Where Google Really Makes Its Money

wordstream.com

15 points·funthree··4 comments

Maybe I'm missing something but the title seems to imply that Google makes most of it's cash from the very top keywords, but I don't see any evidence of that.

Anyway, very interesting what the top keywords are. Does anyone know why "cord blood" is so expensive? A close friend is involved with a cord blood bank and I know there's great potential in cord blood, but I'm not sure why it's such an expensive keyword.

The point here is really about what you might call advertising economies of scale -- if one good nets its producer $10 per sale and another $100/sale but the price and effectiveness of advertising are the same, it's much more exciting to advertise the second than the first. Google is segmenting these markets in a way that newspapers and tv can't: only one person can buy the top keyword per search, so while TV advertising is wall-to-wall insurance, loans, and cars, the same phenomenon expresses itself in google terms through high-priced keywords.

As to cord blood:

http://en.wikipedia.org/wiki/Cord_blood

claims that

"The cost of private cord blood banking is approximately $2000 for collection and approximately $125 per year for storage, as of 2007."

which sounds to me like a pretty high-margin (in dollar terms) business, hence the attractiveness of advertising.

I find it hard to believe companies pay Google $55 per click and that is in any way profitable for them. There must be more +EV opportunities out there for advertising. But I'm probably mistaken as usual.

This is awesome tip for smart web entrepreneurs looking for new startup ideas.

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