Google Case Paper
- Submitted by: Mallory
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- Category: Other
- Date Submitted: 09/28/2010 07:23 PM
- Pages: 7
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Revenue Earning
Approximately two thirds of Google’s revenues come from advertising on the company’s own site. Most of this is generated from search engine advertising. Firms are able to create an account on Google and load or design the ads they want shown. For each ad, they can specify keywords that, when “Googled” by a user, will bring the advertisement up on the right side or top of the search results page. They can also specify the maximum cost per click (CPC) they are willing to pay for each ad. This is how Google charges for their advertising services; customers pay a predetermined price (by themselves) for each time a user clicks on their ad.
If two firms choose similar search targets for their ads, the order in which they are shown is determined by an ad rank. This ad rank is calculated by multiplying maximum CPC by the quality score for the ad. The higher the maximum amount they are willing to pay (CPC) the higher their ad rank will be. The quality score is determined based on many different aspects of the ad itself. Some of those aspects include click through rate, keyword performance and how well the specified keywords match up with the article. The quality of the web site to which the ad takes the user is also taken into account. All these factors go into the quality rate, which then determines the rank of the ad. Obviously, the ad with the higher rank will be listed first in a situation where search terms match more than on ad.
Google acquires most of the remaining portion of their revenues from sponsoring ads on other websites through its AdSense network. This expands their customer reach, thus increasing their ability to target customers with specific interests related to the ads that are shown when they use those sites. This creates a larger return for the advertising companies, which attracts more business for Google. The websites that have this contract with Google generally receive seventy to eighty percent of the profits...
Approximately two thirds of Google’s revenues come from advertising on the company’s own site. Most of this is generated from search engine advertising. Firms are able to create an account on Google and load or design the ads they want shown. For each ad, they can specify keywords that, when “Googled” by a user, will bring the advertisement up on the right side or top of the search results page. They can also specify the maximum cost per click (CPC) they are willing to pay for each ad. This is how Google charges for their advertising services; customers pay a predetermined price (by themselves) for each time a user clicks on their ad.
If two firms choose similar search targets for their ads, the order in which they are shown is determined by an ad rank. This ad rank is calculated by multiplying maximum CPC by the quality score for the ad. The higher the maximum amount they are willing to pay (CPC) the higher their ad rank will be. The quality score is determined based on many different aspects of the ad itself. Some of those aspects include click through rate, keyword performance and how well the specified keywords match up with the article. The quality of the web site to which the ad takes the user is also taken into account. All these factors go into the quality rate, which then determines the rank of the ad. Obviously, the ad with the higher rank will be listed first in a situation where search terms match more than on ad.
Google acquires most of the remaining portion of their revenues from sponsoring ads on other websites through its AdSense network. This expands their customer reach, thus increasing their ability to target customers with specific interests related to the ads that are shown when they use those sites. This creates a larger return for the advertising companies, which attracts more business for Google. The websites that have this contract with Google generally receive seventy to eighty percent of the profits...