Google has been around since 1998 when two men decided to make a search engine. Now it is one of the biggest and most successful companies in the world. How does it make money? How much money does it make and where does that money go.
First, a look at Google
So how did Google come to be? Way back in 1996 Larry Page and Sergey Brin met at Stanford and began to work on a search engine called BackRub. The search engine operated on Stanford servers for more than a year; eventually it became too big for the servers to handle as it was taking up too much bandwidth.
On September 15 the following year, the word Google.com was registered as a domain. The name comes from the mathematical term “googol,” which is the number represented by the numeral 1 followed by 100 zeros. It was also meant to symbolize their ambition to organize structure from the seemingly infinite amount of data available on the Internet.
The search engine took off, by December 1998, PC Magazine recognized it as the search engine of choice in the Top 100 Web Sites for 1998 due to its ability to provide “extremely relevant results”.
The company expanded and by February the following year they had a new headquarters, more staff and even hired a chef.
By October 2000 Google launched its ad marketing strategy, AdWords, to customers. It also launched Google in several languages.
The company grew more and more, launching Google Images in July 2001, Google Zeitgeist in December 2001, Google Labs in May 2002 and Google News in September 2002. Gmail followed on April 2004. This would be followed by more features including Google Calendar, Google Translate and Google Wallet, among others.
In 2007 Google was named by Forbes as the best company to work for.
Today, an estimated 300 million people a day use the Google search engine to launch over 2 billion queries, making it the most used search engine to date.
The word “Google” is now considered a verb and has become synonymous with “to look it up in the Internet.”
How Google Makes its Money
Do you remember ever paying Google for the use of its search engine? No, so how does Google make money? The answer is in ads.
“We generate revenue primarily by delivering relevant, cost-effective online advertising,” the company often says in their usual report to shareholders.
Ads on the Internet have a distinct advantage over the traditional ads (those aired over TV and radio or printed in the newspaper). For printed or broadcasted ads, you cannot be sure you are targeting the audience you want to reach. However, for Internet ads it is different as your ad can be directed toward your target audience, for example you can place an ad for a house for sale in the home section of a website, or an ad for a bakery in a website dedicated to food.
Google also has different plans for different ad budgets with their AdWords.
It is estimated Google derives at least 96 percent of its revenue from ads.
Google’s Earnings Through the Years
Google only started posting their revenue earnings since 2004, the year they hit the billion revenue mark. So how much money has Google made since then? It’s safe to say their revenue is consistently on the rise.
By the end of 2004 Google already made $1.837 billion; broken down to $805.9 million for Q3 and $1.032 billion for Q4.
By the end of 2005 Google posted earnings of $6.137 billion; broken down to $1.256 billion for Q1, $1.384 billion for Q2, $1.578 billion for Q3 and $1.919 billion for Q4.
By the end of 2006 Google made $10.61 billion; broken down to $2.25 billion for Q1, $2.46 billion for Q2, $2.69 billion for Q3 and $3.21 billion for Q4.
By the end of 2007 Google made $16.59 billion; broken down to $3.66 billion for Q1, $3.87 billion for Q2, $4.23 billion for Q3 and $4.83 billion for Q4.
By the end of 2008 Google made $21.86 billion; broken down to $5.19 billion for Q1, $5.37 billion for Q2, $5.54 billion for Q3 and $5.70 billion for Q4.
By the end of 2009 Google made $23.64 billion; broken down to $5.51 billion for Q1, $5.52 billion for Q2, $5.94 billion for Q3 and $6.67 billion for Q4.
By the end of 2010 Google made $29.32 billion; broken down to $6.77 billion for Q1, $6.82 billion for Q2, $7.29 billion for Q3 and $8.44 billion for Q4.
By the end of 2011 Google made $37.1 billion; broken down to $8.58 billion for Q1, $9.03 billion for Q2, $9.72 billion for Q3 and $10.58 billion for Q4.
By the end of last year Google made $51.38 billin; broken down to $10.65 billion for Q1, $12.21 billion for Q2, $14.10 billion for Q3 and $14.42 billion for Q4.
They have also posted partial earnings for this year; $28.08 billion, broken down to $13.97 billion for Q1 and $14.11 billion for Q2.
What does Google do With its Money?
That’s the funny thing. They don’t know what to do with their cash.
They have tried giving it away, but there is so much. Apart from running their business, Google isn’t short of philanthropic work either.
As early as 2004, Google formed the non-profit philanthropic Google.org, giving it a start-up fund of $1 billion. It was intended to create and focus awareness on climate change and global public health and poverty.
In 2008 Google launched “Project 10100” to accept ideas for how to help the community. Google users were allowed to vote on their favorite solutions. Two years later Google would give $10 million for various ideas that were voted.
In 2011, Google donated $1.4 million to the International Mathematical Olympiad to support the next five annual olympiads from 2011 to 2015.
Just last July 2012, Google launched a “Legalize Love” campaign in support of gay rights.
Google annually donates $20 million to various charities local and foreign, and has given money to groups like the National Center for Missing and Exploited Children, Reporters Without Borders, the World Wildlife Fund, Feeding America, the Mango Tree, and Save the Children.
Aside from giving to charities, experts have suggested Google fund new technological ventures, but as to what is the next big one out there, who can say?
However, money isn’t one of the problems Google will be worrying about anytime soon. Experts have estimated that if the trend of Google’s growth goes on, they could see a profit of around $57 billion for this year.
Not exactly a googol, but still impressive.