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:

Comments

Post a Comment

Popular posts from this blog

Problem: Date Formatting cannot be Changed in Microsoft Excel

In this article, we will learn how to change the date formatting. We will use “Text to Column” wizard to resolve the problem of change the date formatting in Microsoft Excel. Let’s understand the functions: - Text to Column:  “Text to Column” is used for separating the cell content which is depending on the way your data is arranged. You can divide the data on the basis of content in the cell such as space, comma, period, semicolon, etc. Let’s take an example and understand how we can convert the date into Text. We have dates, foramatted as text in column A. Now, we want to convert it into date format.     If we want to convert the formatting into numbers, then we need to follow below given steps:- Select the range A2:A11. Go to Data tab, and click on Text to Columns from the Data tools group.     Covert Text to Columns Wizard – Step1 of 3 dialog box will appear. Select fixed width, and click on Next button.     Skip step-2, and...
Post a Comment
Read more
How To Remove Gphone Virus Well gphone.exe is nowadays one of the most dangerous virus spreading very rapidly. It is a Trojan and changes your IE homepage and sends tries to open gtalk and yahoo messenger. It even sends messages to gtalk contacts. Its icon is just like that of folder icon and people thinking of folder click on it get infected by the virus. Gphone virus basically is a 260 kb .exe file which looks like a folder and it can take any name of any other folder if you have clicked on the virus folder which looks like a folder but it is not. If you have a folder name ―movies‖ in your D drive it will make a exe file in the folder named movies.exe and if you click on that exe file it too work as a virus. It makes .exe files in all the folders you have with the name of the folder. How to remove this virus Method 1 1. Go to Task Manager then Processes and then click on gphone.exe and click on end process. 2. Manually go to folder where gphone.exe is present and delete it. 3...
Post a Comment
Read more