The Working of Google’s $150 Billion Advertising Business – CPCs
When talking about Alphabet’s revenues, it is key to understand that more than 80% of it comes from Google ads, which generated $147 billion in revenue last year. Google has led the market when it comes to online advertising through the use of ad tech tools that allow content makers to generate money through advertising and let ad buyers seek out the kinds of people they would prefer to appear in front of on Google Search, YouTube, Maps and on other websites across the internet.
Search is Google’s most profitable unit. Any and all advertisers using Google products can bid on search keywords — specific words and phrases that lead their ads to show up to relevant users in search results. These advertisers are now tasked with choosing the correct bidding strategy. In case they prefer to gravitate the traffic towards their website, they can opt for the “Cost-per-Click” bidding, where they must account for a payment each time someone clicks on one of their ads. More specifically, while using such a strategy, they must determine the maximum amount of money that they are willing to pay per click, and for every single time that ad is eligible to come up for a search, there is an auction which decides whether the ad will come or not – and if it does in what position will it show up.
CPC ads are not limited to Google- there are a diverse range of text, rich-media or social media ads that use CPC as a factor in determining the total paid advertising campaign costs. Some ad types are only displayed on particular kinds of networks, such as the Google Search Network (ads at the top of Google’s search engine result pages) and Display Network (Google-owned or partnered sites like YouTube and Gmail). CPC is important in ad types including – Text ads, Image ads, Video ads, Facebook ads, Instagram ads and LinkedIn ads.
Reference Link: https://www.cnbc.com/2021/05/18/how-does-google-make-money-advertising-business-breakdown-.html