Google has expanded far beyond its original claim to fame as a search engine. Alphabet owns Google, as well as many other companies. However, Google itself owns companies. The reach of this technology giant is so vast it is hard to imagine an area of modern life it has not touched.
Google owns more than 200 companies, including those involved in robotics, mapping, video broadcasting, telecommunications, and advertising. Google is growing through acquisitions, but it is also increasing revenues in each of the companies it owns. In cases where an acquisition cannot grow revenues, Google tends to sell that company.
Google also develops companies in-house through X, formerly known as Google X. X is a moonshot company with a focus on creating new companies that identify major societal issues and attempt to find tech-based solutions. If these companies are deemed worthy, they "graduate" out of X and begin a life of their own. This could mean they get folded into an existing Alphabet sector, become an independent company within Alphabet, or even get spun out on their own. The most recent graduate of X is called Chronicle, a cybersecurity platform designed to help business understand their own security data better and identify cyber-threats before they happen. The company is now an independent business within Alphabet.
Google announced on its annual developer confab, I/O, on May 8, 2018, that it would integrate artificial intelligence with almost everything, from writing emails to computer chips.
Google introduced new ad-buying tools on July 10, 2018, that highlight a growing push to let machines fine-tune ads and determine where they should run. Jerry Dischler, vice president of product management, shared in a blog post that machine learning is at the heart of the company's latest updates. These advancements strive to help advertisers keep up with changes in how consumers interact with devices.
We have selected four companies to highlight based on their ability to produce consistent revenues. Each of these companies has a history of attracting customers and monetizing their services.
1. Google Maps
You can look up any location in the world using Google Maps. The views are aerial for the most part, but Google also provides street-level views of many cities. Google Maps is embedded in real estate sites, as well as sites for businesses that want to make sure you can find them. And that's how Google Maps makes money.
Companies pay to be included in Google Maps searches. Companies may also be featured as the user zooms in or out on any given map. Google does not list how much money it makes from Google Maps, but analysts predicted that the company could have earned $1.5 billion in incremental revenue in 2017 from advertising.
As of July 2017, the Google Maps Local Guides introduced gamification to persuade local users to update data and add photos of local venues. This may increase the number of users, and thus the value of Google Maps.
AdSense is Google’s network for selling advertising on its partner sites. Google provides text, images, videos, and interactive media for a fee.
This service has become the standard for advertising online, and Google doesn’t seem to be losing ground with it. AdSense has provided close to a quarter of Google’s income in recent years. Google Network Members' properties, of which AdSense is a part, saw revenues reach 17.59 billion in 2017, increasing $1,989 million from the previous year. However, the company attributed the growth primarily to strength in both programmatic advertising buying and AdMob. Google also reported a decline in the traditional AdSense businesses.
DoubleClick is another advertising service. It can target customers and focus on an advertiser's specific pages to bring in revenues. It also allows website owners to place ads on their websites. DoubleClick can tell a publisher how long visitors are on a site and which pages they stay on the longest.
Online publishers use DoubleClick to build their web traffic, product sales, and service sales. Google also uses DoubleClick to promote its own services. If you have less than 90 million ad impressions per month, the service is free.
DoubleClick earns more than $30.6 billion in annual revenues. Google announced the acquisition of DoubleClick in April 2007 and completed the deal in March 2008.
YouTube is highly popular, and users have become accustomed to seeing short ads during most videos on the site. It makes $9 billion per year from advertising. However, there is another value to YouTube that is harder to measure in dollars. By owning this company, Google dominates the online video business.
The difficulty for Google is that many people watch embedded YouTube videos without going to the site, where the ads are.
YouTube has become the go-to source for videos and looks like it will continue to dominate. YouTube has been considered a “break-even” company by many industry watchers, but its presence as a means of popularizing goods, services, and entertainment is priceless.
The Bottom Line
Google continues to snap up companies and will continue to grow for the foreseeable future. Not all of the companies have lasted with Google, and it has divested itself of many.
Google was widely criticized when it acquired YouTube because critics could not see any way to monetize the service. Its break-even status may continue to present problems. Yet Google continues to find ways to generate revenues with its products and services. Simply put, the company has been visionary in recognizing the income potential for information products.