to consumers is the organization of information. The service provided resulting in the exchange of money is advertising.

    So, yes… Google IS in the advertising business. However, this only makes sense if you’ve got money in your hands and you’re looking to advertise. If, however, you have information you are looking to organize, then Google is in the business of organizing the world’s information.

  26. Tech News » YouTube Experimenting With 3D Web Videos Monday, July 20, 2009

    [...] Where Does Google Get 97% of Its Revenue? [...]

  27. Google Vs Amazon, Microsoft « Kindle Review – Kindle 2 Review, Books Wednesday, July 22, 2009

    [...] of Google’s money (or to be more particular, 97% of it) comes from [...]

  28. Charmaine Lim Monday, July 27, 2009

    Yes, Google is an advertising company and one of it’s source of revenue comes from AdSense products.

  29. SnapDragon Consultants » Google is finally ready for the big time (Part 2) Friday, August 7, 2009

    [...] An explanation of the campaign from the official Google blog: Over 1.75 million businesses, schools and organizations have gone Google — including Motorola, University of Notre Dame, the Mercy Corps and many more — and each day, 3,000 more organizations join them. We want every organization to understand the benefits of going Google, so today we’re telling the story in a new way. We’re kicking off a series of outdoor billboards in four cities — Boston, Chicago, New York and San Francisco — that will change every weekday for the next four weeks. The billboards tell the story of an anonymous IT manager who gets so fed up with the typical IT status quo that his company eventually — you guessed it — goes Google. [Via GigaOM] [...]

  30. » OMG Google Sells Ads ¶ ShitCrunch Thursday, August 13, 2009

    [...] the Most Insightful Post of the Week award goes to Jordan Golson for telling the world that Google makes most of it’s money by selling advertising.  The popular GigaOm writer has [...]

  31. Biz Beat » Blog Archive » Eric Schmidt, Google CEO and Chairman Tuesday, September 15, 2009

    [...] they offer their users – like their web search engine, Gmail, Google apps, Google maps, etc. They make 97% of their revenue from their advertising divisions AdWords and AdSense. In 2006, Google acquired YouTube and in 2008, they acquired the [...]

  32. Is Google Cooking-up Something? – IT-Zeen Tuesday, October 6, 2009

    [...] that was before and the battles were not fought for Google’s core business — search and advertising revenue that it produces. It seems that recently though, everyone took turns in taking a swing at Google. [...]

  33. I agree with Anand, and I would go a bit further by asserting that one is not in the business of making or offering something; one is in the business of *selling* something.

    To Anand’s point, Google would be in the search business only if you as the search “customer” paid Google to access search results. This isn’t to say that search isn’t central to Google’s genetic makeup as a company. Rather, search is one of the strategic core competencies that supports, enables, and drives Google’s advertising business by connecting advertisers with potential customers.

    As Charmaine points out, search-based advertising is only one of several channels through which Google monetizes on advertisements (albeit presumably the dominant one). AdSense, for example, has nothing to do with search, and everything to do with driving advertising revenue.

  34. Google & AdMob: Is that It? | Volker on Mobile Friday, November 13, 2009

    [...] eyeballs bit is, however, maybe the concerning piece of this: Google makes 97% of its revenues from its legacy business using AdSense, AdWords, etc. Nothing much has changed for a couple of [...]

  35. Google is Evil When it Comes to Innovation « Marc's Augmented Reality Tuesday, December 8, 2009

    [...] starts with the immense revenue generated by advertising.  According to Jordan Golson of GigaOm “97 percent of its revenue comes from advertising on its various properties, including [...]

  36. Google IS Evil When it Comes to Innovation | Marc's Augmented Reality Monday, December 14, 2009

    [...] starts with the immense revenue generated by advertising.  According to Jordan Golson of GigaOm “97 percent of its revenue comes from advertising on its various properties, including [...]

  37. So natural they steel publishers efforts

    Recently Google Adsense adopt a new price policy invoked by the world economy crises while taking the same revenues from advertisers
    they give less to publishers .
    so if you a website or blog and you have lets say 100 clicks a day which
    was yield 10 US$ for you you now get 2 US$
    So great Google like Shylock in merchant of venice.

  38. @Carlos Guevara,

    It’s very easy to misinterpret things when you don’t understand business.

    Google has a number of different competitors in the market. Microsoft Bing being a big one. Yahoo being another, of which Microsoft acquired control. There are also a number of fly-by-night advertisers cropping up left and right, because this is where the money is at.

    So, if you use Google as an advertiser and think they are giving you an unfair cut of the money, all you need to do is go to a competitor. If you don’t think there are any viable competitors, just acquire direct advertisers yourself.

    It was possible before Google and is still possible today.

    The real reason Google is so successful is because the competition aren’t giving terms which are much better. So, the one giving the best service is going to naturally rise to the top. Google is that clear winner (so far).

    On a side note, this article is still a bit misleading. Saying that Google isn’t in the search business and is, instead, in the advertising business is a misnomer. It would be like saying Time Magazine is not in the magazine business but in the advertising business. And that NBC is not in the entertainment business but in the advertising business.

    Just because a business makes the bulk of their income FROM advertising… does not mean they are only in the “advertising business”. Otherwise, you could say your local grocery store is in the advertising business because they “advertise third-party products on their store shelves.”

    The fact of the matter is… if Google’s search engine vanished, they would lose a majority of their money. While they do make most of their money through advertising, that advertising is featured primarily on their search engine. Thus, their search engine is the mainstay of their business.

    They have two ways of doing business as a search engine. Charge everyone money for using the search engine and make it ad-free… or, put up ads and provide free search to everyone. I think the latter model is a win-win for everyone because it gives advertisers an avenue for getting attention and it gives consumers a free service.

    To somehow think this is a bad thing is just someone trying to get more blog hits. A blog which, no doubt, features advertising. A blog which probably earns most of its income from advertising. A blog which might not consider itself to be in the blogging business, but the advertising business, perhaps?

  39. The Future of Twitter « Vicarious Existence Thursday, April 15, 2010

    [...] you go, “Psshaw!” and dismiss the entire concept, remember that Google gets 97% of its revenue from advertising – you know, those AdWord thingies –  and it is the biggest advertising agency in the world [...]

  40. Bing To Destroy Google With Free Adwords | Services For Seo Saturday, April 24, 2010

    [...] it’s all about the ads, if 97% of Google’s revenue comes from advertising, then the target is advertising, not search, and the tactic is [...]

  41. McAdam as Verizon COO: More Google, Less Neutrality: Tech News « Monday, September 20, 2010

    [...] wants the world to use it as a search engine and suite of web apps to beget ad income, which last year accounted for 97 percent of revenue. Verizon will be moving towards a tiered pricing bucket for wireless data and is even offering [...]

  42. How much goes Google make in Ads on the search results page vs on Ads on other peoples pages and mobile apps and etc.

  43. Well google also makes money by buying and selling websites.

  44. How Google benefits from the long tail of search advertising (PPC) | Online Marketing Blog | Digital Marketing Blog Tuesday, January 11, 2011

    [...] Jens on July 16, 2010 It is well documented that 97% of Google’s profit comes from ads. Although they do have a lot of product offerings; Chrome, Gmail, Wave, Google Docs [...]

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