Google Maps is a web and app-based mapping platform that offers aerial photography, satellite imagery, terrain data, street maps, route planning, and real-time traffic information.
Google Maps is an immensely popular platform. In the United States, there are approximately 154 million active monthly users with this number increasing to well over 1 billion worldwide.
But with so many users, it may surprise some to learn that Google has until recently done little to monetize the service directly.
Morgan Stanley predicts that Google Maps revenue will hit more than $11 billion by 2023, noting in an article on Yahoo Finance that:
“Google Maps is a utility-like service (similar to Search) and in our view, remains the most under-monetized asset that we cover.”
With the above figures in mind, let’s explain below how Google Maps makes money.
Google Maps revenue generation
The reasoning behind Morgan Stanley’s prediction of $11 billion in revenue is simple to understand when you consider Google’s revenue from search and related services.
In Q4 2021, the company reported that $61.2 billion (or 82%) of total revenue came from advertising alone.
This means the bulk of Google Maps revenue comes from advertisers who use Google Adwords to promote their businesses and will continue to do so in the future.
However, a lesser-known source of income is derived by selling access to the Google Maps API.
Below is a look at each revenue source in more detail.
Advertising
Google makes money from advertising in three ways.
Search listing ads
Search listing ads appear when a Google Maps user searches for a particular business or type of business, such as a gas station, mall, or their nearest Walmart.
Advertising here works the same as it does for a Google search; paid listings are shown at the top and businesses are only charged when a user clicks one of their ads.
Branded location pins
In some situations, Google Maps will show branded location pins irrespective of whether the user is searching for that company.
Branded pins are available to any business provided their ad spend and ad quality is of a sufficient level.
Businesses must also have a square logo (favicon) uploaded to their My Business accounts and have configured their location extensions for each ad campaign.
Retail locations as navigational landmarks
Less common is the use of retail landmarks when receiving directions from the automated voice within the app.
Some users have reported receiving messages such as “Turn right after the Burger King” or “Turn left at the Starbucks.”
Google Maps API
Google also makes money by selling the Google Maps API to other businesses and app developers that require mapping or navigation services.
These include Uber, Lyft, Snapchat, Accenture, and Square.
API services come in three forms:
- Routes – for example, Uber incorporates Google Maps into its app so that drivers do not need to switch between two apps to determine a route.
- Places – this encompasses geocoding, where street addresses are converted into geographic coordinates that can be used as place markers. This form also includes current place, time zone, place photos, and autocomplete for geographic search terms.
- Maps – these are maps that consumers see embedded in real-estate websites or food-delivery apps, for example. Customers may also choose from static or dynamic maps and static or dynamic Street View.
Each of these API services comes with various fees, but Google offers $200 credit (equivalent to 28,500 map loads) for free every month.
Key takeaways:
- Google Maps is a web and app-based mapping platform that offers aerial photography, satellite imagery, terrain data, street maps, route planning, and real-time traffic information.
- Most Google Maps revenue comes from advertisers who use Google Adwords to promote their businesses. Some of the ad formats include search listing ads, branded location pins, and retail locations as navigational landmarks.
- Google Maps also makes money by selling its API to interested parties. API services are categorized as either Routes, Places, or Maps and will suit the majority of business applications.
Key Highlights
- Google Maps Overview: Google Maps is a widely used web and app-based mapping platform that provides various features including aerial photography, satellite imagery, street maps, route planning, terrain data, and real-time traffic information.
- User Base: Google Maps has an enormous user base, with around 1 billion users worldwide and 154 million active monthly users in the United States.
- Monetization History: Despite its popularity, Google initially did little to directly monetize Google Maps.
- Revenue Projection: Morgan Stanley predicts that Google Maps will generate over $11 billion in revenue by 2023. The platform is seen as an under-monetized asset compared to Google’s other services.
- Revenue Sources:
- Advertising: The primary revenue source for Google Maps comes from advertisers who use Google Adwords. There are various advertising formats within Google Maps:
- Search Listing Ads: Ads appear when users search for specific businesses or types of businesses. Advertisers are charged when users click on their ads.
- Branded Location Pins: These are shown regardless of user searches, provided the business meets certain ad spend and quality criteria.
- Retail Locations as Landmarks: Occasionally, navigation directions include references to branded landmarks (e.g., “Turn right after the Burger King”), creating advertising opportunities.
- Google Maps API: Google also generates revenue by selling access to the Google Maps API to other businesses and app developers. This is used by companies like Uber, Lyft, Snapchat, Accenture, and Square. The API services include routes, places (geocoding, time zones, etc.), and maps for integration into various applications. Google provides a monthly credit for free API usage up to a certain limit.
- Advertising: The primary revenue source for Google Maps comes from advertisers who use Google Adwords. There are various advertising formats within Google Maps:
- Advertising Revenue: Google Maps leverages its user base for advertising revenue, similar to how Google Search does. In Q4 2021, a significant portion of Google’s total revenue ($61.2 billion or 82%) came from advertising.
- API Revenue: Selling access to the Google Maps API is another revenue stream. This service is utilized by various companies that require mapping and navigation capabilities in their applications.
- API Service Categories: The Google Maps API offers three main services: Routes, Places, and Maps. Each service comes with different functionalities and fees. Businesses can integrate these services to enhance their own apps and platforms.
| Aspect | Description | Example |
|---|---|---|
| Ad Revenue | Google Maps generates a substantial portion of its revenue through advertising. It displays ads to users based on their location, search queries, and other user data. These ads can be in the form of promoted locations, pins, or sponsored search results. Advertisers pay Google to promote their businesses on the platform. | A local restaurant pays Google to have its location shown as a promoted result when users search for nearby dining options. |
| Location-Based Promotions | Businesses can create location-based promotions and offers through Google Maps. These promotions are displayed to users when they are near or within a specific store or business. Companies pay for these promotional features to attract foot traffic and boost sales. | A retail store offers a 20% discount to users who check in or use a coupon through Google Maps when visiting the store. |
| Business Listing Services | Google offers businesses the opportunity to create and manage their listings on Google Maps. These listings include essential information like business hours, contact details, and photos. While basic listings are free, businesses can pay for premium listings with additional features and enhanced visibility. | A hotel pays for a premium listing, allowing it to display more photos, showcase its amenities, and appear prominently in search results. |
| Google Maps API Usage Fees | Developers and businesses can integrate Google Maps into their applications and websites using the Google Maps API. Google charges usage fees based on the number of requests and services accessed through the API. Businesses pay for this service to provide location-based features to their users. | A ride-sharing app uses Google Maps to provide real-time location tracking to its users and pays Google based on the number of API calls made. |
| Geolocation Data Licensing | Google Maps collects vast amounts of geolocation data, including traffic patterns and user behavior. Google may license this data to third-party companies, including government agencies, urban planners, and businesses, for various purposes such as traffic analysis, city planning, and market research. | A city government licenses Google Maps data to optimize traffic flow and plan infrastructure improvements. |
| Subscription Services | Google offers subscription-based services, such as Google Maps Platform Premium Plan, that provide advanced features, dedicated support, and enhanced customization options to businesses and developers. These services come with a monthly or annual subscription fee. | A delivery service subscribes to the Google Maps Premium Plan to access advanced geolocation features for routing optimization. |
| Ride-Hailing Integration Fees | Google Maps has integrated with various ride-hailing services like Uber and Lyft. While this integration benefits users by providing seamless access to ride-hailing within the app, Google may receive a commission or referral fee for directing users to these services. | A user books an Uber ride through the Google Maps app, and Google receives a percentage of the ride fare as a referral fee. |
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Source How does Google Maps make money? – FourWeekMBA
