James Fallows writes in the New York Times:
Google is the clear leader, among competitors like Overture and Kanoodle, in a modest-seeming innovation with potentially broad implications. For Google, it is another way to sell ads – and a fast-growing source of revenue. For people who rely on the Internet for information and expression, it may open an opportunity.
The innovation in question is Google’s AdSense program, unveiled last summer. Google’s original way of making money, and still its largest source of revenue, was search-driven ads. You enter, say, “vacation homes in France,” and with its usual list of sites Google shows a list of “sponsored links” from advertisers, who have paid to be associated with those terms.
“AdSense was really a very natural outgrowth” of this search-dependent system, said Gary Stein, a senior analyst at Jupiter Media in San Francisco. (No one from Google would comment about its products because the company is in the “quiet period” before its initial public offering.) “Google had this great database of advertisers, and the keywords they were interested in,” he said. “But they had to wait for the searches to happen.”
AdSense allows Google and the advertisers to avoid the waiting. Google’s great technical strength – the “sun in its solar system,” as Mr. Stein put it – is the way it automatically grasps the themes and emphases of each Web page. With AdSense, anyone who operates a Web site – a blogger, a community activist, a retailer – installs a bit of code that transfers control of part of each page to Google. Then users who visit the page will see a short list of ads that, according to Google’s analysis, represent the most likely match between the subjects discussed there and the advertisers’ products – ads for veterinary supplies on a cat fanciers’ site, for example. Each time someone clicks on an advertiser’s link, the advertiser pays a fee to Google, and Google passes some of that on to the Web site operator.
This sounds like nothing more sophisticated than a car magazine that runs car ads – but then, eBay at first looked like nothing more than a big garage sale. In each case, scale and automation give a familiar idea new effects. Just as eBay connects each seller to a universe of potential buyers, AdSense connects each blogger and local Webmaster to 150,000 potential advertisers. The crucial point is that the blogger reaches those potential advertisers without having to hire a sales staff, prepare media kits or invest scarce time and money.
Why does that matter? It completes the publishing revolution brought on by the Internet. The first stage was the liberation of the reader, who, thanks to browsers, could look at publications in any part of the world. Next was the liberation of would-be publishers. Thanks to blogging tools, anyone can present his or her views online. And now, thanks to automated ad sales, small publishers have a more viable hope of creating a business, and keeping independent voices, than they did even a year ago. A. J. Liebling’s wisecrack that “freedom of the press is guaranteed only to those who own one” takes on new meaning when technical and financial barriers to creating a Web-based press drop so low.
Google could do for niche publishers what eBay did for small sellers.