For people with basic knowledge of Economy, there can’t be any earning unless there is an exchange for money versus goods or services. That’s totally true. But it gets a bit harder to understand when it comes to companies that provide services for free. Many people don’t know how could search engines like Google or Bing make money and be a profitable business. Most of the online marketers know the exact answer for that. But not everyone. So today I want to explain to all of you how all of these companies makes money(a lot of money) through the free search engine they offer.
Let’s start from the basics.
How does search engine work?
All of us has used search engines many times in our life.( Unless if you are a baby and that’s your first day on the Internet. You are very welcome and I wish you a happy life!). We go to Google, Bing, Yahoo or any of all the search engines that exist and then enter a query. Each search engine does it best to give us the most relevant content to our query. So we will find something that will satisfy our curiosity about what we were looking for. And we do that quite a lot ( it’s very good to be curious and try to have as much knowledge as possible, I don’t say it to make you feel bad.) Google, for example, has done more than 1 Trillion research in 2012. That’s a huge number! It means that it’s in an average of 100 Billion searches per month. Nowadays, it usually gets to 3.5 searches per day. ( check the live number of searches per day in the Google search live stats.)
All of that just to say, that search engines have a big audience that uses them. Day after day, search engines gets more and more performant and give more relevant results for each search. Customers (us), gets the habit of asking about everything. We even verbalized the word “Google”. You can hear some people saying ” I am googling this”, ” I googled to know when will be the premiere of the movie”, ” I will google later from where the word “Minions” came from” or even ” I googled Economysecrets.com, and I found this nice blog”. The last one, it might be just me who do it until now :D.
So search engines become the websites that we visit the most. For example, Google is the Top#1 in the Alexa ranking and Yahoo is the #4th by the time I am writing this post.
Okay. Now we know how much search engines are certainly the most visited and used websites all over the world. But the service they provide is FREE! How can they make money from it?
Well for most of the search engines the first source of revenue is: Advertising.
How do Search engines do the whole Advertising Business?
It’s simple. Every day you do search queries in your search engine. And every time they are earning some money from it.
I will use as an example to explain Google. But the rules I am saying applies to all search engines, they may have different names for their programs but, in general, it’s the same wheel that is turning.
So let’s make a research to try for three random searches:
- “Why is Apple Inc named Apple and not another fruit?”
- “Does Batman works for google?”
- “How to really make a profitable business starting from home”
( Note: I tried to put one serious query for that try. After all, a lot of people wonder if Batman works for Google, right ?)
that’s what I have got when I have done the researchers in Google:
No ads in the first research. No one has a related ad to what we searched for.
No ads related to this query. ( And also, the fact of Batman working in Google is kept secret apparently…)
Only one Ad. It’s for the Google Adwords.
More than 7 Ads. I stopped to count them when I counted the seventh. And yes there is a way more. There were exactly 11 Ads in this page.
Did you saw that? There are a lot of search results, and near the link to some there is a yellow box with the word “ADS”. Yes, these are the ads that some companies have paid for, so they would appear on the search results for some keywords.( a keyword is the word you are looking for, for example, “food”. “Delicious Food” is a combination of two keywords,”Delicious” and “Food” placed together give us a keyphrase). Business owners can start an ad campaign by bidding on some keywords or keyphrase. Through the program of Google: Adwords.
Adwords is, in general, a cost-per-click advertising program. Companies can start a marketing campaign. Bid on they keywords they want to appear for their results. But they will be charged by Google only if someone click on Ad. That’s how Cost-per-click advertising works. In other words, some companies can do an advertising campaign without paying a dime if no one clicks on the ad.
When someone ( like you and me) clicks on the Ad. The company is charged by an amount calculated according to many criterias ( The price of the keyword/keyphrase. The geographical zone from where came the visitor…etc.)
That’s how search engines make money through the search itself. And it’s usually the biggest part of their sources of revenue. For Google, Adwords represent on average 70% of the annual earnings.
Is there another way? Of course there is!
Let me tell you about Adsense
Adsense is a Google program that show/display Ads. With the Adwords that we talked about earlier, it’s all about the “clicks”. If no one clicks on you ad you are not charged for your campaign. Not even a dime. With Adsense, it’s more about the “impression” that the “clicks”. So companies could pay to display an ad to an amount of people. Which they can precise very specifically.
You certainly wonder why would someone accepts to pay for the impression than the clicks. Knowing that when it comes to Adwords people don’t pay unless someone click on the ad. So they can have thousands of impression for free! Kinda look insane to pay for impressions. But when you want to pay for the impressions the amount that you are willing to pay will be much lower for the same keyword/keyphrase. That’s why some small business uses that kind of Ads.
Most of the websites that you might visit per day use Ads. Not to promote themselves but to have some revenue. So they could pay all their fees (Hosting, Domain name…etc) and also make some profit. Google, through it Adsense program, make it available to many people to be paid to display Google Adsense Ads. So everyone is earning that way. The business that paid for the campaign will be able to target his audience. The website owner will be able to start having an income. And Google will make money through the payment it will receive, and will have a bigger audience to earn from.
Added to this general ways there is also some search engines like DuckDuckGo, who also use affiliate links for Amazon and Ebay. Each time someone does a research and get redirected to one of theses stores and buy something they will get a commission. Also, they are certainly the one ones that don’t collect information concerning the users. They try to protect the privacy of each user.
This is the main sources from where search engines make money even if they are providing a free service.
And to keep always making more money, search engines works on many things:
- Improve the Algorithm of the search engine: That’s the first factor they all working on. They have to always display the best results, the most relevant content and never be outdated. Take off all the spammy websites. All of that just to make sure that the users are able to do their research in the best conditions and with the best results.
- Be friendly with the users: That’s can be done in so many levels. For example, the way google celebrate each day by writing their name in a different way. According to the date and also to the country (like the mothers day or election day). Or sometimes same Google theme for worldwide days (like for the new year, World Cup of football).
- Develop more products for the users: We saw that with all search engines. Google, for example, developed an email service: Gmail. Google Drive to put all the files on the cloud.A browser: Google Chrome. Google Docs, Google Maps, Earth, Google+…etc all of that just to keep the users inside the Google world. So they get more information about their users and analyze their behavior. So they have a better offer for the enterprises that want to do a targeted Ad campaign.
Google Turned over $59 billion on 2013. Search engine do makes money. They make a lot of it. Google is certainly the most profitable now. But as we said, it’s only because they are doing their best to have a whole environment that covers all the needs of the users. To know all that they want and study their behavior. That way they always keep offering the best results to every research. Customers keep getting just happier each time they use google and found exactly what they are looking for.
Even if a service is for free, it doesn’t mean that it can’t be made money from it. In fact, free services are between the smartest way to make money. Just offer a service for free and add some ads on it. And who knows, you may become the next Google.
Now that we know how simply ( simply not easily. Don’t confuse) search engines make money. Why don’t a big company like Apple hasn’t jumped in that Market too as Microsoft did with Bing? Is there a fear to don’t get success same way Microsoft is still struggling to get?