PPCHow Google Made $37.9 Billion in 2011

How Google Made $37.9 Billion in 2011

How does Google make money? A new analysis by Wordstream looks at who contributed the most to Google’s 2011 revenues, based on keyword, search query, and CPC data, and reveals which industries and businesses spent the most on advertising.

Finance & Insurance, Retailers & General Merchandise, and Travel & Tourism were the top industries contributing to Google’s $37.9 billion in revenue over the course of 2011, according to research by SEM software/PPC service firm Wordstream.

Last week, Google’s earnings disappointed investors, with revenue falling $300 million short of analyst’s expectations. Despite profit growing from $2.54 to $2.71 billion over Q4 2010, stocks fell 10 percent overnight.

Ninety-six percent of Google’s annual revenue of $37.9 billion comes from advertising. Wordstream CEO Larry Kim set out to determine which industries and companies contributed most to Google’s annual advertising revenue. In addition to creating an infographic (see below) listing the results of their research, Kim offered insights into what these findings mean for the U.S. economy as a whole in the full report, What Industries Contributed to Google’s $37.9 Billion in 2011 Revenues?

Wordstream also offered their best guess at commonly used keywords and costs per click, based on their evaluation of data from their own trillion-word keyword database, the 10 million most popular keyword phrases of 2011 according to Google’s Keyword Tool, and their average cost per click (CPC) data.

Industries with the Largest Google Ad Spend Over 2011

Industry spend estimates reflect global spend, while average CPC and top companies in each industry reflect U.S. data and companies, due to the information available to Wordstream for analysis.

With that in mind, the five industries spending most on Google advertising over 2011 were:

  • Finance & Insurance – $4.0 billion 
  • Retailers & General Merchandise – $2.8 billion 
  • Travel & Tourism – $2.4 billion 
  • Jobs & Education – $2.2 billion 
  • Home & Garden – $2.1 billion

The top 10 industries by Google ad spend account for 60 percent of their annual advertising revenue, according to Wordstream.

Hey, Big Spenders

Lowe’s was Google’s top advertising spender in 2011, dropping $59.1 million for the year, according to Wordstream’s estimates. Amazon came a close second with an estimated $55.2 million in Google ad spend. Home Depot rounded out the top three, with $50.3 million spent on Google advertising.

The infographic below breaks out top spenders by industry; here are a few other highlights:

  • University of Phoenix, $46.9 million 
  • State Farm, $43.7 million 
  • Progressive (Insurance), $43.1 million 
  • eBay, $42.8 million 
  • Booking.com, $40.4 million

Google doesn’t release data on which companies and industries contribute most to their advertising revenue, so analysts are left to make their best estimates based on information available to them. Kantar Media took a crack at estimating Google ad spend, last month revealing the 20 largest U.S. search advertisers of 2011.

Keep in mind while comparing their list to Wordstream’s that Kantar Media evaluated data from the first three quarters of 2011, while Wordstream examined the year as a whole. While no one knows, outside of Google, just how accurate these lists are, it sure is fun to speculate.

google-earnings-wordstream

Infographic by Wordstream.

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