Google: The Least Intrusive Advertising Platform
Updated: Mar 20, 2020
In a world where advertising dominates content, there are few platforms that remain untainted. Somehow in the sea of product and service promotion, Google has managed to make many of their products seem free: Gmail, Google Maps, Google Earth, Google Docs, Google Photos, Google Chrome, the Google Search Engine itself. Ok, maybe we can spot the ads in the search engine. But when’s the last time you thought twice about those other Google products being filled with ads? Google is an advertising company, but they’ve done it with incredible tact.
Friendly Google Maps
Ads? We hate them. Google Maps? Pocket survival guide. We want to use Google Maps. Google Maps, first released in 2005, has provided a reliable global mapping and routing service for all major modes of transportation. At the time of the Google Maps release, interactive maps were just beginning. We either had a Garmin style in-car GPS, a printed-out static map from MapQuest, or a car-width cross-country map from the glove box. Google was the first to offer a digital, navigable map using geospatial information. Fast-forward to today, and Google has accomplished that and so much more. Embedded in the maps are businesses for paying customers – restaurants, bars, hotels, gas stations.
Presented any other way, like in a television commercial or on a billboard, becoming aware of those businesses is no longer your idea. We like it when things are “our” idea and we want to know everything that’s around us so we can make the best choice for ourselves. This decision-making process is what’s known to economists as utility maximization. The way Google Maps caters to this decision-making process is how it emerges as a likable free service. Other sources may provide data necessary for decision-making and utility maximization, as in the case of realtors and property selling, but the data comes at a cost. Google Maps, on the other hand, is free. But despite many Google services being offered free to the public, they take resources and money to keep running.
How Google Makes Money
We all know Google is a massive tech company. They’re ranked the 15th largest company in the U.S. by Fortune 500 and in 2018, they brought in $136.8 billion in revenue, which would be enough to build the Golden Gate Bridge 90 times over. From that revenue, $30.7 billion was pure profit. For perspective, compare those numbers to Nike. In 2018 Nike brought in $36.4 billion in revenue and $1.9 billion in profit. Nike’s profit margin is a fractional 6% of Google’s. Now, no knock to Nike here. Google and Nike are fundamentally different businesses making them unfair to compare directly, but the numbers offer a magnitude of scale comparison.
So how does Google get to $136.8 billion in revenue? The bulk is from advertising services. Google offers other companies a chance to promote their businesses on the various Google platforms in exchange for a fee. This type of advertising revenue accounts for 85% of Google’s total revenue. Advertising services are primarily offered through Google powered search engines, but they’re also offered through Google Maps. Yes, friendly Google Maps.
This probably doesn’t come as a surprise seeing how Google Maps shows surrounding businesses when you open the app. What might come as a surprise though is how little Google has explored advertising through Maps, and how much runway they have for future advertising strategies. Based on an interview with Google’s business chief Philipp Schindler, an article from Bloomberg released in April 2019 indicated that Google is looking to ramp up the monetization of Maps, albeit carefully. In the interview, Schindler broke down the monetization areas as utility, requests for things nearby, personalized recommendations, and neighborhood business listings. If you open the Google Maps app today, you’ll notice new features like “explore” and “for you” tabs, which align with the monetization areas Schindler highlighted. Right now those new features shouldn’t be considered intrusive since users physically need to click on the tabs, but is this just the start?
Outlook on Google
Google’s corporate mission is to organize the world’s information and make it universally accessible and useful. Further, Google’s annual report states that they’re committed to building products that have the potential to improve the lives of millions of people. Moving forward, the question becomes whether Google can hold themselves those standards while still generating the same amount of revenue and profit.
Focusing back on Google Maps, there’s reason for a positive outlook. In that same Bloomberg article, the Google Maps director of product management, Rajas Moonka, said “We want to be able to highlight things that are around you and surface them nearby to you in a way that’s not disrupting your experience’’. Through Google’s outward public relations, they appear to be mindful of keeping Google products integrated in everyday lives with minimal unwanted interruption. Alas, only time will tell if Google can keep its title of the least intrusive advertising platform beyond 2019.