Hi guys, it’s DataScienceKid, here with a new article. Today, we are going to be taking a look at one of the biggest companies in the world, Alphabet. You’re probably scratching your heads, wondering what in the world is Alphabet. Well, Alphabet is the parent company of Google. Other than Google, Alphabet also owns other Google based companies, such as Youtube, Waze, Fitbit, and many others. As you can see, Alphabet is a very powerful company. In fact, in the year 2022, their revenue was over 280 billion dollars! But of all that money, nearly 80% came from Google’s advertising revenues. So, let’s take a closer look at how Google makes so much money from advertising!
The first money-maker is the Search function. This is where advertisers can bid on search keywords. Keywords are words that the target audience would search, that are relevant to the product that you are selling. Usually, companies pay Google every time someone clicks on their ad, which generates revenue for Alphabet. Depending how competitive and important your product is, you would pay a higher fee per click. Let’s take a look at an example.
Suppose you are advertising your online store, which sells sunglasses. You would probably want to bid on keywords such as glasses, sunglasses, and eye-protections since those are all relevant to your store. Now, you need to decide how much you are willing to pay Google. The sunglass industry isn’t that competitive, so you probably wouldn’t need to pay more than 20$ per click. So now, Google will pop up your ad whenever someone searches those keywords.
(Example of sunglasses ads on Google search)
Now, there is one more thing that you have to keep in mind. The order that your ad appears. There are many factors that Google considers, and they have a big effect on when your ad is shown. This process is called an auction.
An auction is the cycle that occurs with each Google search to conclude which promotions will show up for that particular hunt and in which order those ads will show on the page (or whether any promotions will show whatsoever).
The ad auction is used for every ad that is eligible to appear in a search. The position and visibility of the advertisement on the page are determined by the auction.
The auction works like this:
1.At the point when somebody searches, the Google Ads system finds all advertisements whose keywords match that pursuit.
2.The system discards any ads that are not eligible from those, such as those that target a different nation or are disapproved due to a policy violation.
3. Only the ads with a sufficiently high Ad Rank will be displayed from the remaining ads. Your bid(cost per-click), the quality of your ads, the Ad Rank thresholds, the person’s search context, and the expected impact of extensions and other ad formats all contribute to Ad Rank.
So that’s a quick summary of how Google Search Ads work. Tune in next time for part 2, where I will explain Youtube Ads, and get deeper with Google Ads and AdSense!