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How Google
Earns 99% Of It's Revenue: From You!
Can You Earn
99% Of Your Revenue From Google?
The 80-20 Rule
In the real
world we are all familiar with the Pareto Principle (also referred
to as the 80-20 rule). Vilfredo Pareto, an Italian economist,
noticed that 80% of income in
Italy
was received by 20% of the Italian population. Soon this 80-20
rule was being applied to almost every business application,
allowing business to focus on the 20% of items that result in 80%
of the revenue.
The New 99%
Rule
On the
Internet, as things often are, the Pareto Principle gets
amplified, as in the case of Google (and Yahoo!). Google earns 99%
of its income from one source - pay per click revenue. That's it.
Pay per click is the driving engine behind all of Google's frenzy,
glory and revenues.
If you stick
with me for just a bit, I can share with you how this impacts your
mortgage web site...
Google's Pay
Per Click Ads
When you use
Google for a search, there are two main sections that appear in
your results. First, and foremost, are the web results, which
appear at the left of the page, and occupy about 80% of the page.
The pay per click ads (called Google AdWords) show on the right
hand side of the screen after you do a search query. These results
are in a narrow column, with the words "Sponsored Links" above the
column. Every ad in the "Sponsored Links" is paid to be there.
What is Google
AdWords?
Google AdWords
is how mortgage companies, and others, purchase highly targeted
pay per click advertising. Such targeted keywords can include: San
Diego Home Loans, Long Island Mortgages, Redmond Home Refinancing,
Palm Springs Second Trust Deeds, etc. This type of targeting
allows a mortgage company to receive exactly what they want...
home loans but no subprime loans, refinances but no VA loans,
commercial loans but no farm land.
So, just how
do these targeted visitors (who want to be your customer) get to
your company. Let's go back to Google.
58% plus 41%
equals 99%
Investors.com
reported that, "As of the end of the March quarter, Google derived
58% of its sales from paid search advertisements on its own Web
sites. It generated another 41% from its distribution partners,
which include content sites and other search engines." A quick
math check shows the sum of 58% plus 41% equals 99%. In short,
virtually every penny that Google earns comes from pay per click
ads.
Google
Distribution Partners
Google
skillfully created their massive income by having advertisers
(i.e. mortgage companies) pay for ads, and then besides showing
the results at Google.com, they also use "distribution partners."
The
Investors.com article further stated, "Excluding the payments
Google makes to its content-distribution partners, revenue leaped
92% to $1.53 billion, above analysts' expectations of $1.47
billion." There is a hidden qualifier in that statement...
"Excluding the payments Google makes to its content-distribution
partners." |
Targeted
Local Traffic For Mortgage Companies
One of the
reasons the Google Content-distribution program works so well
for local mortgage companies, is that Google delivers "local
ads." In example, if a site is about schools and real estate in
San Diego, the Google bots have "indexed" the page and knows to
deliver "San Diego Home Loan" ads, not "Dallas Home Loans." This
highly targeted ad causes visitors to the sites to be more
likely to click on the ad, thus benefiting not only the viewer,
but the mortgage company and Google.
Even My
Teenager Content-Distribution Partner Site Delivers
Highly-Targeted Mortgage Leads
Content-distribution partners are the places where Google ads
appear, besides the Google site. In example, my teenage daughter
is a content-distribution partner for Google. Certain pages of
her site are city specific and can result in real estate and
mortgage leads being generated by her visitors. This also
benefits my daughter as she has about 60,000 unique visitors a
year and earns monies from Google for allowing her visitors to
see, and click upon, the Google ads.
Besides the
impact from my daughter’s site, Google also receives "sales"
from content-distribution partners such as the Washington Post,
Amazon, AOL, AT&T Worldnet, EarthLink and the New York Times.
Google Chief
Financial Officer George Reyes states that the continued
addition of new publishers participating in Google's AdSense for
Content program was "significant" in driving sales growth.
Home Loans
vs. Salads
The amount
paid to be listed varies on the competitiveness and on the value
of on the keyword. Generally, financial or money-related terms
tend to generate higher bid amounts. In example, the top five
bids for "Home Loan" currently range between $5.02 and $5.83 per
click, while there are only a few bids for the term "Salad" and
they are between $0.10 and $0.11 per click. Even a highly
searched keyword like "Jessica Simpson" has a top bid of just
$0.12 per click.
Furthermore,
money related domains frequently have even higher bids for
highly targeted searches. Again, the top five bids for "Home
Loan" currently range between $5.02 and $5.83 per click, while
the top five bids for "Nevada Home Loan" range between $5.99 and
$7.01 per click. The top five bids for "New York Home Loan"
currently range between $5.13 and $6.25 per click and for "Miami
Home Loan" the range for the top five bids are from $5.00 and
$6.88.
If a visitor
clicks on one of the pay per click ads from the Google.com site,
then Google keeps 100% of the amount of the click. If a visitor
clicks on one of the pay per click ads from a distribution
partner, then Google pays a portion of their earning to that
partner as a commission.
What Does
All This Mean For Your Mortgage Company?
Given the
expense of advertising mortgage services, you can highly target
which “exact visitors” you want to see your ad. And exclude all
other visitors outside your geographical location or exclude
those seeking a mortgage related service that you don't provide.
So Google
may earn 99% of its earnings from companies like yours, but you
in return can earn a substantial amount of your revenue from
Google by buying pay per click ads for highly targeted keywords.
************************************************************* Rod Aries and Robert Farris are co-founders of MortgagePromote.com, a leading Internet marketing provider to corporate mortgage clients. Web site: www.mortgagepromote.com
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