
According to Google’s corporate information page, the beta label came off the company’s website on this day eight years ago.
Some of you may not be aware that Google did not come to be the search power it is today via some grand strategic plan.
Founders Larry Page and Sergey Brin were not the first to enter web search, and their site has never been the best in terms of quality of results. It soared in popularity during its early years because it was easy to use. Ironically, its simple interface is rumored to be more the product of the founders’ lack of programming ability than intelligent design.
While Google has certainly made it easier for non-techies to sort through billions of web pages, their biggest impact has arguably been in revolutionizing advertising. Their premise: Ads are most effective when viewed only by people who are interested in what’s for sale, based on what they are searching for or reading about on the Internet.
Initially, Google’s ads were sold at fixed prices. Larry and Sergey were hesitant to adopt an auction-based model out of concern for users. In early 2002, an employee named Salar Kamangar convinced CEO Eric Schmidt and the founders to switch to an auction-based system like the one used at Goto.com, where advertisers paid only if their ad is clicked on, and the highest bidding advertiser was listed first. The New York times wrote about this last October in Google Wants to Dominate Madison Avenue, Too:
Mr. Kamangar, though, had an important improvement on the model. Rather than giving priority to the advertisers that bid the most per click, as Goto did, he realized that it was better to save the front of the line for ads that brought in the most money - a combination of the bid and the number of clicks on the ad. This was not only more profitable, but it also linked readers to ads that were more relevant to them. He also figured out that the system should use what is called a Vickrey auction - that is, to charge the winner only one cent more than the second-highest bidder. That gives advertisers an incentive to bid high, knowing that they will not be penalized if they are far higher than the rest of the market.
The rest, as they say, is history. And history might be what this company will change — in a big way — over the coming years.
Update: Google’s Dennis Hwang blogs about the birthday here.