Google is one of the most valuable public companies in the world, after Amazon and Apple. As of January 16, 2020, Google’s parent company Alphabet Inc. (GOOGL) became the fourth US company to achieve a market value of $ 1 trillion.
Unlike companies like Apple that rely on more unique lines of business like the iPhone for revenue, Google has several major lines of business that provide revenue streams. Many of Google’s revenue streams have seen tremendous growth over the years.
Google AdWords and search advertising
The company’s exclusive advertising service, Google AdWords, continues to be an important line of business and a contributor to Google’s revenue. In 2020, Google’s paid clicks, a key advertising measure, increased 19% over the previous year, driven by growth in mobile user adoption and growth in advertiser activity.
The number of impressions increased from 2019 to 2020 by 15%. This comes from the growth in Google Ad Manager. Meanwhile, cost per impression fell 8% in 2020. The drop in cost per impression was the result of lower advertising investment due to COVID-19.
Google AdSense network
Google AdSense is another of Google’s best-known lines of business. Google AdWords allows businesses of all sizes to serve ads on Google websites, including Gmail, YouTube, and the Google search engine, and it also allows third-party websites to display Google advertising on their pages.
Ads generate 80% of Google’s revenue. Through its AdWords and AdSense advertising products, Google also seeks to continue its dominance on the mobile web,
Other Google bets
One of the main challenges in identifying the top non-Google search revenue streams is the secrecy around those projects. Housed under Google’s “moonshot” research and development arm, X Development, projects like Waymo autonomous cars have sprung up from X.
However, Google’s other projects had operating losses of $ 3.56 billion, compared to $ 1.9 billion in 2014. During its earnings call on January 26, 2017, Alphabet and Google’s CFO , Ruth Porat, indicated that Google’s other most profitable projects are Fiber, Nest and In truth.
For fiscal 2020, Google’s other bets generated $ 657 million in revenue, but operating losses came in at $ 4.5 billion..
First announced in 2010, Google Fiber is a broadband service that delivers high-speed gigabit TV and Internet at speeds of up to 1000 Mbps. Google Fiber is currently available and operates in 19 cities, including Kansas City, Missouri and Austin, Texas.
At the time, during the Q4 2015 conference call, Porat indicated that Fiber was the most expensive project of all Google’s other projects. The Google Fiber Phone, which functions as a home and mobile phone, can also be added to a phone plan.
Nest Learning Thermostat was one of the first home Internet of Things products to gain a widespread audience. On January 14, 2014, Google acquired startup Nest Labs, a home service of interconnected smart thermostats and smoke detectors, for $ 3.2 billion.
At the time of the acquisition, Nest founder and CEO Tony Fadell claimed that Nest devices were found in more than a million homes. Under Google, Nest continues to focus on thermometers and other smart home technologies.
Verily Life Sciences
Formerly known as Google Life Sciences, Verily focuses on a wide range of human health and life science projects, including a bandage-sized glucose monitor and a perfect human health “baseline.” Verily is focused on finding solutions to diseases and other global health problems, including smart contact lenses, assistive eating devices for people with hand disabilities, and other healthcare challenges.
The bottom line
Driven by the high profitability of its AdWords and AdSense products, Google stands as one of the five most valuable companies in the world. From July 202 to 2015, Google provided an annual return of 21.2% to its investors.
Despite the prospects of some investors that Google’s other projects are reducing the profitability of the company, its diversification from the main lines of business continues to lead the company to reach new financial milestones.