Top Four Industries for Google Revenue and What it Means for Bloggers

Whether you have a brick and mortar business or an online business, the world is a little bit clearer with the advent of the launch of Google rewarding mobile friendly activity out on the web. Yes, brick and mortar businesses, you must listen also. For you see, the largest advertising agency in the world is rewarding those who are mobile friendly. Please note, I refuse to use that negative word, this is all positive stuff for online bloggers, online businesses and brick and mortar. The world is jumping another generation forward with transparency and this leap is just as life changing as the desktop computer, the iPhone and the many convenient apps we are all married to each and every hour.

Yet, the question we must be asking is how will Google's revenues change and how this forecasted change will affect me as a business owner/blogger? What are Google's revenue sources? Who are Google's best clients? And the real million dollar question is who will be Google's best client in the future? Will their revenues reside mainly in the United States? Will their revenues be mainly from mobile devices? And most importantly, what industry or industries will drive continued internet expansion? Stay tuned for facts and figures from the past and some insights into the future.

Stellar Year for Google - 2011

Google is the largest advertising company in the world. Google does advertising better than anyone ever in the history of the world. The release of their 2011 operating results is important to all us. Not only was it a stellar year, but it also marks a change in management with new product development and further investment. To quote the CEO Eric Schmidt about 2011 year ending results:

"The stellar financial results allows us to "invest heavily in future growth -- investments that will benefit our users, Google and the wider web."

The $29 billion in annual revenue included $8.5 billion in net income or roughly $26 per share. What might this new investment entail for us as consumers and citizens of the world? To me it spells new products and new conveniences. To further validate this prediction, look at the management line up and how they have positioned key managers in the organization. The annual report details specifically one of the co-founders will head up new products.

If you look back into history, you will recall that Darrin Stephens, the husband of Samantha Stephens on Bewitched (played by the beautiful Elizabeth Montgomery), was an advertising executive. In fact, if you are consumed with baby boomer television as I am and paid close attention especially to the early shows, you will recall the scenarios where Samantha helped Darrin craft his ad campaigns. Yes, those were the very first episodes. Those particular shows were perhaps not the best in class, but they served a young child well and introduced me to the fact that someone is crafting those advertising campaigns. So there you have it, the history of advertising from the standpoint of a small girl in the Midwest - her first introduction to the world of Google. If you had told me Google would emerge and send me tiny checks for helping them advertise, I would have asked what planet are you from?

Call a spade a spade. What was once called an advertising agency is now commonly referred to as an SEO firm. Google's advertisement for pay per click and "Adsense" are simply 21st-century terms for targeted advertising.

How does Adwords affect the online blogger? Adwords is a term that we as writers like to study because it monetizes our content. Keywords, content publishing, pay per click - all of these add up to supporting the greatest advertising agency in the world - the world wide web. The king of this new advertising world is clearly the search engine that delivers the best user experience.

Google is king of advertising - but this is not just my opinion, this is the opinion around the world. Yes, Google has developed a better mousetrap - one that billions access daily either through their desktop computer or now through their smart mobile devices. Google is simply the largest and best advertising agency in the world.

As a finance professional, marketing and advertising revenue appear on the income statement under the heading of "sales". The end goal of all of this, however, is profit - advertising profit.

If you know your history, you will recall the world was forever transformed from the horse and buggy to the motorized carriage or what we call cars. This transformation of the advertising agency from Darrin Stephens to the shops at Google is different. A new world filled with technology and new advertising firm leading the way for a better user experience.

Trend Analysis of Revenues Derived the United States

While not a significant change as yet, the trend for greater global revenues and, therefore, less reliance upon revenues from the United States is clearly the future of this behemoth advertising agency. The United States will not always be the largest client of Google.

This financial fact is important as citizen writers, citizens of the world, we must recognize, the world we grew up in is changing very rapidly and we must brace ourselves for this change.

Network Revenues

The "network revenues" are where Google places the Adsense revenues. These are the revenues that content writers, editors are most familiar with, also called "affiliate revenues" because Google partners with others. In years past, this amounted to about 33% of the total revenues.

Google Website Revenues

So where is the lion's share of revenues for Google's vast fortune coming from exactly? Directly from the Google website - amounting to close to 70%. But the real question that we must answer as writers, is who is funneling that demand. What industries are Google's best clients?

Cost Per Click Overall Revenue is Up 5%

One of the items we as citizen writers watch carefully IF we publish outside of HubPages is the cost-per-click revenue. 2010 was also a stellar year for this revenue - increasing 5%

Paid clicks increased even more dramatically 11% and previously 18%. Often referred to as "PTC websites" are middlemen who service the same marketplace. The Cost per click is the revenue for the advertiser.

Some have analyzed the cost per click and have noted a volume increase and a price decline. I have not seen this and would question its authenticity. Perhaps the cost declined due to increased efficiency of targeting the audience. That scenario definitely gives different implications to the Google profit matrix.

In short, it is not surprising, that as the advertising demand grows, so too, does the revenue and the cost of advertising on the world wide web for both Google and its few competitors.

To analyze the future of advertising revenue, we need to look beyond the figures that Google has and look to Nielsen and see exactly who is spending to gain the attention of the consumer. The industries are shown below and reveal some insightful points.

One of the items I always share with my marketing clients is the fact that business to business operations need sales, their world is riveted by sales to their distributors. In that world, the purchase order is King. In the world of business to consumer, marketing is King. To sell to the consumer, you must reach the consumer and touch their emotions. And that is where the blogger, content provider, content curator can help.

The greater the number of backrubs especially from confirmed 3rd parties, the greater the importance of the website and the greater the possibility that the users searching really wanted that particular website. This gives me a whole new perspective of the internet and the search engine. It lends a friendly atmosphere and that is really Google's mission to serve us in the world of searching for timely, pertinent information.

Larry Page and Sergey Brin founded of Google while studying at Stanford. Essentially their mathematical backgrounds allowed them to create a better algorithm for searching the web.

This is memorable, I have never heard this one before, they nicknamed their new creation, a better computer search engine, the term "BackRub". To these young inventors, the items we now call backlinks are really an analogy for "backrubs" in the human world. In the technological world of bits and bites, the computer sees these as backlinks. The greater the number of backrubs especially from other people, the greater the importance of the website and the greater the possibility that the users searching really wanted that particular website. This gives me a whole new perspective of the internet and the search engine. It lends a friendly atmosphere and that is really Google's mission to serve us in the world of searching for information.

2nd Generation of Backrubs - Social Media

And then there is the second generation of "backrubs" - the rise of the social media. Twitter, Facebook, Instagram are leading the charge of backrubbing the products, the websites, driving the consumer demand via Tweets and Facebook likes.

The face of Google profits has changed over the years. A look back sees the Internet giant changing its product mix. Today, like it or not, Google is the world's biggest and best advertising agency.

What the Future Holds

What Google is today is not what Google was in their start up. Similarly, these men of "leaders of technology" and "leaders of social mores" (albeit they flunked at social networking) will no doubt reinvent the profit matrix once again and diversify and bring new products to market.

The lack of "mobile" being mentioned in the 2011 report is a notable absence that fore scores a dramatic shift in our lives and in Google's profit matrix.

Interestingly, in the 2011 report, the elephant in the room, mobile technology was not mentioned. Yet the naming of the new product development manager Sergey Brin was detailed. If you read the background of Sergey and the respect that Eric Schmidt has for this man, you will know the world will change and new products will be forthcoming from Google via the ideas from Sergey Brin.

The intelligence of Sergey Brin is perhaps self-evident in his education and financial success with Google. Beyond this, I find one of the articles about him stating that he has not delved into foundations and giving of his wealth because he doesn't have the knowledge base. I admire a manager who knows what their team does best. I hold in great esteem a man who can articulate his lack of knowledge. This man, mark my words, will change the world that you and I live in.

Autonomous Automobiles

Update: In 2012, Sergey Brin celebrated new California legislation that allows autonomous automobiles. Sergey's "new project" obviously was reveals.

Couple the entrance into automobiles and the knowledge brought forth by the statistics of Neilsen and you quickly see the leading industry for advertising on mobile devices will be the automotive industry.

Update: SFGate.com reports the autonomous automobile is a game changer:

"Auto insurance is a $200 billion industry that could lose big in the long term — as cars function more like computers on wheels, the thinking goes, the number of accidents will decrease, and with that, so will the cost of insurance.

There are already cars on the road packed with sensors and software that allow them to operate semiautonomously — the Mercedes-Benz S550 Coupe is outfitted with an adaptive cruise control that can navigate a traffic jam. Google has said it plans to introduce a version of its automated car by 2017. Nissan recently moved up the release date of its own vehicle to 2018."

Brin has set the stage for Google's governance. "knowledge is always good, and certainly always better than ignorance", a philosophy that is summed up by Google’s motto of making all the world’s information "universally accessible and useful".

To give a perspective on Brin's power in setting the stage for the corporate culture at Google and possibly the world: "When pressed for clarification, Eric Schmidt has famously said, “Evil is whatever Sergey says is evil.”

Humanity and the world are better off with Google. Google has chosen a mission to help us search for information and make our lives easier. They have acquired other companies, developed multiple new versions of the search algorithm and they continue to be a major force in technology and our daily lives. This will not change in our lifetime. The co-founders are young and brilliant. Look for exciting new products from Google that are life changing.

The New World with Google Mobile

Update: The above statement was written long before the autonomous automobile was announced. Now we have Google glasses, watches and soon the roadways will forever be Googlized with smart cars. The future is bright for user friendliness but as a business owner, I challenge you to look at the numbers and see how content will migrate to social media. Someday soon we will all remember the days when content was King and that King will very quickly have to succumb to the new ruler called "social media".

What are your thoughts on this world? How will you change your online work habits given these changes? Have you updated your sites to be mobile-friendly for the April 21st, 2015 deadline? (note this hub was updated and relaunched on 4.21.2015). Please share with us your thoughts and insights. What do these numbers and changes mean to you as a blogger?