Emergic: Rajesh Jain's Blog

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Google as Auction King

September 14th, 2005 · 1 Comment

Ryan McIntyre has an interesting viewpoint:

To me, the most profound aspect of Google’s pay-per-click model is the fact that it is powered by an auction marketplace that resembles eBay’s, only it is far more efficient and is sublimely frictionless, with Google collecting a much larger share of each transaction since they are not only the marketplace, but also the supplier and seller of the inventory. Even more impressive is that Google runs a real-time auction (which is really a hairy multivariate optimization problem that would impress even the brightest Wall Street quant) to serve advertising links every time someone searches on Google or views an AdSense-enabled page.

To put this in perspective, the NYSE and NASDAQ see average daily trading volumes in the low billions, while Google is certainly processing and delivering a comparable order of magnitude of advertising auction transactions every day given the number of searches performed daily coupled with the much greater number of page views generated by AdSense publishers.

Tags: Search Engines

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