With tech companies like Google reporting billions of revenue per year, it’s normal to wonder how search engines actually make money. After all, they’re providing a free service, not selling a product – so where do the billions in revenue come from?
In this article, we’re going to be discussing how search engines are making money in 2023, why online advertising can be both beneficial and detrimental to business, and how the most popular search engines make the bulk of their revenue. So, how do search engines make money?
Let’s take a look.
What is a search engine?
To better understand how search engines make money, it’s important to remind ourselves not just what search engines do or offer us as a service, but their internal mechanisms and how they function.
So, what actually is a search engine? A search engine is a platform where you can freely search for information that has already been indexed and ranked according to its quality. Most search engines use ‘crawlers,’ (aka bots) to crawl the internet and find web pages to index. Once web pages have been indexed, the search engine will use an algorithm to rank web content and present it to users when they search for specific terms.
How do search engines decide how to rank content?
Typically, a search engine will decide to rank content based on the following factors:
- Content quality. If the content of a web page is sup-bar, it’s unlikely to rank high for its relevant search terms. Your content must be easy to read (preferably broken up into small sections) and informative, while also maintaining good punctuation and an engaging tone that keeps the reader on your page. It’s ideal if your site offers something of value to a visitor; this increases the chances that they’ll come back and revisit your content in the future.
- User experience. A lot of search engines will determine the quality of a web page by measuring how long users stay on the page. If users find that the site is hard to navigate, poorly written, or even has long loading times, you won’t rank as high as you could do. This is because most people won’t remain on a web page that loads slowly or has lots of site errors.
- SEO optimisation. Even if your website has high quality content and offers an overall positive user experience, you still need to optimise your website for SEO purposes. This means writing content optimised for the most important search terms relevant to your business, updating your website regularly, optimising your landing pages, and developing relevant, high-quality backlinks that give your site ‘authority’ in the eyes of a search engine algorithm. Before attempting to optimise your website yourself, it’s a good idea to look into SEO training in London for an overview of the basics.
- Visitors. Search engines will also decide how to rank your site by the number of monthly visitors. If you receive lots of organic traffic (organic = unpaid), this gives your site more authority, and the search engine is likely to rank your site higher than competitors with fewer visitors.
- Adverts. Now, we can get onto the topic of the article – adverts. Because the main way the most popular search engines make their money today is via advertising. In fact, the world’s most famous and most-used search engine, Google, makes the bulk of their revenue from advertising. But how does search engine advertising work?
How search engines make their money
It’s simple – search engines make the bulk of their money through advertising programmes. Whether it be PPC campaigns, or using your information to recommend you tailored products or services, most search engines make their profits by either selling advertising space or recommending you services. Advertising is the perfect business model for a search engine for two reasons:
Search engines are able to harness commercial intent
When users search for common terms on Google, many of them are looking for a specific product or service. If you’re a large corporation or a highly profitable business, you’ll probably be willing to pay search engines hundreds of thousands of pounds a year (or more!) in order to be the first suggested product or service. This is a goldmine for search engines such as Google, whose Google Ads programme runs on a PPC, auction-style basis. Unlimited ad potential. Think of how many million keywords and keyword combinations exist in the world. Search engines get to sell all that space to various buyers – and even obscure, long-tail keywords are bought up. With unlimited possibilities for ad space, search engines have unlimited earning potential.
So, what kind of advertising methods do most search engines use?
PPC Advertising
The most popular form of advertising on search engines is PPC advertising. PPC advertising works by selling ad space under popular keyword search terms, with companies paying the search engine every time a user clicks through to their advert. While this can offer businesses and start-ups the opportunity to get quick and easy brand visibility, it’s incredibly expensive. When trying to buy up ad space for competitive, broad-term keywords (such as ‘car insurance’ ‘lawyer’) companies can end up spending upwards of £20,000 per month, if not more.
Display Ads
We all know by now that search engines collect thousands of pieces of data about each of its users, and use this information to recommend ads that might correspond to their interests. For example, if you recently googled “cooking classes”, you might find that some of those pesky, unskippable Youtube ads are about online cooking classes, or cooking-related. While this can be infuriating when it comes to questions of privacy and tech overreach, the ultimate goal is to both provide the user with more relevant adverts, while also allowing the search engine to make money.
How else do search engines make money?
While the majority of a search engine’s revenue will come from their advertising models, most search engines will also branch out into other business models, whether it be tech expansion, subscription models, or merging with other services. Here’s how the most-used search engines in 2023 make their money:
Google is the most popular and most-used search engine in the world, so much that ‘to Google’ has become its own verb. In 2021, Google accounted for over 28% of all digital online advertising – an enormous sum. While Google makes the majority of its profits from search ads and display ads, it also makes a lot of money from its merger with YouTube. Google collects profits from YouTube’s premium content service, and also makes profit via the Google Play store.
Google also has ventured into hardware products, selling its own range of tech products including home speakers and headphones. Like any company, Google has even used Google to advertise their products, and has even been in trouble in the EU courts for abusing their own algorithms to recommend their own branded products.
Yahoo
Like Google, Yahoo also makes the majority of its revenue from search and display ads. Yahoo also offers a subscription service to its users, where paying members can enjoy upgraded features such as enhanced online protection or trading features. Interestingly, one feature of Yahoo’s Plus plan is that it is ad-free.
Bing
Often simply considered as Microsoft’s not-so-successful side project, Bing has actually enjoyed some modest success as a search engine. Unlike Google and Yahoo, Bing hasn’t branched out into other services or products; instead, Bing itself is a by-product of the Microsoft project. While it still makes money, most of Bing’s revenues come from search and display ads.
Bottom Line
In 2023, the easiest way for a search engine to make money is through search and display ads. Not only are search engines targeting consumers looking to buy, but they’re able to sell their ad space to the highest-price bidders, allowing them to rake in billions of pounds of profit every year. While some search engines do offer additional products or services aside from search services, the advertising model is the most profitable and sustainable.
