Google makes the vast majority of it's money through advertising revenues. More specifically Google generates advertising revenue through there advertising program known as AdWords.
The heart and soul of Google's advertising success is the ability to target advertisements to the target market. When a consumer searches for a product or service the most applicable advertisements will be shown to that consumer. Thus Google has introduced an unsurpassed relevancy to advertising.
Google advertisements are distributed through two main channels. The first, most effective, and thus valuable is the search based advertisements. The second and ever growing source of Google advertisements is through the content network.
Two AdWords Distribution Channels
Advertisers can place ads on content websites or search engine result web pages.
Search
The search advertising or search engine marketing which is often abbreviated as SEM has and remains Google's bread and butter when it comes to revenue and advertiser success. The success of search advertising derives from the three R's of online marketing.
The ability to reach the interested consumer at the time of interest was never possible before AdWords. This ability to target both relevance, and peak interest is amplified by the ability to track the performance of almost every aspect of an advertising campaign. Advertisers can track almost anything whether it be time of day, location, demographic, search query, landing page, ad copy, or practically any other variable you can think of. This ability to track performance allows advertisers to hyper focus their advertising budget like never before.
Another big advantage of SEM is the notion that you only have to pay when a user clicks on your advertisement. Instead of the pay for display method of advertising Google search advertising only charges an advertiser if a user clicks on the ad.
Content
Google search advertisements are not always clicked on. In fact the majority of the time a search user will elect to click on a organic search listing. So what is an advertiser to do once the user has left google and found a site or online resource with the information that they are looking for? Google came up with a solution.
Google partnered with online publishers and content providers through a program called AdSense which allows advertisers to obtain an enormous advertising reach via the websites participating in AdSense. Websites that partner with Google through AdSense allow Google to place advertisements on their website. Google in return shares the advertising revenue with the websites.
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