In 1998, two American university students founded a company called Google. This post is to record the reasons Google came to dominate the online search business. As is the case with success—or failure—no one can pinpoint the exact reason for why things happned the way they did; nevertheless, I think it's good to consider what authors covering the subject matter think.
A few weeks ago, I linked to an essay in the December 9th, 2010, issue of New York Review of Books, "Google and Money!," where Charles Petersen reviews a few books on Google and pens an essay of what Google was, is, and may be. I decided to extract that essay since it is worthwhile as a standalone post—at a minimum, for future record-keeping purposes (yes, part of the reason I write this blog is to record).
Consider this as the second source of Google's success. Some people really have no clue about Google—How could it earn billions off search advertising? It must be a scam!—and the linked article should help clarify some aspect of Google. You may want to also refer to my June 12th, 2009 post to read the other source of Google's success, the auctioning system. In my opinion, there is another aspect of Google that I haven't covered yet, the technology implementation, which relies heavily on low-cost, easily-scalable, open-source software, and cheap Internet infrastructure (partly due to the overcapacity from the dot-com bubble in the 90's—yes, some bubbles do leave a lasting positive impact).
What made Google what it is? It's difficult to say but here is one interpretation of history (as usual, bolds are by me unless otherwise stated):
Google’s vast improvement on other search engines is usually attributed to a new algorithm, called PageRank, that made use of the links between sites to more accurately determine relevancy. In contrast to other search engines, which ranked results according to the number of times a searched-for word was used, Google ranked its results based on the number of links a site received, a method that revealed the “wisdom of crowds.” The pages to which many people link were, by Google’s model, listed higher than pages that were less popular, and if a particularly popular site linked to a page, that link would be given greater weight in determining relevancy. But Google’s success was not due primarily to its technical ingenuity; other search engines, including Lycos, used a similar ranking technology.
Google’s advantage over Lycos only became apparent when Page and Brin, still intent on pursuing their Ph.D.s, tried to sell their technology to another search engine, Yahoo. As Ken Auletta writes in Googled:
[The Yahoo founders] were impressed with [Google’s] search engine. Very impressed, actually; their concern was that it was too good…. The more relevant the results of a search were, the fewer [pages] users would experience before leaving Yahoo. Instead of ten pages, they might see just a couple, and that would deflate the number of page views Yahoo sold advertisers.In the early years of the Web, a search engine was considered only one of many attractions on sites like Yahoo and Lycos, which were attempting to become, in the language of the time, a “portal,” or a site that served as an entry point to the Web and provided links to various kinds of content....
Hence the emphasis on “page views.” Instead of a promise of an ad in a newspaper’s “A” section, sites like Yahoo and Lycos sold advertising based on how many times each page on their site was viewed (a statistic easily tracked online)....
Page and Brin decided to continue improving Google’s search algorithms, while disdaining the efforts of Yahoo, Lycos, and other portals to maximize the number of pages—and hence ads—that visitors might see. More than any innovation, this decision allowed Google to become the best search engine available. But it also left Google with almost no source of revenue, since users did not see many different pages and the site consequently could not compete in selling ads based on page views.
Google’s executives realized that ads on search engines reach users at a singularly receptive time: unlike readers browsing through articles on a news website, users of search engines are often looking for something very specific. A user who asks a search engine, for instance, “Where can I find the best car insurance?” would be a more promising potential customer than a visitor to a news website, because by searching for car insurance a user signals that he or she is, at that moment, in the market for car insurance. A car insurance ad programmed to appear next to the results of such a search would allow the advertiser to target its most desirable audience.
This approach, a form of what’s known as a “cost-per-click” advertising system, charges advertisers for each time a user clicks on an ad that is displayed next to related search engine results. To implement it, Google developed a program to link specific ads to millions of different search terms that prospective customers might use (from “car insurance” to “French horn” to “cat grooming in New York”), as well as a program to ensure that the ads sold through this system would be priced fairly (the program uses a simple bidding system, vetted by economists).
You can see how this looks today: a user searching for “pet food,” for exam ple, is greeted not only by a ranked list of sites containing information about pet food, but also by three “sponsored” links at the very top of the page, as well as a column of pet food ads in the right margin. These “sponsored” links and ads in the margin are paid for by online pet food stores and related ventures.
Back in the early 2000s, though, another company, Overture, which was far more focused than Google on making money online, had already developed such a system. Google copied much of the system from Overture in 2001; Overture sued Google in 2002; and Overture was itself bought by Yahoo in 2003. Yahoo settled the lawsuit against Google out of court for $275 million in 2004, and the system, modified over time, still provides the vast majority of Google’s billions of dollars in revenues.
(source: "Google and Money!," Charles Petersen for The New York Review of Books. December 9, 2010)Tags: Google