How Does Google Maps Make Money?

Google Maps makes money? But you and I never had to spend a dime when using Google Maps! Plus, Google Maps has always been so hassle-free. We are used to incessantly having to skip ads on YouTube but never had to close a single ad pop-up on Maps. Then how does Google use Google Maps to make money when it is not bombarding us with ads and has such an unassuming and smooth user experience?

Indeed, when Google Maps was initially released, it was completely ad-free. Even when it partnered with other companies or gave them access to its API, it charged much lower rates than it does now. However, Google is now actively squeezing more ads into its interface to generate more and more revenue. Even though it may not be obvious right now how Google is monetizing Maps because it is still doing so in a limited capacity, there is certainly some paid work going on!

In essence, Google is importing the same philosophy and business model that it has been using for its other platforms, into Google Maps. We’ll talk more about Google’s business model in detail soon as that is key to understanding how any Google platform generates so much money without directly charging users for its services.

How much does Google Maps make?

This we do not know accurately as Google never discloses it. However, we can manage a guess based on expert estimates that it makes around $4 billion a year as of now, and the amount is scaling up fast!

Google’s interesting business model- “hidden” revenue!

Why is Google’s business model so interesting? Typically, we pay for services we use. But with Google’s model, the user doesn’t pay a penny for its services. The world’s information at our fingertips, and all for free!

So who does pay Google?

Google mainly uses advertising to generate its huge amounts of revenue! Third party companies, businesses, and people pay Google to advertise their products and services on its platforms.

It’s no surprise that Google earns skyscraping AND skyrocketing revenues every year, because of the sheer volume of traffic that it attracts. Advertisers choose Google because such a large volume of people use it, everywhere and all the time! So with everyone looking to advertise through Google, Google is earning a great deal of money.

You can see now why this is called a “hidden” revenue business model. On the surface, users do not need to pay anything! Instead, third parties pay Google for advertising.

Examples of customers who use Google for advertising are:

  • Amazon! Oh yes, Amazon advertises on Google too and just imagine the revenue Google must be generating from the biggest global advertiser and other similar large businesses!
  • Advertising and marketing agencies
  • Medium and small businesses

Google Ads and Google AdSense explained

Google Ads (previously known as Google AdWords) is Google’s online platform where advertisers (different type of businesses and individuals) pay to advertise. It is like an auction where advertisers bid on keywords for their ads to show up in Google searches.

Whenever a user clicks on an ad, Google charges the advertiser for that click. CPC is the Cost Per Click that an advertiser has to pay. It is determined by how much you bid, the quality of your business and the competitiveness of the keyword you wish to rank for. If you bid larger amounts, and your business has a good reputation, you will rank higher in ad rankings and your business ad is more likely to show up right at the top of the Google search results page.

 

Google AdSense is Google’s ad network that allows publishers (website owners, bloggers etc.) to place ads on their site, and earn a share of the profit Google earns from advertisers.

Google Ads and AdSense are thus integrated with each other.

So, in summary, here’s how this cycle works:

  1. Users search on Google, and visit websites
  2. Users click on ads
  3. Google charges the advertiser for every click and makes good money
  4. If you are a publisher who allows ad placement on your website, you get a share of what Google earns every time a user clicks on an ad on your website.

This is a very smart move by Google, because even though they must pay publishers for every click, the total amount of traffic that they can direct to ads, and the total number of ads that they can display increases dramatically. With the huge added profits it makes, Google doesn’t mind splitting part of its revenue per click with content creators in return. The same model applies to YouTube. YouTube creators get a chance to make money by allowing Google to play ads during their videos.

You must have also noticed how this advertising has blown out of proportion in the past few years. Once upon a time, YouTube used to be nearly ad-free, and we could watch videos almost undisturbed. Now the ads keep coming every few minutes and the amount of “must-watch” time before you can actually skip the ad is also increasing!

This is Google’s smart advertising model, and you should keep this in mind when we talk specifically about how Google Maps makes money in a while.

What other ways does Google use to make money?

Although 88% of Google’s revenue comes from advertising, the remaining 12% is generated by other streams such as Google Cloud, which earns through a subscription-based model. Google is also acquiring other companies and hence increasing its sources of revenue. For example, YouTube was acquired by Google in 2006. Fitbit was acquired recently in 2019. Moreover, Google also earns through e-commerce and app sales too.

 What is Google Maps?

Now that we have discussed Google’s business model in general, let’s talk about Google Maps in detail. Google Maps is undoubtedly the best mapping service in the world. It has no significant competitor in its league. It is such a precise, detailed, and all-knowing mapping service that it is loved by every user. Some of the cool features that Maps offers include:

  • Browsing it like a normal map
  • Searching local businesses, places, and landmarks like restaurants, outlets, tourist spots, hospitals and shops- you name it!
  • Finding routes, estimating traveling time, and using it for navigation. Recently Maps has become so advanced that it offers information on traffic density on roads in real-time. So you can avoid taking routes that may be congested.
  • Location sharing in real-time
  • Features like Street View and Live View
  • If you own a business, you can get your location added on the Map, so people can find you easily.

How does Google Maps make money?

Google Maps has two main revenue streams:

  1. Advertising (you guessed it!)

We’ve already said a few words about Google’s business model and how it uses advertising to make money. Well, Maps is no exception.

We mentioned above that Google Maps has a search feature that lets us look for places nearby or in a certain locality. For example, you search for “hotels” and results will show up (just like Google’s search engine results) with a list of hotels in the area. And just like in a regular Google search, the paid ones or “ads” will show up right at the top. So businesses can pay to have their physical outlets show up first on Google Maps too. The ads are differentiated from the organic (unpaid) search results by a tag which says “Ad”.

Recall Google Ads and the CPC (cost per click) that we talked about. Ads that show up in Google Maps searches are also linked to a business’ Google Ads account. Whenever a person clicks on the ad, Google charges the advertiser a certain amount. And that’s how Google earns through Maps!

Although Google Maps has started to focus more on monetization through ads, it is taking it slowly, to see how users feel about the change. That’s why you and I are not yet being bombarded with ads and pop-ups like we put up with on YouTube!

Rajas Moonka, Google Maps’ Director Project Management said:

“We’ve been pretty careful about not being very aggressive about how we present those [ads] to users because we don’t want users to feel like we’re overloading the experience.”

But there may come a day when Google Maps is flooded with ads too, so be warned!

If you own a business and want to add your location to Google Maps and then advertise your business too, we will go through the simple steps briefly in this article at the end.

  1. Partnerships and sharing Google’s API with businesses

Google Maps is the best mapping service and has an amazing interface. It could be of great use to other business too like ridesharing and tracking companies, and many are certainly willing to pay to be able to use Google Maps’ API.

Recognizing this, Google allows businesses and developers to access and integrate the Google Maps infrastructure into their applications. And in return, of course, Google charges them. Recently Google has increased its charges for sharing its services.

Did you know that Uber and Lyft both use Google Maps’ API? They are the two most prominent companies that Google has partnered with. Uber was estimated to have paid $58 million to Google for its mapping services from 2016-2018. Although these are Google Maps’ two biggest partners, there are many other smaller businesses that Google sells its services to as well.

Another way that Google Maps makes money

Although the above-mentioned sources are Google Maps main revenue streams (advertising being the biggest by far), there are other small ways that Google Maps is making revenue.

Custom Pins

You know the red pin markers that show up on Maps? Businesses can have their pins customized so that they show up with their unique logos and stand out. Google charges businesses for this feature.

“Turn right after the Burger King”- An advertisement trick?

As a new addition, many people have shared their experiences hearing the Google Maps navigation system giving them directions with respect to specific businesses and landmarks! Google however says that this is not part of its advertising business, and this is just to make the user experience better and more fun. However, people were a bit skeptical that this could be have been an advertisement trick!

How can I add my business to Google Maps and advertise it?

Now if you are a business owner and want to make your ads show up on Google Maps, you need to follow these simple steps. First, to add your business to Google Maps:

  • Go to “Google My Business” and press “Start Now”
  • Type the name of your business into the search box and see if it is already listed or not. If it is, click on the existing entry, otherwise click the “create a business with this name” option.
  • Next enter your business’ location, category, contact details, and finally, finish and ask Google to verify your business. Once Google sends you your verification PIN, enter that into your Google business page and you’re done!

Now that you have setup your Google My Business listing, you can show ads on Google Maps too. For that you have to:

  • Go to your Google Ads account and enable local extensions. If you do not have a Google Ads account, set up one first. No advertising without Google Ads!
  • Bid for the location or area that you wish to target. If your ad ranks high enough, whenever a user searches for businesses of your type in the area, your business ad will show up on top of the search.
  • Focus on your keywords: You will have to optimize your keywords for location too now. So whenever you are promoting your business, use location keywords and other things people usually search for nearby.

In conclusion, where is Google Maps headed?

With Google focusing more and more on monetization, the revenue it is earning through Google Maps is growing fast. So much so that Morgan Stanley estimates that in 4 years, i.e. by 2023, Google Maps revenue will have gone beyond $11 billion!

As of now, Google Maps is considered to be “under-monetized” compared to other heavily monetized services like YouTube. But Google is looking for new smart ways to monetize Maps and there may be even more interesting paid features coming up soon. Google is surprising us with better and more every day and is growing stupendously not just as the most loved information provider for users, but as a business too. It’s monetization strategy is certainly one of the best and smartest in the world!

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