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False Positives Adventures in Technology, SciFi and Culture from Toronto

Saturday, May 01, 2004

Google as an Advertising Company

One of the most interesting things about Googles S-1 Filling and all the info that came out is the numbers about their revenue and earning, none of which was public Knowledge before (see "Google and Akamai: Cult of Secrecy vs. Kingdom of Openness".

The NewYork Times has a piece about Google as an Adverting company ("Google Poses a Challenge for Usual Ad Outlets") or as Google put it in their "Letter from the Founders" : we bridge the media and tech industries. From the NYT's :

advertisers are finding they can attract buyers relatively cheaply without a blaring message and an expensive Madison Avenue agency to create it. On Google, most ads are simply a few words of text set to the right of the main search results.

Only a few years ago, when Internet companies were falling to earth like a flock of scorched Icaruses, online advertising was written off as little more than tiny, ineffectual billboards.

For advertisers, search engines improve on traditional advertising in another way: they have to pay only when an Internet searcher clicks on an ad, so there is no money wasted on people with little interest in the product or service.

Moreover, advertisers, to some extent, determine their own prices through an auction process in which those willing to pay the most are listed higher than others.

With the growing popularity of search advertising, both Google and Yahoo are faced with a problem: more demand for advertising than they have Web pages available. Google has responded by building a network of other sites where it sells ads. It even sells ads for Ask Jeeves, which runs a competing search engine called Teoma. And more recently, it expanded beyond search to place its text advertisements on news and information sites.

"Search, broadly speaking, is the most powerful paradigm in advertising today," he argued. "They have many avenues for expansion without taking their eye off that ball.''



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