Google, last week announced a massive rise of 32% year on year in their revenue which equaled to a whooping $9.02 billion of revenue in the Q2 2011 earnings. Sure these figures do not come as a surprise to anyone. Google has had a strong hold on the market for quite some time now.
The most interesting point to note is, 97% of Google's earnings are owing to the extensive advertising on Google sites. Such high is the intensity of the advertisements that, it has grossed them a jaw dropping $32.2 billion from the period leading from Q3 2010 to Q2 2011. And, to that end, WordStream's Larry Kim reported that their main aim was to explore, “what keywords demand the highest costs per click and are most competitive in terms of high search volume. Since the vast majority of Google's profits come from AdWords advertising, these high CPC keyword categories are responsible for a large part of Google's profits.”
- “Insurance" (example keywords in this category include "buy car insurance online" and "auto insurance price quotes")
- Loans (example keywords include "consolidate graduate student loans" and "cheapest homeowner loans")
- Mortgage (example keywords include “refinanced second mortgages” and “remortgage with bad credit”)
- Attorney (example keywords include “personal injury attorney” and “dui defense attorney”)
- Credit (example keywords include “home equity line of credit” and “bad credit home buyer”)
- Lawyer ("personal injury lawyer," "criminal defense lawyer)
- Donate ("car donation centers," "donating a used car")
- Degree ("criminal justice degrees online," "psychology bachelors degree online")
- Hosting ("hosting ms exchange," "managed web hosting solution")
- Claim ("personal injury claim," "accident claims no win no fee"
- Conference Call ("best conference call service," "conference calls toll free")
- Trading ("cheap online trading," "stock trades online")
- Software ("crm software programs," "help desk software cheap")
- Recovery ("raid server data recovery," "hard drive recovery laptop")
- Transfer ("zero apr balance transfer," "credit card balance transfer zero interest")
- Gas/Electricity ("business electricity price comparison," "switch gas and electricity suppliers")
- Classes ("criminal justice online classes," "online classes business administration")
- Rehab ("alcohol rehab centers," "crack rehab centers")
- Treatment ("mesothelioma treatment options," "drug treatment centers")
- Cord Blood ("cordblood bank," "store umbilical cord blood")”
Google AdWords works on the basis of bidding for maximizing profits, where the advertisers participate in an auction of keywords for top ad placement. As top ad placement could lead to possible extra clicks. The minimum bid one can make is 5 cents. And as Larry Kim points out, “Google can make up to $50 per click. Despite a diversified product portfolio, advertising on Google sites accounts for the vast majority of its billions in annual revenue.”
A statement made by Google's Chief Economist back in September 2009 can perhaps prove as a justification on Google's part for warning its users about the cost implications, “Your incremental cost per click is how much extra you are paying, on average, for the extra clicks you are getting from your higher bid. When your value per click is higher than your incremental cost per click it makes sense to increase your bid. On the other hand, if your value per click is lower than your incremental cost per click, you probably want to decrease your bid.” I guess, you can't blame Google solely for the revenue they generate as result of the price we end up paying. If you've evaluated bidding highly and $50 per click is going to profit you then its your decision. Google starts the bid at an affordable 5 cent, its your competitors you need to blame for hiking the bid price and not Google.
In addition to that, whilst these industries are ending up paying high sum for their CTC's an important point to note is, these industries have a quite dedicated customer traffic inflow. So, these businesses in principle do not mind paying such high value sums. So, who's to be blamed? Certainly, not Google.
With the increase in the compition, will mean added fight over key words. So, the future looks good for Google as key words will get increasingly more expensive.
So, why not make use of the Google's bid simulator as reveals:
- How you can enhance traffic, possibly organic traffic, to your site without raising the bidding costs?
- Which keywords should you modify your expenditure for?