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The Secret of of Googlenomics

Secret of Googlenomics: Data-Fueled Recipe Brews Profitability

21 Billion, that’s the amount of revenue that Google brought in last year.

In the second half of the course, we have been discussing and analyzing the different types of online auctions regarding the selling of ad slots on numerous search engines. One of the most renown search engines, Google, brings in more revenue (21 Billion) from advertising than most companies bring in over a decade. Thus, by analyzing how Google sells its ad slots, we get a glimpse into how this internet giant continues to dominate the online marketplace.

To begin with, Google’s “ad selling algorithm” has been evolving continuously to maximize efficiency and revenue. As outlined in the article, Google initially sold their online ad slots in a very traditional manner. Google’s sales personnel would court big companies and firms to buy ads, explaining to them what key-words meant and what the prices were. Google then charges these companies later based by the number of views on the page, regardless of whether or not anyone clicked on the ads. However, as time progressed, Google enhanced its way of selling ad slots on its engine. Starting with opening its sales to an auction style market, in which an unlimited number of companies can bid for advertising slots, and charging companies by the number of clicks on each ad rather than how many views on the page. Then, as Google got even larger, it started writing algorithms to target specific ads to certain people, increasing the number of clicks on the add, thus increasing its revenue. The VCG procedure discussed in lecture undoubtedly models the most basic aspects of how Google distributes its Ad slots, in which advertisers with the highest values/click would get the slots with highest cTR. While the VCG models the basic aspects of Google’s strategy, the actual algorithm the company implements is more complicated than that. Though, no one outside of Google and its partners know exactly what the algorithm composes of.

To conclude, Google’s ad selling strategies continuously update to match current demands and maximize revenue. While there is no way to tell exactly what algorithm the tech giant uses to distribute its ad slots, one thing is for sure, Google spends a lot in development in research to maximize its 21 Billion dollars in ad revenue.



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