How Do Internet Companies Like Google and Yahoo Make Money
Have you ever wondered why companies like Google, Yahoo and MSN offer everyone free services? What do they get out of it? Before I answer I'll list the biggest untrue myth that a lot of people believe about internet companies:
Google, Yahoo and MSN get paid by our internet service providers (the companies that we pay to have internet access). A lot of people simply figure "I pay my internet bill which pays for everything I use on the internet." Well, no internet companies get paid by internet service providers. That my friend, is an untrue myth.
So here's the true one! Internet companies like Google and Yahoo make money mainly from advertising. Now if you look at Google there are no flashy banner ads saying "You've won a million dollars" or crush calculators popping up left-right-and-centre. So where are Google's ads? They're in the search results when you use Google's search engine. They're not the main results on the left, they're the results on the right hand side of the page. Looking like normal search results, they are actually paid ads! This is much the same on Yahoo and MSN, except Yahoo and MSN have some banner ads on their home page as well.
Though now the question is, where do Google, Yahoo and MSN get their ads? They are huge billion dollar companies and they need thousands of ads for every little topic someone might search up. These companies have many services like Mail, instant messaging etc, but also some advertising ones. Almost anyone can advertise on Google through their "Adwords" service. Yahoo and MSN also have services like this. This provides them with easy ads for every topic someone might search on their search engine.
Now that's all very well, but what happens when there are not enough ad slots in the search results? Sure, they could just keep making pages and pages of search results with ads alongside them, but those ads would get very poor exposure. So Google created an "Adsense" service. This service allowed website owners to fill part of their website with Google ads (from Adwords). In exchange the website owners get a percentage of the profit generated by the ads on their site. This service is also a way for Google to make more money from Adwords. Yahoo and MSN have similar services, although Google's are the most popular and well known.