The huge-scale real-time auctions that power the Google profit machine
1–10 of 16 posts
Re: The huge-scale real-time auctions that power the Google profit machine
#2Varian is an expert on what may be the most successful business idea in history: AdWords...
And there I stopped reading.
Re: The huge-scale real-time auctions that power the Google profit machine
#3"Varian is an expert on what may be the most successful business idea in history: AdWords"
How about selling oil?
Re: The huge-scale real-time auctions that power the Google profit machine
#4"Varian is an expert on what may be the most successful business idea in history: AdWords" How about selling oil?
for Wired, "history" == "since Google IPO".
Re: The huge-scale real-time auctions that power the Google profit machine
#5I'd hesitate at calling AdWords an auction. It is a non-transparent black box process, some aspects of which are auction-like. (And I like Google.)
If it were an auction, the highest bid would win every time. That is catastrophically untrue with AdWords -- quality score, account history, Google's desire for variety, and a few hundred types of secret sauce mean that lower bids routinely float over higher bids for the same keyword.
Contrary to what many people believe, Google also sets essentially a reserve price on their keywords -- if you manage to discover a credit card keyword that nobody has ever used before (highly unlikely, but roll with it), that is probably worth well in excess of a dollar per click to you. Will you get it for 5 cents? Nope. Google will establish the minimum somewhere close to neighboring keywords, and you'll end up paying over a buck to be the only add on the screen. (Real auctions have a word for when you're bidding against the house, but I'll try to be polite.)
Re: The huge-scale real-time auctions that power the Google profit machine
#6[deleted]
Re: The huge-scale real-time auctions that power the Google profit machine
#7I'd hesitate at calling AdWords an auction. It is a non-transparent black box process, some aspects of which are auction-like. (And I like Google.) If it were an auction, the highest bid would win every time. That is catastrophically untrue with AdWords -- quality score, account history, Google's desire for variety, and a few hundred types of secret sauce mean that lower bids routinely float over higher bids for the…
Aside from the lack of full transparency, are you saying that generalized second-price auctions are not really auctions or that auctions with reserve prices are not really auctions?
Re: The huge-scale real-time auctions that power the Google profit machine
#8"Why does Google give away products like its browser, its apps, and the Android operating system for mobile phones? Anything that increases Internet use ultimately enriches Google, Varian says. And since using the Web without using Google is like dining at In-N-Out without ordering a hamburger, more eyeballs on the Web lead inexorably to more ad sales for Google."
Very silly. Google's browser generates searches in the title bar for free which Google pays Firefox and the others for. Mail, Talk and the apps are vehicles for showing ads to people. The extra internet use is just not the primary purpose of these things. What confuses people, even Wired, who should know better, is that not everything Google does has an immediate payoff every time. They're willing to develop something, like maybe Android, which can make them money later, maybe.
Re: The huge-scale real-time auctions that power the Google profit machine
#9"Varian is an expert on what may be the most successful business idea in history: AdWords" How about selling oil?
This line threw me too, but success is something that can be defined in a lot of ways. If you define success in terms of growth rate and speed from idea to market dominance and massive profits, then Google is right up there.
It all depends how you weight growth and total profit when you talk about "success." The growth curve of oil as a business took hundreds of years, whereas Google became a billion dollar business in a few years.
Re: The huge-scale real-time auctions that power the Google profit machine
#10I'd hesitate at calling AdWords an auction. It is a non-transparent black box process, some aspects of which are auction-like. (And I like Google.) If it were an auction, the highest bid would win every time. That is catastrophically untrue with AdWords -- quality score, account history, Google's desire for variety, and a few hundred types of secret sauce mean that lower bids routinely float over higher bids for the…
The highest bid does win every time, if you realize that a bid in this situation constitutes more than just price. Price is one way to motivate a seller to perform a service for you. In this case, another way is to have a great site to match your service, which contributes to the overall reputation of the AdWords program. There are also other ways to motivate, and all the secret sauce you commented on is probably to handle them. Add up all of this motivation and call it a bid, and the highest bid wins always, even though the highest price may not.