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The huge-scale real-time auctions that power the Google profit machine

wired.com

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Re: The huge-scale real-time auctions that power the Google profit machine

#11

Post by patio11 »

berrow wrote: post #7
patio11 wrote: post #5

I'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?

I'm saying that if the auctioneer can assign prices unrelated to the content of bids received, then yes, that is not an auction.

Compare with eBay, a true auction:

Single bid at 5 cents, hidden reserve of $1 (eBay): no sale takes place.

Single bid at 5 cents, hidden reserve of $1 (Google): no sale takes place.

Single bid at 5 cents with maximum bid of $1, hidden reserve of $1 (eBay): no sale takes place.

Single bid at 5 cents with maximum bid of $1, hidden reserve of $1 (Google): sale takes place at $1. (I think almost nobody knows this happens.)

Two bids of 5 cents and $1 (eBay): the bid of $1 wins.

Two bids of 5 cents and $1 (Google): the side who Google says wins, wins, at a price which is somewhere between 0 cents and $1.

Re: The huge-scale real-time auctions that power the Google profit machine

#12

Post by TriinT »

mahmud wrote: post #4
mattmaroon wrote: post #3

"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".

And that is why Wired seems to have become Gawker or Valleywag. There used to be some good journalism on Wired in the 1990s. Now it's a geek version of Vanity Fair...

Re: The huge-scale real-time auctions that power the Google profit machine

#13

Post by neilk »

djehuty wrote: post #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 th…

No, the primary reason for these apps isn't advertising. I don't know if they have finally given up or what, but people reading email or composing documents just aren't that distractible.

Google likes the idea of putting your documents on the web because (a) it's a potential business, especially at the enterprise level; (b) they want more structured data on the web to mine; (c) they want a better way to profile you.

Android I don't know enough about, but it's more like an attempt to make phones work more like the PC -- an open-ish standard, rather than specialized, incompatible devices under the control of carriers. I assume Google feels they will do much better in that kind of market.

Re: The huge-scale real-time auctions that power the Google profit machine

#14

Post by zandorg »

mynameishere wrote: post #2

Varian is an expert on what may be the most successful business idea in history: AdWords... And there I stopped reading.

I think photocopiers (with Xerox's patent) were very very profitable. A royalty on every sheet of paper copied...

Re: The huge-scale real-time auctions that power the Google profit machine

#15

Post by zandorg »

mahmud wrote: post #4
mattmaroon wrote: post #3

"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".

Yup, Wired used to try and predict the future, but now it just reports on the recent past.

Re: The huge-scale real-time auctions that power the Google profit machine

#16

Post by djehuty »

neilk wrote: post #13
djehuty wrote: post #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 th…

No, the primary reason for these apps isn't advertising. I don't know if they have finally given up or what, but people reading email or composing documents just aren't that distractible. Google likes the idea of putting your documents on the web because (a) it's a potential business, especially at the enterprise level; (b) they want more structured data on the web to mine; (c) they want a better way to profile you.…

There's no doubt you're right about the profiling. I don't know how much they generate from the ads but they're context sensitive. Is it better or worse than ads next to a search? It would be interesting to know.
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