How Search Engines Make Money (and Why It Matters)

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We’ve just launched a new eBook, SEO 101: The Basics (and Beyond). We’ll be serializing bits of it from time to time, beginning with this excerpt from Section 1. If you’d like to get the whole book right now, just click here.

How Search Engines Make Money (and Why It Matters)

There are two kinds of search results:

  • Organic results are “natural” results. Search engines attempt to return the web pages most relevant to the search query, and rank results according to perceived value derived through complicated algorithms.
  • Paid results – so-called pay-per-click (PPC) ads – are placed by advertisers (or third-party advertising networks) and displayed according to a formula that includes how much the advertiser is willing to pay, how relevant the ad is to the keyword, and the quality of the landing and not

Search engines make money by getting searchers to click on ads. These ads are displayed both on the search engine results pages (SERPs) and on ad networks they are associated with. Just as with any other medium, the more people that use a specific search engine, the more advertisers are willing to pay for their ad to run. Search engines are extremely vested in providing the best, most relevant organic search results – every single time. It’s the only quality that makes them sticky, and the only competitive edge that matters in their business model. Their market share will always be fragile, as there’s a very low barrier for the user to switch search engines. If a searcher doesn’t trust that the search engine they’re using provides the best results, they just visit a different one and repeat their search. This erodes the search engine’s user base, which means fewer searches to serve ads against… and lower rates for the PPC ads.

All of the major search engines are working very hard to increase the quality of their organic results. For example, Google typically makes between 500 and 600 algorithm changes each year. The majority of these updates are fairly minor, just small feature improvements or minor tweaks to how Google ranks a site. As an example, Google update #82580 was an improvement for showing the sunrise and sunset times search feature.

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There are a few major algorithm updates each year that have significantly wider impact. These algorithm changes are generally named, and are always focused on improving a searcher’s experience with the organic results. This usually involves improving Google’s ability to detect web pages that deliver a bad experience or are trying to trick the search engines into ranking them better.

In 2012, Google had two major algorithm updates:Panda by Stay Harvey Cc 2.0 6PNS219687343_fd080ab34c_z

  • Panda, which was designed to lower the rank of low-quality sites, advertising-heavy pages, and duplicate content. You’re probably safe from the impact of Panda if you publish high quality, original content that people want to read
  • Penguin, which looks for link spam and devalues it. There is minimum risk to your site from Penguin if you publish high quality, original content that reputable sites want to link to (and you do not buy links of any kind for “traffic value”). Again, the search engines are tightly focused on providing the best experience for the searcher so that they can become (or remain) the engine of choice, grow their traffic numbers, and charge more for advertising. This works in your favor if you optimize your site and content to deliver what people want to find.


So what’s the absolute bottom line? The search engines look very hard to find the most correct, authoritative content to fulfill a searcher’s request. That’s the only method they have to get the traffic that generates their primary income. You up your chances of ranking well if you focus on creating the kind of content people search for, and optimize it straightforwardly so that search engines can find it with the search terms people are likely to use.

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Panda by Harvey Barrison used under a Creative Commons 2.0 license.