How Google Works

Google has multiple ways of generating revenue beyond private investment or selling shares of its stock. Google uses several methods to partner with merchants and advertisers: Google Pay, Google Ads, Google AdSense and Google Analytics are some.

Google Pay (formerly Google Wallet and, before that, Google Checkout) is a service designed to make purchases easier for both the consumer and the retailer. On the consumer end, users create a free Google Pay account, entering credit or debit card numbers, which Google stores in a secure database. When the user visits a retailer with Google Pay, either online or in a brick-and-mortar store, he or she can use Pay and Google facilitates the transaction using a "virtual account number" — what Google describes as an "alias" for your real card number. Google doesn't charge a fee to the business or the consumer. With Google Pay in a real-world store, consumers can use their smartphones to pay, leaving their credit cards at home.

The main way Google generates its revenue is through a pair of advertising services called Ads and AdSense. With Ads, advertisers submit ads to Google that include a list of keywords relating to a product, service or business. When a Google user searches the Web using one or more of those keywords, the ad appears on the SERP in a sidebar. The advertiser pays Google every time a user clicks on the ad and is directed toward the advertiser's site.

AdSense is similar, except that instead of displaying ads on a Google SERP, a webmaster can choose to integrate ads onto a site. Google's spiders crawl the site and analyze the content. Then, Google selects ads that contain keywords relevant to the webmaster's site. Webmasters can customize the type and location of the ads that Google provides. Every time someone clicks on an ad on the site, the site receives a portion of the ad revenue (and Google gets the rest). Google Analytics is a powerful tool that tracks traffic to websites, enabling them to better understand who their users are and what they're after on their sites.

With both Ads and AdSense, Google's strategy is to provide advertisers with ad placements that are directly targeted to the Google users who are most likely to buy their products or services and to give users information that is most relevant to what they're looking for (which may include goods and services to purchase) [source: Google].

That relationship between users and advertisers is at the heart of the business of Google ... though Google's Nayak is quick to point out that users, still, come first.

"We believe If users get what they want, get what they're looking for ... then they're going to keep coming back to look for more things," Nayak says, "and we send more traffic to the Web and we keep the Web ecosystem healthy.