Revenue model for Google, Amazon.com and eBay

Google’s Revenue Model aims at increasing the visibility and traffic of its small business partners, streamlining their marketing costs, qualifying their leads and helping track returns on investment. Google mainly generates revenue by charging advertising fees and affiliate fees. Google’s revenue stream revolves around its pay per click program (PPC), AdWords and AdSense. Google owns a stunning array of popular search services that buffers it against lost market share in the flagship search engine. It is continually innovating and improving its revenue programs.

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AdWords

AdWords is Google’s main source of revenue which is a pay-per-click (PPC) advertising program, and site-targeted advertising for both text and banner ads. It allow the advertisers to present advertisements to people at the instant the people are looking for information related to what the advertiser has to offer. AdWords ads appear on the right side (and sometimes at the top) of Google search pages. Advertisers pay for their ad only when a Google user clicks on it. a

AdSense

Google earns most of its revenue by allowing other website owners to advertise on their search result pages or by placing these same text ads on other sites based on relevance. The goal of an AdSense page is to get visitors to scoot off the page by clicking an ad. When a visitor clicks one, the AdSense publisher shares the cost-per-click ad revenue with Google.

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PPC

Google.com is using the Pay-Per-Click model. It is an online advertising payment model in which payment is based on qualifying click-through.

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Amazon.com is one of the world's largest e-Commerce retailers, or etailers for short, of consumer goods. With sales several times that of its competitors, the company has achieved its status as the industry leader by adopting the concept of selling goods via the Internet's World Wide Web. The company presently enjoys significant brand, scale and capital advantages over its rivals. Amazon has many products such as books, music, video & DVDs, auctions, toys & games, consumer electronics, e-Cards, and zShop. Amazon will be able to consistently offer lower prices in relation to the traditional retailers. Amazon generates revenue model by sales, transaction fees and affiliate fees. Amazon.com will charge transaction fees on the sales and also affiliate fees on those who advertise in the Amazon website.

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eBay is an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. The vast majority of eBay’s revenue is for the listing and commission on completed sales. Thus, eBay generates revenue model by sales and transaction fees. For PayPal purchases an additional commission fee is charged. Margin on each transaction is phenomenal since once the infrastructure is built, incremental costs on each transactions are tiny – all eBay is doing is transmitting bits and bytes between buyers and sellers. Advertising and other non-transaction net revenues represent a relatively small proportion of total net revenues.

a As a conclusion, most of the revenues for eBay and Amazon.com are from sales and transaction fees. On the other hand, Google is earning from advertising the most. However, Amazon.com and Google also charges affiliate fees on those advertisers.

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Google

http://media.wiley.com/product_data/excerpt/35/07645714/0764571435-1.pdf

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Amazon.com

http://faculty.washington.edu/sandeep/d/amazonebay.pdf

http://www.rhsmith.umd.edu/faculty/jbailey/ents630/amazon.pdf

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eBay

http://faculty.washington.edu/sandeep/d/amazonebay.pdf

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