Google earns in cents. Thats why people find it hard to believe Advertising could make such a huge industry.
They also do custom search for huge companies. They have multi-million contracts with companies like CNN, ebay, amazontartups and midsize web companies have their destiny held in google's hand. A significant amount of ebay customers come through google. Even yahoo does advertising though google's adwords. Its hard to believe, buy it worked out for them coz almost every company in USA pay a couple of hundred dollars to google for advertising. Besides they also have  Adsense which you can see in every websites. But this is just 60 % of their business. They have evolving into other zones too. They are moving towards Video advertising on google video and youtube. They are working on Vertical search, and targeted search advertising through internationalization and localization..

I seriously think that this formula will slowly start showing its limitation by the end of 2009. Sites like digg which have lots of traffic still are unable to generate money in the same ration because most of the people who visit digg are techies. Once people become aware of adwords, nobody clicks them unless it very well targetted and personalized.