For a couple of years in Google's early history, it was a real search company. But that would change in 2000 as Google would embrace advertising. Learn how Google would shift to become a dominant force in online ads.
Welcome to tech Stuff, a production from iHeartRadio. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer with iHeart Podcasts and how the tech are you. I've often said that Google is not a search engine company. It's an advertising company. And of course these days, when I say Google, you could argue that I really mean Alpha, that you know, the parent company that owns all the various Google companies. But to be clear, I am not the only person who says this, right, I don't mean to say that I'm some sort of guru who I did not come up with it. I'm not the first person to say it. I also say it. That's all. I agree with those who say this. But here's something that I find interesting. So, once upon a time, Google was a search company. It was not an advertising company. In the very early days, Google didn't generate revenue through advertising. So let's set the clocks back quite a bit. In nineteen ninety five, a guy named Larry Page was mulling over the idea of enrolling in Stanford University in order to go to grad school. He was at the campus in order to get the lay of the land, and there was a student who was assigned to him to show him around, a Stanford student named Sarah gay Brinn, and the story goes that the two got along kind of like oil and water. They apparently didn't agree on practically anything, but a year later, when Larry Page was in the graduate program, the two decided that they would work together on what would turn out to be a truly huge project. So their goal was to build a new kind of web search engine. So at the time, the dominant search engines that were still working off the very young Worldwide Web primarily used keywords as their guide. So you would pop into a search engine. The one I used all the time was web Crawler, but there were lots of them, and you would type whatever it was you were searching for, like let's say it's the word tractor, for example. The search engine would return results of web pages that featured that keyword somewhere in the page, and they might have different ways of prioritizing the web pages. Maybe if the keyword appears in the title of the page, it might rank higher.
That kind of thing.
But the problem was there was never a guarantee that the search results you got would actually be relevant to the search query that you put in. They might include the search term, but it may not turn out to be useful. Maybe the page just mentions tractors off handedly, like as a joke or as a reference, and it's not actually about tractors, it just happens to have the word tractors in it. Or maybe it's a web page run by a real scumbag who just crams the bottom of the page with a ton of random keywords, ones that they've determined are really popular, and it's on an effort to capture as much traffic from search engines as possible. They don't care that this isn't what you were looking for. They just want to get you onto that page. The search experience could be really a frustrating one. It often involved users going to a page, taking a quick look, saying oh, this isn't what I need, backing out, and then doing it all over again. And it wasn't very satisfying or helpful page. And Brend wanted to create an engine that would return much better search results.
So how would you do that?
Well, their solution was to take a broader approach to search. Their search engine would assign a rank a page rank if you will to each result, and higher ranks would appear higher in the search results page and lots of factors would go into determining what page rank a page would receive. For example, let's say that you've got a web page and you notice that there are tons of incoming links pointing to this web page. Well, that could end up being a boost to that page's rank, because the thought is, if a lot of other web pages are pointing to this page, it must be good, right, if you've got a lot of different pages. Of course, you can game that too, right, You could create a whole network of pages that just link to each other in an effort to try and boost page eranks. So another part of this ranking system would take into account the quality of those incoming links, the idea being well, if the incoming links are coming from really established websites, maybe they belong to a known entity like an important company, or maybe it's a web page that has been around for a while and has sort of proven itself, any links that that page has are going to be worth more. Plus those pages themselves, the ones that been around or from known entities, those would have a higher rank because they were thought of as just being higher quality. Now, this is just a couple of examples of factors that would determine a web page's page erank.
As it turned out, there were.
Lots of them, and the formula would change frequently, and it was always kept secret so that pages couldn't try to game the system. Although they didn't stop anyone from trying, it just meant it was hard to do because you didn't exactly know which factors were the most important. The PageRank approach meant that you were far more likely as a user to come across a search result that was relevant to whatever it was you were actually searching for.
Now.
Originally, the pair called their search engine BackRub. I think we could all agree that it was a fortunate thing that they decided to change the name to Google. The two received a healthy one hundred thousand dollars check from an investor in nineteen ninety eight, and they launched Google Incorporated, and for the first couple of years, Google existed primarily off of influxes of cash coming from investors. Everyone could recognize that Google was providing a valuable service, one that was becoming increasingly important as the web was getting more complex and larger, and it was doing so at a level that really set Google apart from the competition. Google was quickly making a name for itself as being the best of the web search engines at that time, but investors were also starting to get a little concerned, and the reason for that was that the powerful Google search engine didn't have an equally powerful way to generate revenue.
Now.
Initially, one strategy was to try and form partnerships with portal sites. And these were websites that acted kind of like a homepage, like this is the page that you would see when you started up your browser. This was kind of a gateway to the rest of the web. They might host a few articles. Maybe some of those articles were written in house by an editorial staff that worked for the website. Maybe some of the articles were really generated by a third party and they were just being linked to on this landing page. And many of them would also include a search tool. So Google would try and make deals with these different sites to be that search tool. But Google with small potatoes in those days, so these deals were few and far between, and they certainly weren't enough to make Google look like it was going to be arousing success financially, So clearly Google would have to come up with a different approach if the company was to stay in business, and someone else had to come up with an idea that, with a little tweaking, would work just fine, and then Google would take that idea. To say they stole it would probably be too harsh, but they certainly emulated an idea that someone else came up with for a totally different site. Now that's someone else was a guy named William Bill T.
Gross.
He graduated from the California Institute of Technology with the degree in mechanical engineering, which would not make you think of someone who would go on to create a web search engine, but he became known as something of a serial entrepreneur. He would launch lots of different companies across his career as soon as he was graduating, essentially, including a video arcade and a couple of software companies, and an audio equipment company and more. But in the late nineties, Gross wanted to solve the same problem that Page and Brinn had been working on or would be working on, actually, because Gross's solution would come out first. He wanted to be able to create a search engine that would return better search results than a lot of the competitors that were on the market. But he took a different approach from what Brin and Page were looking at. So instead of building out a system meant to assess the value of every page that's on the Internet, he figured he could deliver better search results by having companies pay him in order to have their search result rank higher on the list. So here's the basic idea. Now, as I mentioned earlier, one of the big problems with early search engines is that a lot of web administrators were trying to game the system. So it really wasn't unusual for web designer to just stuff a page full of keywords that didn't actually apply to the page's content itself. So clever designers would do this in a way that wasn't obvious to the visitor, right because otherwise you would just like I said, you would scroll down a page and you see like a word jumble of a bunch of unrelated words at the end of a page, and it just looked like a mess. Clever web administrators would choose to make the text the same color as the page's background at the bottom, so you wouldn't even see it like it might be that the page seems unusually long with no content toward the bottom of it, but in fact there would be content. It's just it was the same color as the background, so you couldn't see it.
However, while you.
Couldn't see it, a search engine could. The search engine would still see the keywords there even though you wouldn't, and that's why this page that doesn't seem to be related at all to the thing you were searching for would pop up in search results. Meanwhile, you had legitimate sites out there, some connected to established brands, that would very much like to rank high in search in order to drive more traffic to their sites, but with all these junk sites out there, that could be hard to do. So they might be in a position where they're able to and willing to pay to jump to the head of the line if it meant that folks would actually find their stuff online. And so Gross launched a company called go to dot com Incorporated. His strategy included a pay per click arrangement, which is exactly what it sounds like. The advertiser agrees to pay a certain amount every time someone clicks on the ad, so typically you aggregate clicks by the thousands, so each click is really just worth you usually fractions of a penny. Gross's logic was that the garbage sites out there couldn't and wouldn't pay for positioning because their entire strategy relied on using keywords in bulk that had no application to the actual site. So if they wanted to try and do that the same way with Gross's strategy, they would have to pay for all these different keywords that didn't actually apply to them, and it would bankrupt them because people would be clicking on those sites over and over again on the search results, and they'd have to pay every time that happened, or at least every time every thousand times it happened. So you would be paying go To for all this traffic. You wouldn't be making that money back through the ad revenue you generated on your site. There's no way you'd be making more money through say, web advertising, than you were paying out to go To. So whamo, you end up with a search engine that delivers better results, or at least more relevant results. Since you can't guarantee that the entities that actually do pay for their positioning are in fact the best ones out there, but chances are there better than the junk sites. Gross launched goo to dot com in nineteen ninety eight. In fact, he launched it before Page and brend got Google off the ground. And while go to only saw modest success in the grand scheme of things, that revenue generation model stood out, and when it came time to determine a way for Google to make money, the go to became well, well, it became the go to model. So Google would introduce a pair of strategies in two thousand that would bring the company into the advertising space. Now, according to a Google SEC filing from two thousand and four, quote, in the first quarter of two thousand, we introduced our first advertising program through our direct sales force. We offered advertisers the ability to place text based ads on our websites targeted to our users search queries under a program called Premium Sponsorships. Advertisers paid us based on the number of times their ads were displayed on users search results pages, and we recognized revenue at the time these ads appeared end quote.
So with this.
Strategy, Google would collect a certain amount of money every time someone saw a particular ad in their search results. Clicking on the ad wasn't necessarily a requirement. Just getting the ad in front of folks was enough to warrant to the charge of the ad. As for how much the advertisers were actually paying, I saw one site where a client said their rate was around forty dollars per one thousand impressions or views, so every thousand times this ad was seen they would pay out forty dollars. And Google was rapidly rising in popularity, and when you think of all the different potential ads the company could sell against different search terms, it really starts to add up. The premium sponsorship ads would appear at the top of the search results, so the very first search result would actually be an AD, so there was a decent chance that unobservant folks would just click on the ad, assuming it was the best result for their query. Because it was at the top of the search results page. Google did have the foresight to place a shaded background behind the link, which set it apart from the actual search results. I suppose folks of the company understood that unless they made the effort to differentiate the paid advertising spot from the legitimate return results, they could get into some real trouble there with regulators like the FTC, which absolutely demanded that search engine companies make differentiation between sponsored results and search results.
All Right, we're gonna talk.
More about how Google did that, plus other strategies Google got into in the advertising space, but first we actually need to take a break for our own advertisers.
We'll be right back, okay.
So when we broke off for ads, we were just talking about how Google needed to separate their sponsored results from their actual search results, and to follow along that for a second.
This is going to just be a little bit of a tangent.
Over the years, Google has changed up how it tags or labels ads versus search results. So example, in two thousand and seven, the company changed the background color from being blue to yellow. In twenty ten, it went to a very kind of light green background. Actually in the example I saw it looked more teeled to me. But then it went back to yellow. And going back to yellow became kind of a thing. Over the following years, Google would experiment and changed to different colors, but would come back to yellow over and over again. In twenty thirteen, Google went with a very pale yellow, which, depending upon how your settings are on your mind or you may not even be able to see, but that same year. That was when the US Federal Trade Commission really issued a war learning to search engines in general about a quote decline in compliance end quote with those rules that all search engines were supposed to follow, that they were supposed to make it clear that certain entries were ads versus legitimate search results. So Google would end up placing an AD tag next to ads in search results to make it more clear that they were in fact advertisings. However, this AD tag actually appeared below the hyperlink text, so you'd get the hyperlink text first, and then that little description, that block of text and stuff that would describe the link that appears below it. Next to that, you would have this little AD tag. The company switched up how that looked a few times. They would use different shaded backgrounds on the tag and whatnot in an effort to comply with the rules, while you know, not complying too hard, because ideally you still get people clicking on those ads, and it's easier to do that if the people don't notice at first that it is an AD, which has certainly happened to me. I know, I've been guilty of it a few times. So I did a search just now to see what looks like these days, And depending on what I'm searching for, it may bring up different things. Like I searched for a refrigerator, and in that case, it brought up a bunch of sponsored links to where I could buy a new refrigerator. But then I did a different search and what I got were a couple of search results at the top that had the label sponsored appearing before the hyperlink. So you had a little highlighted sponsored and then the hyperlink and then the text. And I feel like that's fairly clear that it's an advertisement as opposed to just a regular search result. So props to Google in that case, because I think that's a reasonable approach. It's not beating you over the head with it, but I feel like it's noticeable. Anyway, Premium sponsorships really started Google's ad revenue journey, but as mentioned, Google's direct sales team was responsible at this time for selling that adspace, and that means that the sales team was reaching out to advertisers with this offer and trying to convince them to agree to plunk down cash in return for thousands of impressions per ad So it was a strong start, but not nearly the strategy that would propel Google into becoming one of the largest, most powerful tech companies out there. Instead, that development would wait a whole two or three months because that same year, in two thousand, Google would not just introduce premium sponsorships, they also introduced a little offering that at the time was called AdWords. So unlike premium sponsorships, prospective advertisers could actually sign up for AdWords at a link, you know, self service style. They didn't have to be reached by a direct sales representative. They would just go to a link and say, okay, yes, I want to purchase some AdWords.
And that wasn't the only.
Difference between AdWords and premium sponsorships. Another was that adword results appeared not at the top of search results. Instead, it would appear to the right of search results. Originally in what we used to call, or still call, I guess, the right hand rail. I just don't hear much about it anymore because I'm not in those meetings anymore, which is fine by me. But the right hand rail is you can think of that as like the right margin of a web page. So in the old web banner days, not that web banners are gone, but they certainly aren't the dominant form of advertising anymore. In the old web banner days, there were a few places where you would typically put a web banner, and you might charge different amounts depending upon the location. So the really popular one was at the top of the page, right like at the very top of the page you have a web banner ad that advertises for something, But another would be in the margins, either along the left or the right. Very rarely you might put one at the bottom. Those were often the least valuable ones, or at least the least expensive ones, because the common thought was that people just didn't scroll all the way to the bottom of the page. But anyway, the right rail is where the adword results originally would appear, So starting in August two thousand or so, searching for something on Google would bring up premium sponsorship ads at the top of your results and a couple of AdWords ads set off to the right. The AdWords ads also had a sponsored link label on them, so they did indicate to the user that they were advertising. They were not an official search result, so that label was there from the beginning. From the advertiser side, buying AdWords was pretty straightforward. The advertiser identified which keyword or keywords they wanted, They then submitted the ad and bammed. Their ad would show up wherever anyone searched for that particular keyword. It was pretty simple stuff, and of course they also paid a certain amount of money. They were kind of doing a pay per click as opposed to pay per impression, meaning that in this case, it wasn't enough that someone saw the ad, they needed to have clicked on it for it to count toward how much Google would charge the advertiser. Things held steady for a couple of years, but in two thousand and three, Google made a decision that would shake things up. They decided to phase out premium sponsorships and actually replace them with AdWords, and the direct sales angle wouldn't be necessary anymore, at least not for this, and AdWords would migrate from the right hand rail to being above the search results. So essentially, they were saying the AdWords approach seemed to be the most successful, most lucrative, the one that was giving the most satisfaction to advertisers as well as to Google, so that was what they were going to switch to. They were going to make that the dominant form of ad revenue generation. In addition, adwards clients would receive charges based on those number of clicks the ads got, Like I said, not the number of impressions, which is nice, right, because someone just seeing your ad that might not mean very much, but if they click on your ad, that's a much bigger deal. However, this also meant that Google would like the cost of those ads. They wouldn't charge that forty dollars per one thousand impressions. Now it'd be much higher now. I'm not sure how much more Google was demanding, because when I was looking at discussions of this online, no one was really giving hard figures, but based on some fairly obtuse articles from the time, it sounds like it was a pretty significant increase, and I'm sure it more than balanced out the shift from impressions to clicks. Also, in two thousand and three, Google launched ad Sense. Now, this product works within websites that belong on the Google network. So, for example, a blog on Blogger, which Google also acquired in two thousand and three, would count. It's part of the Google network. So you create a blog on say Blogger, your blog would belong to the Google network and you could enroll in ad sense. And the way ad sense works is that Google will place ads on websites and those ads will be contextually relevant to whatever the content of the site is itself. So let's say that you write a blog about travel and it's a pretty popular blog. Well, Google could serve up ads that relate to stuff like travel agencies or airlines or hotels, and it would be less likely to serve up ads about you know, I don't know, underwear or kitchen appliances. Ad Sense was viewed with some skepticism early on because a few advertisers voice concerns that a consumer would be far more likely to act on an AD if they're actively searching for information through a web search rather than if they are just casually visiting a website, Because, as it would turn out, ad sense would end up making Google a hang on, let me let me look up this figure. Yeah, a butt load of money. So this was a really popular offering once you get past the initial launch phase, and content creators get a cut of that cash. By the way, so choosing to monetize a site means the person creating the content gets some of that money. Google gets some of it and the advertisers get eyeballs. It's not that different from the way advertising works on YouTube, which no big surprise, you know Google owns YouTube as well, right Like, you can choose to monetize your channel and you get some of the money from the commercials that run on your channel, and Google gets all the rest of it. So very similar in that way. So Google was officially in the ad business starting in two thousand, really ramping up by the end of two thousand and three. Beginning of two thousand and four. In two thousand and six, it tried an experiment. Google made a proposal to newspapers in the United States suggesting that Google would offer Internet based clients the chance to bid on unsold newspaper ad space, So the newspapers would be able to sell inventory that otherwise would just go to way, and the ad clients would potentially reach a new audience that traditionally they might not have because they just weren't in the newspaper advertising business. So around sixty six newspapers agreed to the pilot experiment. Google would put up the ad space for each newspaper and then open it up to bidding, and around one hundred different advertisers would compete with one another to bid on that ad space, and so the winning bid would fork over the cash and then place whichever ad they wanted in that slot. Google said the experiment was a smashing success, but newspaper said, we're not really sure how this really benefits us just yet. It seemed really good for advertisers and their clients, It seemed great for Google, but newspapers weren't totally sold on it. In fact, The New York Times said that their plan was to forge relationships with these smaller advertisers and ultimately to create a direct relationship with them, eventually cutting Google out of the equation, and that they were very upfront about this, like it wasn't even on the slide. They're like, no, this was our plan, We've told Google. Google was actually doing something similar with radio stations. Like with the newspapers, the strategy was to secure unsold ad inventory on radio stations and then auction that space off to advertisers who otherwise wouldn't have the opportunity to secure radio spots. And no big surprise here. Google would then go on to try and do the same thing with television. In two thousand and seven, Google would secure an agreement with clear Channel Communications to sell ads across their stations. And here's a fun fact. Clear Channel Communications would eventually transform into iHeartMedia, So I figured I should mention that since you know I worked for iHeart podcasts. But the radio experiment would only last for about three years because in two thousand and nine Google pulled the plug on it, and the print advertising experiment as well. The push to extend web advertising strees to the quote unquote real World appeared to be mostly a bust. It just didn't have a level that was sustainable. The initial success was really promising, but it didn't last. Fun side fact, audio ads would actually make a return many many years later in twenty twenty, but this time the audio ads were not designed.
To play on the radio.
Instead, they were designed to play against YouTube. The idea was that more folks were listening to YouTube content while not necessarily actively watching it. They might listen to it while they do other tasks like cooking or cleaning, or trying to find out exactly what is making that eerie whaling sound beneath the floorboards. You hear it right anyway. In twenty twenty two, Google would open up audio ads to all advertisers who wanted to take advantage of listener habits as they used YouTube to listen to stuff like streaming music or podcasts. So audio ads are back. Maybe they're just not the same thing as they were back in two thousand and six. But speaking of that, let's get back into the history of Google advertising. So in two thousand and seven, Google would introduce pay per action ads. So pay per click is a type of pay per action, right. The action in that case is clicking on the ad. The advertiser only has to pay when users take the action of clicking on the ad itself. If they just see it, there's no charge. However, that's not the only type of action you could monetize. The action could be something else. For example, maybe you set up an ad deal where you will only pay if the user not just clicks through, but signs up to say, subscribe to a newsletter, or maybe you only pay if the user will click through and make a purchase on the target site. As you might imagine, the ad rates on those types of ads can get pretty expensive because very few people in general, like in the grand scheme of things, are going to take those actions, but the ones who do are going to be very valuable. So the AD rates are going to be much higher for those kinds of actions, but at the same time, they're not going to happen as frequently as someone who just say clicks on an AD or just looks in an AD. Google also experimented with a tool that could display how many times users search particular keywords. Obviously that's really important, right, Like, if you're sitting there trying to determine which keywords you want to target for your ads, it's helpful to know which keywords are really popular versus which ones aren't. Let's say you're an advertiser representing a sporting goods company, and so you take a look to see which keywords are really trending, and you're looking at phishing rod and you see a lot of folks are searching for phishing rod, but very few are actually searching for rod and real. So if you're only going to target one of those sets of keywords, you're probably going to want to target the phishing rod one because those are the folks who are targeting more people. More people are going to see her ad because that's what most people are searching for You could argue that if more people are serious about phishing and they're using rod and Real, maybe you want to target that one instead. Yeah, there are fewer people who are searching for it, but the ones who are searching are really serious about getting into fishing. There are a lot of decisions that had to be made, but in order to make those decisions, you need the analytical tools in the first place. Okay, when we come back, we're going to talk about probably the biggest change for Google's advertising strategy, or at least the most impactful one.
I would argue.
But before we do that, let's take another break to think our sponsors. Okay, I would argue that the biggest move Google made in two thousand and seven was a three point one billion with a B dollar acquisition of a little company called double Click. So Dwight Merriman and Kevin O'Connor came up with the idea for double Click way back in the nineties, and it had its humble beginnings as a web banner ad business. They figured that the web would give them the chance to track ad performance in a way that other media just couldn't do. Right, Like you can buy ads for television or magazines or whatever, but you're never really sure how much of your audience actually saw or paid attention to the ad that you've placed in front of them. With banner ads, you could tell how many people actually took action, right, because you could count how many people clicked on the ad. Plus you would also still know how many impressions the ad got whether anyone clicked on it or not, so you would have that information too. The co creators met up with a bunch of other folks who got involved, and they merged their idea with another company that was kind of struggling to do something similar, and they got to work and double Click forged a path by using online cookies to track user behaviors, which meant the company could do better paid advertisements. They could pair ads with specific users. So targeted advertising was starting to become a thing, and it was really onto something. Double Click was really kind of zeroing in on what the future of online advertising was going to be. So another company called Hellman and Friedman bought double Click in two thousand and five. They spent a cool one point one billion dollars, and it was from them that Google would purchase double Click in two thousand and seven for the three point one billion dollars. The FTC took a look at this deal to make sure everything was copasetic, and they said, it doesn't look like a problem to us.
Now. I seriously wonder.
If the deal were to happen today, if our current FTC would have objected to it, because I bet they would have. But that was not how the world turned back in two thousand and seven. Two thousand and seven, if you wanted to get a massive merger through chances are the FTC would be like, Yeah, it's fine. These days, they FTC is more like, eh, that looks a little scary to me. So double click became part of the Google Empire, and Google began to take advantage of double clicks technologies, and that would really accelerate Google's ability to leverage ads. In two thousand and eight, Google introduced a new dashboard to allow advertisers to buy ad space across different types of media. Keep in mind, this was still when Google was in print and radio and TV before they would pull the plug on all that, but at this time they were really selling ad space through AdWords across multiple platforms, whether that was the Web or newspapers or magazines. All the magazine thing really only lasted a brief time, or radio or television. And we know that this would start to collapse in two thousand and nine because that's when Google would shut down its print and radio ad operations. But in two thousand and eight, the plan was to create a kind of integrated user interface for advertisers, to give them all the options in the world to have their ad place wherever they felt would work best. So it was a neat idea. It just turned out that Google really had not nailed how to integrate with these other pre existing forms of media. So Google also opened up the opportunity for advertisers to use third party advertising tags to track their ad performance across Google's content network. So again, this would only apply to ad Sense ads. You know, ad sets only works on Google's network of content sites. They weren't selling ad Sense for just generic sites that weren't part of Google's network. But it meant that advertisers didn't have to rely solely upon Google's own integrated internal analytics to see how their ads were doing. So that was good, right because you know, you worry when Google is the only source of information about how well your ads are doing, because you don't know if they're telling the truth. But then with these third party tags, suddenly the advertisers were able to to monitor ad performance independently of Google and make sure that everything is going well, or if it's something's not going well, that they can swap things out. In two thousand and nine, while shutting down print and radio advertising projects, Google made another acquisition. This time it was a company called ad Mob or ad Mob as it might turn out to be, and this specialized in ads on mobile platforms. Now, in my opinion, this was an incredibly savvy move on Google's part because just keep in mind, in two thousand and seven, Apple proved that there was a market for a consumer smartphone, particularly in the United States, they launched an iPhone. It starts to sell incredibly well. Google follows suit by introducing the Android operating system several months later, and then we would see habits shift dramatically as people began to use smartphones more frequently to access the web. So entire websites were scrambling to adopt new mobile friendly strategies they never had to worry about before. So it stands to reason that Google wanted to leverage a company that specialized in mobile advertising, rather than having to reinvent the wheel themselves, they went and got a company that was already focused on this sort of thing, and they could kind of get ahead of this growing trend of the mobile web becoming the dominant form of people accessing the web. Google would continue to refine its ad tools over the years, so, for example, in twenty eleven, the company gave advertisers the chance to optimize which ads to display based on conversion rates rather than through click through rates. So if you're wondering what does that mean, Well, first, most advertisers will have a whole bunch of ads for the same client, right. They might have twenty or thirty different ads they're running that are all about trying to move the same product or service for the same client. But they have different images, or different wording or different calls to action, but they're all designed to try and get the same resist right to sell.
This product or service.
Ideally, as an advertiser, you want to see which of your ads are having the best impact, and when you see that, you might want to start shifting to rely more on that ad versus all the other ones you're running for the same product or service, and you could optimize it a couple different ways. If you optimize via click through rate, what you're prioritizing are the ads that get the most clicks on them. But click through isn't the same thing as conversion. A conversion is when you get a user to become a customer, So it's when you convince your user to take a further action, such as to make a purchase. The ads that lead to conversions might be the ones you want to emphasize. You know, maybe they don't get as many clicks as the highest click through rate ones do, but the important thing is the people who are clicking on that ad are the ones who are buying what you're selling. So Google gave advertisers the chance to automatically optimize based on whatever criteria they found to be the most important for their clients. So the advertisers could say, all right, well, if these twenty ads are running and these three ads are getting the most conversions, automatically, those three will get prioritized over the other seventeen or whatever I think I said twenty. So that would be the way that would kind of work in a broad, high level sense. Now, I'm not going to go over all the different features and changes in Google's advertising business. That would require a mini series of episodes, and I'm sure it would be interesting to some listeners, but personally, I think I would find it a little on the dull side to really go into that deep detail. But we can hit a couple of important points. For example, on July twenty fourth, twenty eighteen, AdWords got a makeover, so Google rebranded AdWords and renamed it Google Ads. So it's pretty much the same product, just with a new name. If you're Cynicle, you could say Google Ads is the product that lets an advertiser buy the top spot in search results for particular keywords. You just got to spend the money and suddenly you're at the top of the search results. You do still have that little tag that if people are paying attention, they'll see it's an ad as opposed to the top search result. But that same year, in twenty eighteen, Google grouped its Google Analytics three sixty platform with most of its double click properties and rename them the Google Marketing Platform, the double Click Ad Exchange, and the Double Click for Publishers products. Those became the Google Ad Manager so everything was sort of getting rebranded and to new names and collected together to have stuff that complemented each other become a single platform. So let's finish up with a quick talk about how much money all this advertising actually brings in. First, keep in mind how Google has an incredible grip on market share, particularly when it comes to stuff like online video and online search. So I've pulled some stuff from various statistic sites. Keep in mind everyone has their own version of analytics, and there's probably a pretty wide range of error margins here as well, but it gives us an idea, right, So let's start with desktop search. Now we're talking about laptops and like desktop computers. According to Statista, Google search takes up more than eighty percent of the market share for that, so eight out of ten web search is being done on computers are using Google. That's more than just dominant. But on mobile it gets even more dramatic. Stat Counter estimates Google to have a ninety five percent market share for mobile search. But even that gets left behind when we look at online video like streaming video. According to six Sense, YouTube has a ninety seven point seven to one percent market share. The largest competitor is JW Player, which has one point three five percent market share, So no wonder the US government suspects Google to have an anti competitive advantage. They do have an insane market share in these areas. Keep in mind that all of these are really just platforms upon which Google can serve advertising. So all that market share means that Google has ample opportunity to give ads to us. And in twenty twenty three, the company made a whopping two hundred thirty seven point eighty six billion with a B dollars in AD revenue. That was about seventy seven percent of all the revenue that the company generated last year. That's a lot of princely sums, and it is why I and lots of other people say that Google is ultimately an advertising company, not a search company, search video. These things are just methods by which Google can bring advertising to us. And obviously Google's ad strategy goes well beyond what I've covered today. As I said, to really get into detail, we would have to do a full mini series of it, but I thought it'd be interesting to just kind of take a quick look and get a surface level understanding of what's going on. It's also a reminder that if the service you're using is free, chances are you're the product, right. So like, if it's free for you to use web search, well, the reason it's free is because there's all this advertising that's playing against that web search. Your behaviors are shaping what ads are going to be sent to you, and the fact that you are spending time using these services means the services get to know more and more about you, which means they can sell that information to advertisers or leverage that information with advertisers in order to serve quote unquote better ads to you. It just becomes this system in which we, the users, are actually the products. So good thing to recall, good thing to keep in mind. Doesn't mean that you shouldn't use these things, but it's good to be aware of it and not to just be naive and think, oh, isn't it nice that Google offers this service for free. Anyway, I hope you are all well. I'm getting better every day, which is a relief, and I'll.
Talk to you again really soon.
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