Have you ever thought about the fact that you use Google on a daily basis but never have to pay for it? Yet, the company is worth BILLIONS (market cap of about $261 Billion). Googles founders, Larry Page and Sergey Brin are each worth over 20 billion dollars. How does google make that much money when you probably never even gave them your credit card?
Data. Every time you do anything on Google, (as in search, get directions, read a review, or track the news) Google records it. Using that data, Google can then create accurate advertisements which you are likely to click on. Then, when you click on the ad, the advertiser pays back Google. It may not seem like a lot, but it piles up.
Why is this so effective? Well, Google is continuously becoming more important in everyone’s daily lives by increasing the number of products people use, and the amount of time people are using them. These are products like Google+, Google Docs, Blogger, Picasa, and YouTube. This means you have more activity they can track, and use as data. The more data they have, the more accurate they can make ads, personalized for you. Clicks equals money, and its all about making sure that you keep clicking on Google.com.
Also, in case you’re wondering, Google does have different sources of revenue, through Google Play, Chromebooks, and other products. However, these are minimal compared to the 96% of revenue which comes from advertising.