How does Google's advertising business make money?
Google' I/O conference, which ended yesterday, attracted more than 7,000 tech enthusiasts from around the world to mountain view's coastline amphitheatre.
According to the small partners at the scene, countless applause and "Wow" is enough to prove the wonderful conference.
Google, which accounts for 90 percent of its revenue, has a global online advertising market share of more than 33 percent and a search advertising market share of more than 60 percent. First, let's look at Google's Ad Revenue Trends Chart:
Since 2001, the statistics show that Google's advertising or advertising revenue, which accounts for the vast majority of the company's total revenue, reached nearly $79.4 billion in 2016.
However, usually when using Google, do you think that advertising is not so ???
This article summarizes the former Global Technical Director of Google and is currently the CTO of Xiaohong Book. The answer to the tiger's answer explores the following two questions:
1. Why don't users hate Google ads?
2. Why do advertisers prefer to run ads on Google?
Ad revenue formula
CPM = Coverage * Depth * CTR * CPC * 1000
CPM: It means the revenue generated for every thousand impressions,
Coverage: refers to "ad coverage." Ad coverage - Search pages / all search pages for ads. As you know with Google, most search pages are ad-free.
Depth: refers to "average number of ads per page." That is, at the top of Google's page,
CTR: refers to "ad click-through rate." This is also easy to understand, the same ad,
CPC: refers to the "cost per click".
After explaining the four variables, let's review the formula:
CPM = coverage * depth * CTR * CPC * 1000
To raise CPM (that is, to make more money),
Many search engines choose the first two. Because.CTR(Ad click-through rate)
But Google didn't. Imagine, elevatedCoverageAnd.DepthAfter
Google chose to keep a tight gripCoverageAnd.Depth，
So we did a lot of pioneering work in the early days,
For example, I want to search for "cheap tickets to San Francisco."
In my impression, Google synthesisCTRIt's 3%-4%,
What is Google's charging strategy for advertisers?
Among many business models, Google has opted for a bid ranking model.
The bid ranking was not invented by Google, its inventor was overture,
In the process of using the spot ranking model, Google has also made a lot of innovations,
What is the open bidding model? Google says: Now "cup"
What is the problem with this model? It may drive up the price of the advertising space,
On the other hand, from Google's point of view, it can lead to the sale of certain advertising spaces.
The second private bidding model is different. When you bid,
It's very efficient, and it motivates everyone to come up with a reasonable price in their mind.
Finally, there is a problem to be solved. How to prevent rich advertisers from monopolizing advertising spaces?
How can Google prevent spam ads from contaminating users' search pages?
Google introduced the Ad Quality Score, which will determine your final ranking on the ad bar.
Let's look at another formula:
Ad Rank Score - Highest Cost of Clicks - Ad Quality Score
The higher the ad ranking score, the higher the ad's ranking.
Example: In the keyword "cup", an advertiser who sells cups,
His advertising ranking score is 4.
There's another advertiser who sells medical supplies, he's super rich,
So his advertising ranking score is 0.1.
So he still has to be behind the advertiser of the cup.
(In real cases, the difference may be even greater, exponential,
This means that the more relevant and high-quality ads, the lower the price.
With this mechanism, high-quality advertisers get higher conversion rates,
In my opinion, Google's so-called "do not do evil" principle is to give up some short-term benefits,
Did it work?
I think so.
Finally, quote a line from "The Wind of Gold": If you only know how to pursue results, one will begin to think of ways to copy the road. But when it's close, people probably can't see the truth. Drive will also slowly disappear, Google give up short-term benefits, to obtain longer-term benefits, from the original back Yahoo to now proud groups of people sketching the empire map, the world overlords, give me who's posture, we see is a world-minded Google.
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