The High Price of Internet Keyword Auctions
Fascinating BusinessWeek article on "Google's Success":
For instance, Yahoo gives the top spot on its search results page to the advertiser who pays the most per click. But Google maximizes the revenue it gets from that precious real estate by giving its best position to the advertiser who is likely to pay Google the most in total, based on the price per click multiplied by Google's estimate of the likelihood that someone will actually click on the ad.
Seems the geniuses at Google have taken auction technology to a level all its own.
The article does point out a critique of the system that we here at TheLadders.com would have to agree with -- "Advertisers complain that it's too much of a 'black box.'" -- which is certainly true and makes our job that much tougher by requiring that we do large-scale inductive testing and examining of the results as opposed to a deductive method from the algorithm that would allow us more flexibility in planning and surety in execution.
