OWNERS' MANUAL | Jeff Haden

How Google Made Its Money

Google earned nearly $38 billion in 2011 revenue. Here's how -- and why you should care.

How Google made its money

Flickr/brionv

 

Google generated $37.9 billion in revenue in 2011, 96 percent of that from advertising.

Knowing which industries—and specific businesses—contributed the most to those results can provide insights into the strategies your business can use to acquire new customers through online advertising. Google doesn’t provide that kind of detail, of course, but that's okay; here’s an estimated breakdown based on research performed by Larry Kim, the founder and CTO of Wordstream, a PPC technology company.

Here's one example: The average cost per click for "domain registration" is $20.13, significantly more than the cost of registering a single domain. Domain registrars have clearly determined a new customer, once acquired, is likely to register multiple or subsequent domains.

Here's another: The keyword “accredited online college degrees” costs a surprising (at least to me) $34.87 per click. Then again, maybe not so surprising: The lifetime customer value in education is relatively high, so spending more to acquire a new customer could be a sound strategy.

Despite a soft economy retailers are willing to spend millions on PPC advertising. (If you compete with Amazon you'll need really deep pockets.) Companies in industries that traditionally spend heavily on television advertising, like State Farm, Progressive, Lowe's, and Home Depot, spend heavily on PPC advertising as well.

Are you missing an opportunity?

According to Kim, here are the top three industries in terms of Google spending:

Finance & Insurance: $4 billion

Top spenders:

  • State Farm – $43.7 million
  • Progressive – $43.1 million
  • GEICO – $23.7 million

Commonly used keywords:

  • self employed health insurance – $43.39
  • cheap car insurance – $33.97
  • affordable life insurance – $28.53

Retail & General Merchandise: $2.8 billion

Top Spenders:

  • Amazon – $55.2 million
  • eBay – $42.8 million
  • Macy’s – $35.6 million

Commonly used keywords:

  • Zumba dance DVD – $5.18
  • Proform treadmill – $3.80
  • Weber grill accessories – $1.95

Travel & Tourism: $2.4 billion

Top Spenders:

  • Booking.com – $40.4 million
  • Expedia – $28.9 million
  • Kayak – $28.7 million

Commonly used keywords:

  • New York hotels – $7.68
  • plane tickets – $6.95
  • cheap hotels – $5.94

Keep in mind the spending figures shown above are estimates.

For a more extensive breakdown, including information on the top 10 industries that spent the most on Google ads in 2011, check out the WordStream Google  earnings infographic.

In many industries, PPC clearly remains a solid advertising strategy for many companies.

Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up from ghostwriting books for some of the smartest leaders he knows in business. @jeff_haden