Majority of Google’s Revenue is From Paid Ads
A study was done earlier this month by technology writer Dan Frommer of Splatf. The study was aimed at determining how diversified the top technology companies are. There are several ways that you could dissect a study of this nature so the results can surely be debated. In the case of this study, Dan Frommer has taken an approach that seems simple and fascinating: which companies draw the most revenue from a single product or service?
According to Mr. Frommer, Google ranks number 1 when it comes to the percentage of a company’s revenue that is generated by a single source. Google makes well over 90% of its revenue from the paid advertisements – and they only get paid when people click on them! This may seem like an unwise business practice to seemingly have “your eggs in one basket”, but considering Google’s multi-billion dollar success, it is hard to argue that they are not making some clever business model decisions.
Pandora, Facebook, Yahoo, and AOL are the other companies on this list who rely on advertising for at least 60% of their revenue. The main thing to take away from this article is that many of the top technology companies rely heavily on advertising as a source of revenue, and in Mr. Frommer’s words: Google really, really relies on its ad business.
Image Courtesy of: Dan Frommer