Is Google one of the best business models ever?

From the most humble of beginnings in 1998 based in a rented $1,700 a month garage in Mountain View has risen one of the most successful businesses ever. I would go so far as to say possibly one of the greatest business models ever. Google Adwords has single handily turned the world of advertsising on it’s head and many organisations are starting to invest more heavily online than they are offline.

Adwords analyses every user search query to determine whose advert will appear where on the top and right hand side of the search results pages known as the ‘sponsored listings’. The Adwords system is essentially one massive, online auction that is (almost) self serviced and automated. It is unclear exactly how much Google makes from the Adwords system but Google made an estimated $21 billion in 2008. As most of the revenue Google receives is via Adwords this may give you a small indicator.

Google has not become the search engine of choice for the majority of web users out of accident. Google’s results are extremely relevant as are the targeted sponsored adverts that are served. This was one of the main objectives when Adwords was originally conceived. The adverts were always intended to be text based, non-intrusive and relevant to the search query.

However, Google operates in what can simplistically be broken down into two levels. One level is the one which many people fail to fully understand. The fact that Google gives away so much for free when it could realistically charge for many of the services such as Google Analytics, Latitude, Trends, Base and recently it’s Android operating system for mobile phones. The reason that Google give these away is to enable it to sell more advertising and sustain it’s bottom line. Ultimately, anything that increases the internet usage that goes through Google increases its brand exposure and also allows Google to have a barometer on internet usages.

The barometer of internet usage is the ultimate driving force behind Googles business model. This data provides torrents of data about users tastes and habits and goes a long way into Google’s ultimate goal of personalised search. Google can then sift through the data and predict future consumer behaviour and improve its products which in turn provides more intelligent, targeted traffic on which to sell targeted advertising.

Therefore, Googles whole business model is based around a constant self analysis of data which sculpts not only the future of Google search but also that of online business. Google can therefore use the mass of information (which arguably could only be surpassed by ISP’s collaborating and sharing internet usage behaviour) to constantly improve it’s relevancy in order to sell more targeted advertising. Any major threats, such as Twitter, can either be purchased or partnered with.