How Does Google Maps Make Money? Business Model of Google Maps


How Does Google Maps Make Money

Google Maps is one of the most popular map and navigation services. Google Maps make money in the same way many other Google services make money.

Google Maps primarily makes money via advertising. They also make money by selling commercial APIs that developers can integrate into their apps and from referral fees.

Launched in 2005, Google Maps started as a program designed by Lars Eilstrup Rasmussen, Jens Eilstrup Rasmussen, Noel Gordon, and Stephen Ma at a company called Where 2 Technologies. While the navigation service was initially designed to be downloaded by users, they pitched a web-based version to Google.

Google, also known as Alphabet, acquired their company in 2004, and that technology later became Google Maps. Google then integrated technology from a company called Keyhole, a geospatial data visualization app, which they acquired the same month. That company became Google Earth, whose data was later integrated into Google Maps.

Finally, Google also acquired a company called ZipDash which provided real-time traffic analysis to include that functionality in the app. Google has consistently improved the functionality of Google Maps via acquisitions and internal research and development ever since.

What is Google Maps & How Does It Work?

Google Maps is the most used global mapping and navigation application. They offer a desktop version, as well as iOS and Android app versions. Google Maps has over 1 billion active monthly users who use the service’s ability to give driving directions for 27.9 million miles of road in 194 countries.[1]

The app offers individual users a number of helpful functionalities. The most used is Google Maps’ directions. Users type in their desired destination and get offered three routes to choose from with estimated travel times based on current and projected traffic conditions. Google provides users with time estimations and routes based on whether they’re driving, public transit, walking, or biking.

Users can then look over the map to understand the directions or request that Google Maps provide them with voiced turn-by-turn directions. As Google Maps has GPS to triangulate a user, it can gives real-time directions to make it easy to get to a location they’re not familiar with. It also recommends popular local attractions and allows users to save favorite locations or create lists of trips.

For those taking transit, Google Maps has partnered with a number of transit providers. These organizations have adopted General Transit Feed Specifications (GTFS) that provides real-time updates around vehicle locations and routes. This allows the company to map out transit routes and give estimated times of arrival based on schedules and vehicle locations.

Google Maps also integrated traffic data into their app. They automatically crowdsource traffic data from people who have the app downloaded on their phone. They can then estimate in real-time when there is a traffic delay on a road. The app then changes the color of a roadway to represent that there is a current delay with red indicating heavy traffic.

Another innovative feature Google Maps provides is Google Street View. The company sends out vehicles equipped with camera equipment to record locations around the world to add to the app. Users can then select street view and see a 360-degree panoramic view of various locations.

While many enjoy this feature, it sparked concerns about privacy. Google responded by blurring faces and license plates. Individuals can also request that their house be blurred out of Street View.[2]

Google Street View has also started mapping non-traditional locations like college campuses, indoor in public buildings like airports, shopping malls, and museums, and underwater wonders like the Great Barrier Reef.

In 2022, the company announced that they would begin creating an Immersive View that would provide 3D images of cities.[3] They have released Immersive Views for Tokyo, London, Los Angeles, New York City, and San Francisco to date. The company also provides 45 degree views via aerial imagery, also known as a bird’s eye view.

Some other features include things like Google Local Guides which allows users to contribute things to the map like reviews, videos, and accessibility information. The application also released something called Earth Timelapse in 2021. This functionality allows people to see how much the earth has changed in the last 37 years.

Google Maps also offers a number of functionalities for businesses and organizations. For example, companies can create business listings that are integrated with Google Maps. These listings include things like their address, website, phone number, and photos. Over 200 million businesses and places are listed on the app.

Companies can also pay for pins to represent their location on the app. Companies can even allow customers to book appointments directly on Google Maps.

Google also sells their Google Maps API to businesses that want to integrate it into their website and or their app. Companies can then give their customers and users a map and navigation service without having to design it themselves.

 

Business Model of Google Maps

Google Maps has a similar business model to most other products that Google creates. It’s designed to generate advertising revenue. By providing an invaluable service to users, Google creates a captive audience for ads. It also seamlessly integrates advertising within the app via business profiles and pins.

Google leverages its high user count to get companies to advertise with them or create profiles on Google Maps. This helps them generate money via targeted localized advertising.

Additionally, Google Maps is in the data business. The app collects a variety of different types of data from users including traffic data and location data. This data helps the company better target ads to consumers. This first-party data is incredibly valuable to the company and can be integrated with data it collects on users from its other services such as its search engine or Google ads to also target adds on its other services.

While Google claims they don’t directly sell your data to third-party companies or data brokers, it shares data with its advertisers through real-time bidding auctions for ad placements. It also sells things like traffic data gathered from individual users to companies when it sells its API.

By creating a rich map and navigation tool, the company can generate a significant amount of revenue by allowing companies to integrate the technology and data into their own applications. This allows companies to access things like elevation data, street view imagery, static maps, or dynamic maps.

It also allows them to provide directions, calculate travel times and distances, and identify roads. Companies can also use Google Maps’ geocoding capabilities or geolocation capabilities. These companies can either integrate all of these features or pick and choose only the ones they need.

Google gives companies a trial in order to experiment with their technology and then charges based on things like maploads with different amounts based on the types of navigation feature or tool that is being used.

Google has also monetized Google Maps in other ways. For example, after acquiring Fitbit, the fitness watch manufacturer, the company is incorporating its mapping and navigation service into the watches. This integration adds value to their smartwatches.[4]

Google has a number of competitors. When it comes to mapping and navigation competitors, apps like Apple Maps, Pocket Earth, and Bing Maps stand out. However, Google Maps is currently the market leader.

The company also has other advertising competitors. Companies like Facebook and Amazon compete with the company for ad revenue.

With both businesses, Google has a significant advantage that discourages competition. Google Maps has made substantial investments in their technology. This includes via acquisitions. Google has acquired companies like Waze, Urban Engine, and Picasa and integrated their technology into Google Maps.

The decision to acquire Waze was also potentially because the traffic monitoring company was becoming a competitor to its mapping service. Google Maps could very well buy out any new competitors entering the market. Very few companies would be able to keep up with the level of investment Google can devote to Google Maps.

For example, Google has a fleet of cars and staffers who drive through locations around the world on regular cadences in order to update street view maps of those locations. Any upstart mapping company would need to make significant upfront investments in order to compete.

Despite likely being a significant revenue generator for Google, Google Maps also has substantial expenses. In addition to their mapping expenses, the company generates satellite images, and has substantial development and hosting costs.

While Google does not break down it’s revenue by each of its individual services, the company brought in $257.6 billion in revenue in 2021. After expenses, that equaled a net income of $76 billion.

It’s unclear how much of that is attributable to Google Maps. However, some have estimated that it is in the billions with Morgan Stanley suggesting the company likely made $2.95 billion in revenue from Google Maps in 2019. [5]

 

How Does Google Maps Make Money?

Google Maps makes money in three different ways. These include advertising, selling a commercial API that developers can integrate into their apps, and referral fees.

Google does not break down the source of their revenue by their apps or services so it is unclear how much the company makes via any of these revenue streams.

Advertising

Google leverages Google Maps to sell advertising in a number of different ways.

Here are some examples:

  • Local Search Ads: When customers search on the desktop or the app for a business type or location a company who buys local search ads will appear at the top of the list. The customers can then click to get directions, to learn more about the company, or to make a direct call to a business.
  • Promoted Pins: These are ads served to people browsing an area of a map on Google Maps. Companies pay to have a bolded pin pop out with details about their business. This creates increased visibility for people in the area and allows customers to find a company’s location more easily.
  • In-Store Promotions: A company can also purchase ads to run on their Business Profile that tell customers if there is a promotion currently running at their store. For example, a company could buy an ad advertising a 10% off sale.

Google charges on a cost-per-click basis, which means that companies pay Google whenever a user clicks on their ad. How much Google charges for each click depends on the topic and business type. Google sells ad placements via bids. If there are multiple local businesses looking to serve an ad for a keyword, then Google give it to whomever is willing to pay the most for a click.

Google has also sometimes calls out companies in their driving directions by telling drivers to turn at a branded restaurant up ahead rather than saying the street name.[6] These could also be paid placements.

 

Google Maps API

Google Maps sells its technology to companies who want to integrate it within their websites or apps. APIs are a relatively cheap way to cut down on development costs since companies don’t have to build their own navigation or map feature from scratch.

Google sells their Google Maps API based on usage, which they measure in maploads. This means the number of times users of the company’s apps use the maps. However, the company charges different rates for usage based on the kind of feature.

Here are some of the things they sell and their prices:

  • Static Maps: These are maps that don’t change as things like traffic change or allow you to route plan. The company charges $2 per 1,000 maploads.
  • Dynamic Maps: These are customizable and interactive maps that provide real-time updates. The company charges $7 per 1,000 maploads.
  • Static Street View: The company sells street view panoramas or thumbnails for integration in a website or app. These are for a defined location only. The company charges $7 per 1,000 maploads.
  • Dynamic Street View: Google sells the ability to look at street views and move around to different locations. The company charges $14 per 1,000 maploads.
  • Directions: This feature gives directions to users between different points on a map. They charge $5 per 1,000 maploads.
  • Directions Advanced: This is a more advanced version of Google’s directions. They charge $10 per 1,000 maploads.
  • Directions Matrix: This option allows developers to include travel time and distance in their directions. They charge $5 per 1,000 maploads.
  • Directions Matrix Advanced: This is a more advanced option involving adding travel time and distance to directions. They charge $10 per 1,000 maploads.
  • Roads: This is an option that allows developers to add roads to their maps. They charge $10 per 1,000 maploads for this.
  • Geocoding: This feature converts addresses into coordinates. They charge $5 per 1,000 maploads.
  • Autocomplete: This feature helps users quickly find what they’re looking for by suggesting businesses as they type. They charge $2.83 per 1,000 uses.
  • Place Details: This feature adds rich details about places to your maps. They charge $17 per 1,000 maploads.
  • Find Place: This feature allows users to search for places via text-based search. They charge $17 per 1,000 searches.
  • Place Photos: This feature includes photos of places on the map. They charge $7 per 1,000 maploads.
  • Current Place: This feature tells users where they currently are and allows them to get directions from that location automatically. They charge $30 per 1,000 maploads for this feature.
  • Geolocation: This feature returns a location without using GPS. They charge $5 per 1,000 maploads.
  • Time Zone: This feature integrates time zones within the maps. They charge $5 per 1,000 maploads.

 

Referral Fees

Google Maps has negotiated partnerships with a variety of different companies and gets referral fees when users access those services from their app. For example, Google has a partnership with Uber and Lyft.

Google Maps can recommend taxis or ride-sharing services in-app to people looking for directions. If a customer clicks and uses a partner service they arrived at from the app, Google earns a referral fee.

 

Funding, Valuation & Revenue

Alphabet Inc (GOOGL), also known as Google, is a public company listed on the NASDAQ exchange. Google Maps is a service that Google operates. For that reason, it is unclear what Google Maps’ valuation might be outside that of its parent company. As of August 2022, Alphabet had a valuation of $1.45 trillion. However, some have estimated that the service could be worth as much as $11 billion by 2023.[7]

Google Maps never had to raise funds since it was always a part of Google. But Google has spent a considerable amount on acquisitions related to Google Maps. For example, Google bought the traffic app Waze for $1.1 billion in 2013.[8]

Alphabet has grown its revenue and income considerably in recent years. In 2021, the company generated $257.6 billion in revenue, which resulted in a net income of $76 billion. That was a significant improvement over 2020, when the company generated $182.5 billion in revenue and made a net income of $40 billion. It is unclear how much of that income came from Google Maps.

YearTotal RevenueNet Income
2019$161.8 billion$34.3 billion
2020$192.5 billion$40.2 billion
2021$257.6 billion$76 billion

 

Is Google Maps Profitable?

Google Maps is likely profitable. However, it is unclear just how profitable the service might be since Alphabet, Google Map’s parent company, does not break down its revenue or expenses by the company’s different services. However, Alphabet made $76 billion in net income in 2021, which was up from $40.2 billion in 2020 and $34.3 billion in 2019.

While Google Maps likely has significant expenses, there is good reason to believe that the service is profitable based on the many effective ways Alphabet monetizes it.

 

Conclusion

Google Maps is one of the most popular mapping services on the market today. It has a lot of competition, but with its wide variety of features and its ability to leverage user data to make the product better, it’s no wonder that Google Maps is so popular.

The future outlook of Google Maps looks very promising with its recent updates and new features being released every year. We can expect more improvements in the near future which will only add to the already great experience that Google Maps has to offer.

In the future, we think we will see more of this kind of technology being used in different areas, such as self-driving cars, which are becoming more common. The software that powers these cars has to be very sophisticated in order to make routes, detect obstacles, and avoid accidents.

We hope that this blog post has been helpful to you. We’ve seen how Google Maps has grown from a simple idea into an essential part of our lives, and we want to see it continue to grow and thrive.

If you have any questions about anything we talked about in this post, please feel free to reach out!

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Sources

  1. Google
  2. Mashable
  3. Google
  4. Extreme Tech
  5. Skift
  6. TechCrunch
  7. Skift
  8. TechCrunch