Advertising is not a market; it is a business model.



Most of Google's revenues - 97% of them - are generated through the sales of ad space.  This is done through services such as AdSense, AdWord, and YouTube. 

While the rest of Google's services may be free to users, they are, in fact, indirectly monetized.  Google does this by providing service and tools designed to generate an audience, making products specifically designed to improve existing products, and attracting new customers through loss leaders.  This all in turn contributes to audience flow, providing for more valuable advertising opportunities, which Google then sells.