“So what we did, in essence, is we said advertising should be useful to a consumer just as much as the organic search results, and we don’t want people just to buy advertising and be able to show an ad if it’s irrelevant to the consumer’s need,” says Richard Holden, director of product management at Google. To accomplish this, Google developed a “Quality Score” model to predict how effective an ad will be. The model uses many factors such as click-through rates, advertiser history, and keyword performance to develop a score for each advertisement.

“Essentially, what we’re trying to do is predict ahead, before we actually show an ad, how a consumer will react to that ad, and our interest is in showing fewer ads, not more ads; just the right ads at the right time,” Holden continues. The Google advertising model has revolutionized the advertising industry, and it continues to improve every day!

THE COMPANY Google began in 1996 as a research project for Stanford computer science students Larry Page and Sergey Brin.

They started with a simple idea—that a search engine based on the relationships between websites would provide a better ranking than a search engine based only on the number of times a key term appeared on a website. The success of their model led to rapid growth, and the founders moved the company from their dorm room, to a friend’s garage, to offices in Palo Alto, California, and eventually to its current location, known as the Googleplex, in Mountain View, California. In 2000, Google began selling advertising as a means of generating revenue. Its advertising model allowed advertisers to bid on search words and pay for each

“click” by a search-engine user. The ads were required to be simple and text-based so that the search result pages remained uncluttered and the search time was as fast as possible.

1 Describe several unique characteristics about Google and its business practices.
2 What is Google’s philosophy about advertising?
How can less advertising be preferred to more advertising?
3 Describe the types of online advertising available today. Which type of advertising does Google currently dominate? Why?
4 How can Google be successful in the display advertising business? What other areas of growth are likely to be pursued by Google in the future?