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Wednesday, July 24, 2013

Ask Matt: Is Google a tech or ad company?

Story Originally Appeared in USA TODAY

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at

Q: Is Google an advertising company or a tech company?

A: It can be difficult sometimes to decide what label to put on a company. That's why investors need to follow the money.

While Google might get attention for some of its technology gadgets, including Google Glass, the company is by far an advertising company first and foremost. Google gets its money by tracking its users and using the data it collects to sell targeted ads to companies.

The numbers tell the story. Last year, Google hauled in total revenue of $50 billion. Of that, a majority, 60%, came from selling ads for the desktop search product, says researcher After Google's desktop search business, the next important was mobile search advertising, at 13%. That's not to mention the ad-driven YouTube business, at 8% of revenue.

The rest of Google's business drops off pretty quickly after the core advertising business. The next largest is Google's interest in Motorola cellular, which accounts for 11.8% of its business.

Analysts expect Google, which is an ad company today, to remain one. By 2015, Trefis estimates that 49% of the company's revenue will be from PC search ads, and 23% from mobile.