“If you are not the customer, you are the product.”

This quote has been on the Internet for a long time and aptly summarizes how “FREE” product models work.

Let’s review Google’s FREE services with this quote in mind.

Google really really wants you to grow on the web, so it helps you with its free services.

But Why? 

As you grow, you will need further assistance to scale your business. And Google’s services are ready to help you achieve that. But now you need to pay a little for Google’s upgraded services. 

“This is the Freemium business model, where they offer a basic version of the product before attempting to charge for a premium version.”

Since you are familiar with Google’s free services and have set up your business on Google Workspace, it will be a hassle to migrate your business elsewhere. Won’t it? So, you are more likely to pay for it. 

And now Google has generated revenue. 

But that’s just a tiny portion of Google’s revenue. 

So, how does Google generate more revenue from these free services?

The very first method is

Data collection

You might be familiar with the phrase ‘Data is the new Oil.’ It loosely translates to whoever has data, has power. That makes Google the King of the Web.

Ad Targeting

Google is a data-driven organization. The more they know about you, the more they can target you in ads. 

Here is a simple fundamental about ads: Your ads perform better when shown to potential buyers. 

How does Google classify you as a potential buyer? The answer – Through your data.

What data???????

Your Demographics, Psychographics, Geographics, and more. 

Google has information on almost everything you do on the web; what you do, where you go, your likes and dislikes, your friends on the Internet, your hobbies, your preferences of entertainment, sex, politics, religion, and thousands of other details that you don’t even recognize as information. Google knows it all. 

Google tracks your online behavior through its analytics tools and codes embedded on the web. 

And when your data and the data of millions of other users are combined, it turns into a gold mine.

Google uses this data to connect businesses to relevant buyer personas.

Google formulates target-specific ads for you and your category of users.

For instance, if you search “best books to read in the winter”, Google knows you are looking for a book. 

Google then tells booksellers that there is a potential buyer(YOU) for their product and gets bids for the ads.

Google shows the winning bid to you as an ad on Google Search. If you click on the ad, google gets money from the business.

And Google generated revenue. Ads generate about 75% of Google’s revenue. 

Surprisingly, about 80% of searches made on Google are still not monetized, as per a report by Wedbush.

Identifying New Markets and Building Targeted Products

Google has access to a vast amount of data on user behavior, including search queries, website visits, and app usage. By analyzing this data, Google identifies patterns and trends that indicate new market gaps or opportunities.

Google tracks what users search for and how they interact with search results. By analyzing search trends, Google can identify topics or products that are becoming more popular and may represent a new market opportunity.

For example, if there is a sudden increase in searches for “vegan food,” Google may identify a unique market opportunity in the plant-based food industry.

Google analyzes the collected data and looks for trends. When they recognize a sensation of pain points, they build a product or service to capitalize on that market gap. 

This new market unlocks monetization opportunities.

Improving Existing Products

Google also uses data to identify gaps to improve existing products or services. By analyzing user feedback and usage patterns, Google can identify areas where users are experiencing frustration or difficulty. 

But do Google’s top-of-the-line products need further improvement?

Always YES. People and their usage patterns modify pretty fast. To keep up with potential issues, Google is always on the lookout for even minor trends of pain points. 

If Google were a person, they would be an overthinker. 

Does Google Sell or Rent Out User Data?

The answer is NO, but the analogy is twisted. 

So, Google does not directly sell or rent out its acquired data. But they let their advertisers use the reports of anonymized and analyzed data to better understand their target audiences.

And that’s how Ad Targeting works.

Building a Brand and also a Community around it

Positive Brand Image

Google has surrounded its brand image with an ‘Air of Positivity.’ The free services Google offers are a significant contributor to that brand image. 

For instance, on the contrary, Facebook has unintentionally developed a negative brand image. The data breach cases, quick monetization tactics, inactive policies regarding copyright infringing content, its latent love for hateful-sensational content etc., have gained Facebook a negative impression. 

But, unlike Facebook, Google has always played the long game; not monetizing on the first chance has made Google a lot of fans.

It’s not that Google does not monetize its services. It does but in a multi-step process. These multi-stepped monetization processes give users the impression that Google’s services are FREE.

Along with the free services, Google rarely displays ads on Google Workspace products. This paints a generous picture of Google for the users.

Free Organic Marketing and Advocacy

‘Free positive advertising’ means organic reviews and referrals. This helps them cut down their customer acquisition cost. 

Google’s major user acquisition occurs through Word of Mouth advertising. 

If you do not know what Word of Mouth(WOM) advertising is- 

When one of your users talks positively about your services and their experience with them during personal conversations or on the Internet. WOM is highly effective due to its organic nature. 

People primarily trust their friends, family and sometimes others with personal experience on the Internet. 

In a world where compliments turn into a sales pitch in the blink of an eye, Google’s free products earn them brand loyalty, if not more. 

For instance, let’s say you use Google Maps for the first time. You are very likely to think, “Oh! This is a great app!!, let me try other Google products as well.” While you use their services, Google ensures you have a great experience. 

This has earned Google a humongous community advocating for its services and products. Even the fact that businesses have set themselves up on Google’s Workspace tells a positive story. 

Google’s community promotes Google and acquires further users.

Increased Users and Engagement

For all the obvious reasons, Google’s free products increase the number of users it sees every month, increasing the engagement with the products, which then, down the line, gets turned into reports about user experience and engagement. 

These reports then further help improve Ad Targeting. 

Competitive Advantage

Google’s strong brand and community have played a significant role in creating a competitive advantage for the company.

According to Statcounter, as of April 2023, Google is the dominant search engine globally, with a market share of over 90%. Its closest competitors, Bing and Yahoo, have a combined market share of less than 5%.

With its strong brand for high-quality search results, Google has solidified its position as the market leader in the search engine industry.

Their search algorithms are constantly updated and refined to provide users with the most relevant and helpful search results, which maintains user loyalty, drives revenue growth, and keeps competitors off Google’s back.

Acquire Now, Monetize Later

An “Acquire Now, Monetize Later” business model focuses on acquiring a large user base and building a solid brand before attempting to monetize its product.

This strategy is highly used in the tech industry where user acquisition cost is very high. Offering “free” products with a high customer retention rate is undoubtedly the best way to penetrate the market and boost the user base. 

Goooooogle does the same. They urge people to use their top-of-the-line products for FREE. They let businesses take their sweet time to grow around their products, and in the meantime, Google’s products also grow into the businesses they are hosting.

Freemium/Subscription-based Products

Now that businesses are dependent on Google’s services, Google wants these businesses to buy premium services when they can afford them. Google builds and uses loyalty to promote businesses that grow around their services. 

Once the small business is ready to pay for advanced services to operate further, it will likely opt for Google’s premium plans. For three major:

1. Their whole business is set up on Google’s workspace, it will be a pain in the ass-ets to migrate it elsewhere.
2. They have been using Google’s services long, so they are more productive and fluent with them.
3. Google has built loyalty by helping small businesses grow under their workspace.

Google has an ecosystem that is super sync friendly and well-connected once a business gains the affordability of Google’s premium packages.

Display Ads

Google generates business from display ads on apps like Gmail and Google Maps through ad auction. In an ad auction, advertisers bid on the opportunity to display their ad to users using Gmail or Google Maps. The advertiser who bids the highest amount will have their ad displayed first.

Google charges advertisers based on the number of times their ad is shown (impressions) or clicked (click-through rate). The average cost per click (CPC) for Google display ads is $48.96.

To participate in a Google ad auction: 

1. advertisers create a Google Ads campaign along with a budget, then,
2. Google matches advertisers with relevant users based on their interests, demographics, and other factors, after that,
3. advertisers bid on the opportunity to display their ad to users.
4. the highest bidder’s ad is displayed to the user, 
5. Depending on the bidding strategy, Google charges the advertiser for the ad impression or click.

In 2022, Google’s advertising revenue was $257 billion, and display ads accounted for a significant portion.

Why prefer Google display ads over any other?

First of all, Google has better ad targeting than any other platform, and secondly, Google’s ad performance reports are way more insightful. 

But one reason that stands out the most is the Reach of Google’s display network. Google’s display network reaches over 90% of internet users worldwide.

Online Courses

Google offers a variety of online courses, both free and paid. These courses cover a wide range of topics, like:

• IT and software development: Dedicated to coding, building websites, and using Google’s cloud computing platform.
• Digital marketing: Where Google teaches you to use Google’s advertising platform, create content for social media, and measure the results of your marketing campaigns.
• Business: Learn how to start and grow a business, manage finances, and build a team.
• Personal development: Where Google helps you improve your communication skills, manage your time, and set goals.

Google’s Grow with Google initiative offers many free online courses, designed to help people learn new skills and advance their careers.

The most popular Google courses are:

Google IT Support Professional Certificate,

Google Digital Garage, 

Google UX Design Professional Certificate, 

Google Project Management Professional Certificate, 

Google Data Analytics Professional Certificate.

If you want to take a Google online course, check out the Grow with Google website. You will find a list of all of Google’s online courses and information on how to enrol.

All is cool, but here is how they generate business out of courses:

• Selling certificates: Google offers several online certification courses. Google charges a fee for these certificates, which is a source of revenue for the company. 
• Upselling other products and services: Google may upsell additional products and services to learners who take its online courses. 
• For example, if someone takes a Google IT Support Professional Certificate course, they are more likely to purchase Google Cloud Platform services. Because they are already familiar with the product, thanks to the course.
• Building brand awareness: When people take Google online courses, they are exposed to Google’s brand and its products. This can lead to increased adoption of Google’s products and services.

Google’s online courses also help to position the company as a leader in education and training. This can help Google to attract new customers and partners and improve the company’s reputation.

Google is not always looking to generate direct cash from its services. They are more inclined to generate business.

Run Targeted Survey Campaigns

Google has an enormous community built out of offering ‘free products and services’. They run targeted survey campaigns through their community and leverage the community to gather user feedback about their products and services. 

Google’s surveys come in different shapes and apps:

For starters, Google has a dedicated mobile application called Google Opinion Rewards. The app allows users to earn rewards for completing surveys. Google Opinion Rewards surveys are typically short and easy to complete, and they often ask about user experiences with Google products and services.

Google uses the feedback it receives from its community to improve its products and services. For example, Google might use feedback from its community to:

• add new features to its products,
• fix bugs in its products,
• improve the user experience of its products,
• make its products more relevant to users

Then there are YouTube surveys where YouTube runs surveys before videos to gather user feedback about the video, the channel, and the overall YouTube experience. 

The surveys typically ask questions about

• The video itself: How relevant is the video to your interests? How was the quality of the video?
• The channel: How do you rate the channel overall? Do you find the channel’s content to be informative or entertaining?
• The overall YouTube experience: How often do you use YouTube? What are your favorite features of YouTube?

The surveys are typically short and easy to complete, and they often offer incentives for completing them, such as a chance to win a prize or earn a discount on a product.

Now how does YouTube generate business from the surveys?

YouTube uses feedback to improve itself, which makes it more attractive to users. This, in turn, leads to increased users and viewers for YouTube.

They are also used to make ad targeting more effective. 

For example, if a user indicates that they are interested in a particular topic, YouTube now has a direct reason to bombard the user with content that is relevant to that topic. Those content comes with relevant-respective ads, which increases the effectiveness of the ads.

And Google generates business and money from those ads.

Referral Programs

Google has a few referral programs, which are used to promote businesses like Google Workspace, Google Cloud Platform, Google Play among many other. 

Google Workspace and Google Cloud Platform Referral Programs reward referrals. Referred users can get a free trial of these products, and the referrer can earn a commission if the referred person signs up for a paid plan.

On the other hand, Google Play Referral Program also reward referrals. But here users who are referred can get a credit to use on Google Play when they sign up, and the referrer can earn a commission if the referral makes a purchase on Google Play.

Google’s referral programs are a win-win for both Google and its users. Google gets more product users, and the referrer earns a reward.

My take

I have learnt about Google’s business model is that it is almost always a multi-step process. They don’t give in to quick monetization techniques. 

Google strongly believes in Inbound Marketing, and they always offer some form of value to its users before they urge them to make a purchase.

Google Buyer’s Journey is studded with lots of high-quality value, whether it be free products, courses, or referrals. Google puts a lot of emphasis on warming up the leads before prompting them to spend money.