Skip to main content

Google's 6 Most Profitable Lines of Business

Google once more became the most valuable public company in the world when its parent Alphabet Inc. (NASQAQ: GOOGL
) reached a market cap of $547.1 billion, which is higher than that of Apple at $529.3 billion. The last time Google was more valuable than Apple was about six years ago. Unlike Apple's reliance on the iPhone to drive revenue, Google has multiple streams of income. Many of Google's revenue sources have experienced tremendous growth over the years.

Google AdWords and Search Advertising

The company's proprietary advertising service, Google AdWords, continues to be a major contributor to Google's revenue at 68%, or $45 billion in 2014. In 2015, Google's aggregate paid clicks, a key advertising measure, rose 31% from the previous year, beating the consensus expectation of a 22% rise.
Across all industries, companies continue to drive up the cost per click (CPC). In 2011, the insurance industry commanded 24% of Google AdWords revenue, for as much as $54.91 for top keywords, including "auto insurance price quotes" and "life insurance comparison quotes."
However, other industries have even more expensive costs per click. In 2015, "San Antonio car wreck attorney," "Flood restoration Chicago" and "Austin drug rehab" could command as much as $670.44, $346.49 and $463.05, respectively. More and more companies compete to gain the top spot in Google AdWords, further driving up the price of Google's aggregate paid clicks.

Google AdSense Network

While Google AdWords enables businesses of all sizes to advertise across Google's websites, including Gmail, YouTube and Google's search engine, Google AdSense enables third-party websites to display Google advertising on their pages. The AdSense networks accounted for 21%, or about $14 billion, of Google's total 2014 revenue.
Through its AdWords and AdSense advertising products, Google also seeks to continue its dominance on the mobile Web. According to eMarketer, Google could capture 32% of the mobile ad market throughout 2016 and 2017, staying ahead of its competitor Facebook, which holds about 20% of that market.

Google's Other Projects

One of the main challenges of identifying Google's major non-search sources of revenue is the secrecy around those projects, including a self-driving car and an optical head-mounted display. In 2015, revenue from those projects rose to $448 million, up from $327 million in 2014. However, Google's other projects had operating losses of $3.56 billion, up from $1.9 billion in 2014. During its Feb. 1, 2016, earnings call, Alphabet and Google CFO Ruth Porat indicated the most profitable of Google's other projects are Fiber, Nest and Verily.

Google Fiber

First announced in 2010, Google Fiber is a broadband service offering fast speeds, at 1 gigabit, and operating in Kansas City, Missouri; Provo, Utah; and Austin, Texas. During the 2015 Q4 conference call, Porat indicated Fiber was the most costly project out of all of Google's other projects.
Future deployments of Google Fiber include Atlanta, Georgia; Nashville, Tennessee; Salt Lake City, Utah; and Charlotte, North Carolina. On Jan. 29, 2015, The Washington Post broke the story that Google Fiber is sending out invitations to a telephone service called Google Fiber Phone, which would enable users to link several telephone numbers, including those from landlines and cellphones, to a single phone number.

Nest Labs

The Nest Learning Thermostat was one of the first Internet of Things products for home to gain a widespread audience. On Jan. 14, 2014, Google acquired startup Nest Labs, a home service of interconnected thermostats and smoke detectors, for $3.2 billion. At the time of acquisition, Nest Founder and CEO Tony Fadell claimed to have sold around 1 million thermostats.
Under Google, Nest continues to focus on thermometers and other home technologies. Despite a January 2016 software bug that forced thermostats offline and left owners unable to heat their homes, industry analysts report that sales of Nest thermostats continue to rise.

Verily Life Sciences LLC

Formerly known as Google Life Sciences, Verily focuses on a wide range of human health projects, including a bandage-sized glucose monitor and a perfect "baseline" of human health. On Dec. 10, 2015, Johnson & Johnson announced the formation for Verb Surgical Inc., an independent surgical solutions company, in partnership with Verily. Verb Surgical seeks to develop comprehensive surgical solutions and best-in-class medical device technologies for operation room professionals.

The Bottom Line

Fueled by the high profitability of its AdWords and AdSense products, Google stands as the most valuable company in the world. From 2011 to 2015, Google provided an annual return of 21.2% to its investors. However, many of these investors feel Google's other projects are driving down the profitability of the company. As long as Google continues to increase its search advertising revenues, the company is able to support pursuing the other business lines.

Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

The Best Web Hosting Services

Are you looking for the best web  hosting  services for your needs? Whether you need a place to host your small personal blog or a major corporate website, the following list will help you identify the best hosts to use. Finding the best web hosting service isn’t quite as straightforward as searching Google and choosing the one with the lowest price. There are a lot of issues to consider, including the reasons for  why  you need hosting and  how  you intend to use it. Once you have a handle on that, finding the right host becomes much easier. Choose one that’s undersized and you’ll end up with website outages and slow page loads, but choose one that’s oversized and you’ll be throwing money away. Defining Your Web Hosting Needs Before choosing your web host, you’ll need to think about your requirements. Consider the following concerns and decide the importance of each item on a scale of 0 to 10 (with 0 being not at all...
Post a Comment
Read more

Now You Can Use Reliance Jio 4G Services On 2G And 3G Smartphones

Indians will always be at the top in availing any free internet facility. As, Reliance Jio aims to offer free 4G internet to the 90% of Indians, hence, with one of its services now you can use Jio 4G services on 2G and 3G smartphones. Now You Can Use Reliance Jio 4G Services On 2G And 3G Smartphones Who doesn’t want the free internet? Of course, we all want, Indians will always be at the top in availing any free internet facility. Jio, which is also known as Reliance Jio and officially as Reliance Jio Infocomm Limited has already given its users free unlimited 4G data for 90 days. As the Reliance Jio aims to offer free 4G internet to the 90% of Indians along with the free voice calls and messaging services. So, we all must agree that Indians are always at the peak when it comes about available any internet facility. We all know Jio, which is also known as Reliance Jio Infocomm Limited has previously given its users free unlimited 4G data for 90 days. Not only that but even th...
Post a Comment
Read more

10 Essential Tips To Keep In Mind While Surfing The Internet

BENGALURU: Internet is an amazing resource which is stapled in many people’s day-to-day lives. It is very much informative but at the same time encircled with many dangers. Listed below are the strategies you can follow to stay safe on the internet as stated by Tech Radar India. Use your discretion on social media Online scams crops up almost everywhere in webpage such as an e-mail, tweet, Facebook post, or many other places. Never click on links that do not look like a real address or pop-ups that claim you have won millions of dollars—all these are scams in which one can easily get trapped. Also don’t fall prey to e-mails which ask you to help someone transfer a large amount of money out of their country delineating their long sad story. Hackers can access data through various innovative ways like sharing links of content that they feel the targeted person is likely to click. Be careful of what you are sharing Limit the content that you share on social media. Facebook...
Post a Comment
Read more