As Google races to become the first company ever to reach market capitalization of a trillion dollars, a question worth considering becomes: why, exactly is Google worth so much money?
It could easily be argued that selling advertising is the reason. Certainly the purchase of YouTube was a terrific business decision, with millions of users visiting often, and the monetization is, indeed, largely due to ads being sold.
The Android phone business is not only THE most viable competitor to Apple, but extends Google’s reach from the office or laptop computer onto mobile. As advertisers hone in on so-called “screen to screen” ad campaigns, this is a significant advantage; Google believes it will make more money from mobile ‘clicks’ than from desktop.
Now, consider Google AdWords, the leader of the commonly called Pay per Click advertising options. When someone is looking for a quality pizza pie in their neighborhood, Google is there—both to sell display ads to the pizzeria, and to prominently feature their establishment in the ‘paid search’ results. AdWords income for Google was up 21% in Q1 2014, and continues to grow.
At the end of the day, approximately 66% of Google revenue comes from advertising on their own websites, and another 30% from ‘Google Network’ websites. So the short story is, almost all dollars earned by Google come from advertising.
Then that’s the answer, right?
But a better question is:
What is the reason so many people are interested in the advertising?
Consider YouTube. Ads can be trafficked to appeal to viewers of particular content. In short, Google makes money by allowing advertisers to target ads to viewers who search for particular content—and get it on YouTube.
Or the Android phone. Mobile advertising has a unique selling proposition: knowing someone’s location while they are ‘mobile’ can make targeted advertising infinitely more viable. Broadcasting and large circulation newspaper and magazines have always been able to deliver for the (relatively) few businesses that have a market-wide footprint. But with mobile advertising, potential patrons can be geo-targeted, and a local advertiser with only one location doesn’t need to acquire (and pay for) listeners who live too far away to become valued customers.
The concept of AdWords comes closest to the real reason for Google’s vast profits, and it’s simple: Google allows users to find what they are looking for quicker, faster, and more precisely than any other mass-market tool ever created. It’s search for content that drives YouTube. It’s search for location-based information—and the ability to act on advertising immediately from a smartphone– that drives mobile advertising. AdWords merely suggests some businesses, prominently, based on certain search terms.
In short, Google created the world’s greatest search engine, to the by and large demise of Lycos, Webcrawler, AskJeeves, and more. And they’ve built a hugely profitable company by helping consumers find the vital data they need, when they need it.
Just like Google, 5i Solutions, Inc. understands the value of finding YOUR vital data, when you need it. We know that companies spend $20.00 on average to file a single document, $120.00 in labor to find a single misfiled document, and $220.00 in labor to recreate a lost document.
That’s why we customize document management solutions to increase the net worth of YOUR company.
5i Solutions, Inc. One single point of access. One singular solution.
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