Google developer conference is high tech, but the $150 billion online advertising business is really profitable

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Key points:
Although Google developer conference I / O usually has a lot of in-depth technology discussions and prospects for the future, Google’s main business is still online advertising.
More than 80% of alphabet’s revenue comes from Google Advertising, with revenue of $147 billion last year.
For more than 30 years, Google has always been the leader in the online advertising market. It is estimated that by 2021, Google will account for nearly 29% of global digital advertising spending.
Over the past four years, Google has built and acquired a number of advertising technology tools to enable content publishers to make money through advertising and help advertising buyers find what they want.
Tencent technology news on May 19, Google’s parent company alpha has a market value of more than $1.5 trillion, making it one of the world’s top listed companies by market value, second only to apple, Microsoft and Amazon. Founded in 2015, alphabet is essentially the holding company of Google, and almost all of its revenue and profits come from Google. Google has always portrayed itself as a technology company and invested in many far-reaching technological areas, such as Internet search, mobile phone, artificial intelligence, autopilot and medical technology.
Although Google I / O Developers Conference usually has many in-depth technical discussions and prospects for the future, Google’s main business is still online advertising. In 2020, alphabet generated nearly $183 billion in revenue, of which $147 billion (more than 80%) came from Google’s advertising business. According to emarketer, a market research organization, Google has been a leader in the online advertising market for more than a decade. It is estimated that by 2021, Google will account for nearly 29% of global digital advertising spending. Facebook, which ranks second, is expected to account for less than 24% of the market, while Alibaba is expected to rank third, with a market share of less than 9%.
Over the years, Google has built and acquired a series of advertising technology tools to enable content publishers to make money from advertising and let advertising buyers find what they want on Google search, youtube, Google maps and other websites on the Internet. While search and other businesses make up the bulk of Google’s advertising revenue, its YouTube advertising business is increasingly taking advertising revenue away from traditional linear TV. In the first quarter of this year, YouTube’s advertising business grew nearly 50% year-on-year.
Here are the main parts of Google’s advertising business and how it makes money:
“Search and other” business
Search is Google’s most profitable department. In 2020, Google’s “search and other” business generated $104 billion in revenue, accounting for 71% of Google’s advertising revenue and 57% of alphabet’s total revenue. This “search and other” figure includes revenue from Google’s search business, as well as advertising from other Google businesses, such as Gmail, maps and Google play app store.
Examples of Google searching mattress ads
Advertisers using Google products can bid for search keywords (i.e. specific words and phrases) that will help their ads show more to relevant users in search results. Any advertiser can choose different bidding strategies. For example, if they want to bring traffic to their website, they can choose “pay per click” bidding, that is, they will pay when someone clicks on their advertisement. They can choose the maximum amount they want to pay for a click, and whenever an ad is eligible to appear in a search, the auction will determine whether and where the ad appears.
Joe Balestrino, a digital marketing expert, said: “in general, the more competitive an industry is and the higher the cost is, the higher the bid price will be. Therefore, the cost of keyword bidding depends on the degree of competition in the niche market and how much money the business owners can make. ” Google also allows advertisers to target locations, languages and audiences, such as people interested in buying financial related products or services, or renters and homeowners.
Buying search ads in Google ads
Google mainly displays ads on commercial search, which, according to wade Bush securities, means that about 80% of searches have not yet been monetized through advertising. As purchases increasingly move online, analysts expect advertising budgets to continue to shift from areas such as linear TV and direct marketing to online search.
But Amazon is increasingly competitive with Google in search. Although emarketer expects Google to account for 56.8% of U.S. search advertising revenue in 2021, Amazon’s 19% share has been growing steadily. According to emarketer’s prediction, Amazon is eroding Google’s share of the entire advertising market. Nicole Perrin, chief analyst at emarketer, said: “the main reason Google lost market share was the decline in search advertising share, as more search advertising spending went to sites such as Amazon rather than ordinary search sites such as Google or Bing.”
As more and more people are looking for online shopping, it’s not just good for Google. “Online shopping has novel Coronet and accelerated during novel coronavirus pneumonia, because people have more digital needs for goods and services,” Palin said. Google benefits, but Amazon benefits more. ”
Analysts who are optimistic about Google’s search business point out that Google has been growing for many years and will continue to do so, whether it’s using voice and image search or other innovations to push products to potential interested people.
At the same time, products like maps are becoming more strategic in advertising. Using Google maps, advertisers can buy local business lists and “pin” ads. Google maps has only allowed advertising since 2019. It has 1 billion monthly active users and is updated tens of thousands of times a day.
Buying map ads in Google ads

Brian Nowak, an analyst at Morgan Stanley, a US investment bank, said Google didn’t disclose revenue from its mapping business, but it was one of Google’s least profitable products. He estimates that by 2023, map revenues could reach $11 billion.
Advertising in Google Maps
YouTube advertising
YouTube is the smallest of Google’s three major advertising revenue sources, with revenue of nearly $20 billion in 2020, accounting for about 13% of Google’s total advertising revenue. However, YouTube is growing faster than any of the company’s other major advertising sources. Advertising revenue in the first quarter was $6.01 billion, up 49% from $4 billion in the same period last year. In contrast, the revenue of “search and other” and Google network increased by 30% in the first quarter compared with the same period last year.
If YouTube creators want to make money from their channels, they can turn on video ads and share their advertising revenue with Google. Advertising is provided through Adsense, Google Ad Manager and other YouTube sales sources, including direct sales. For example, advertisers can buy on shows like YouTube select, which allows them to buy on “brand safe” videos and specific audiences.
The creators of the ads donate part of the advertising revenue to Youtube. But YouTube can also broadcast ads on channels outside its partner program, which means the creators of these videos won’t get a share. Creators can also make money in other ways. For example, by establishing membership for their channels, by selling goods, or by drawing a percentage when YouTube premium members watch their videos.
Marketers who want to buy ads on YouTube have a range of choices, including skip able or non skip able ads that appear before, after, or in the stream, video discovery ads that direct users to other YouTube videos or channels, and headline ads.
Chobani oat roll ad on YouTube
Over the past few months, YouTube has announced a number of experimental features that not only identify products in videos, but also integrate lists of those products. Then, the recommendation algorithm can display relevant videos when users scroll through the website. This has drawn the attention of Wall Street analysts, who see it as a huge potential money making opportunity.
“Despite its size, YouTube still feels like a sleeping giant in the Google ecosystem,” said Myles young, senior director of global data at mightyhave Credit Suisse estimates that such product updates will help personalize advertising and promote the monetization of Youtube. The company estimates that this will help Google compete better with Facebook.
“It can’t be overemphasized that advertisers love video,” Palin said. Advertisers have always wanted to turn the Internet into television because they wanted to put video ads on everything. They think video is more attractive than other formats. Advertisers are very happy to have more video inventory available to them, especially if they can buy it on a large scale through programming and data. ”
Google network and advertising technology for publishers
The third major component of Google’s advertising revenue is Google network, which will generate $23 billion in 2020, accounting for about 16% of its total advertising revenue.
This includes revenue from selling advertising outside of Google’s own assets. Generally speaking, publishers or application developers can use Google platforms (such as Adsense, Google Ad Manager or AdMob) to provide advertising time to advertisers. Publishers use these tools to manage their activities and hand some inventory to Google to match advertisers. Publishers and Google divide revenue in different proportions according to how much work they do.
Here are the main tools for content creators to participate in Google Technology: Adsense has more than 2 million content publisher customers. Approved publishers can enter their Google Code on their websites or videos, and advertisers can bid for the ads that appear at the auction. If a publisher’s content is advertised through Adsense, the publisher will receive 68% of the revenue recognized by Google in connection with the service.
Website developers can also put search ads on their own websites or applications, so that when visitors click, they can earn money. In search, publishers receive 51% of Adsense revenue confirmed by Google.
Google estimates how much money the food and drink website, which has just over 2 million views a month, can make in North America
Google Ad Manager is an advertising management platform for large publishers, who have a lot of inventory sold directly to advertisers. The platform supports a variety of advertising exchanges and networks, including Google’s Adsense, Google’s ad exchange (which allows publishers to open their advertising inventory to a larger pool of demand), and other third-party networks and exchanges. It includes parts of the $3.1 billion acquisition of doubleclick in 2007, including doubleclick for publisher and doubleclick ad exchange.
Acquired by Google in 2009, AdMob is a platform for mobile app manufacturers to sell advertising space within their apps, such as small banners that appear at the top or bottom of apps, or pop-up windows that may appear between game levels. Device makers running on Apple’s IOS and Android can use AdMob to make money.

Google says more than a million apps are using AdMob and more than a million advertisers are using it. For North American fitness and health IOS app developers, Google estimates that if an app developer has 50000 monthly active users, it can earn more than $6300 a year.
Buy ads in AdMob
Other advertising technology products
Finally, Google offers a range of other products to all participants in the online advertising market, including businesses of all types and sizes. As far as buyers and sellers of advertising are concerned, “I can’t imagine any other technology as comprehensive as Google’s advertising tool, and no other stack can put all of these things in one place,” said young, senior director of mightyhave’s global data business.
These products include: Google ads is a platform to help advertisers run search, display, video, applications, shopping and local advertising, without a minimum cost threshold. The cost of such activities depends entirely on what advertisers want to achieve. When users interact with advertisements, advertisers will be charged for calling enterprises or visiting websites, and the fees may be different. Today’s Google ads platform is Google’s Adwords business in the past.
Google marketing platform has both tools for advertisers of large enterprises and analysis tools for small enterprises. The service includes doubleclick advertiser products and Google’s Analytics 360 suite.
Google’s marketing platform includes display & Video 360 (it includes the former doubleclick bid manager, campaign manager, studio and Audience Center). It is reported that display & Video 360 provides “a single tool for planning promotional activities, designing and managing ideas, organizing and applying audience data, finding and purchasing inventory, and measuring and optimizing promotional activities.”.
“They try to provide you with a simple one-stop shop or place where you can see and manage everything,” said Neil Patel, co-founder of Neil Patel digital. In addition, they’re trying to put all your data in one place. “( Tencent technology reviser / Jinlu)