Unraveling the Logic of AdSense: A Historical Rundown of Google’s Influential Ad Tool
AdSense has always had a keyword auction-based pricing model. “From the beginning we’ve had the same sort of fundamental architecture,” said Axe. “The one change that we made early on, we realized that not all clicks provide the same value, depending on the context.” Using Google’s keyword and semantic recognition system, they can determine the value of keywords on a site. “We look at various different signals—what we’ve called smart pricing—and we essentially discount the click if it’s not deemed to be valuable to the advertisers,” he added.
Since its release, AdSense has been so successful that it’s spawned rival contextual ad systems from both Yahoo and Microsoft. Google brought AdSense to the table just in time to capitalize on the rise of the blogosphere. “Initially we were thinking, ‘hey this is a great extension to search, it’s contextual, it’s good for users because they’re relevant ads…, its good for the advertisers because they’re getting so many more opportunities to market in front of a targeted audience, and its good for publishers because … you can pay the publishers much more than you can through other current options,” said Axe.
Not content to let AdSense ride, the team is building on the platform. They’re aiming for large scale advertisers. “I would summarize it as essentially bringing TV-type scale to marketers … starting online and then moving to offline through automation that really was not possible with previous tools,” said Axe. He was a little bit coy with the details, but he did tell me about some advertising that Paramount did for their Hustle & Flow movie in 2005. “They were trying to reach inner-city urban youth, and that’s something that you just can’t do on-scale by going to the top portals, or by going to the top three niche sites on comScore,” Axe further explained. “Through Google AdSense… they were able to reach a long tail of users and publishers that really catered to the inner city urban youth, and do so in such a large volume play.”
Briefly expounding on his history, Axe said, “I’ve been with Google three and a half years, and launched AdSense as pretty much my first product here.” Since then, the AdSense team has grown from 1-2 people to a team of 10-15, all committed to developing new AdSense services and staying ahead of the competitors.
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