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By Root 1957 0

anyway? How much are we leaving on the table by not running them?" My assumption was that because image ads were more intrusive, we would be able to charge a higher rate for them. I was on the wrong side of history, but fortunately Larry and Sergey overruled me. They argued that we could always escalate from text to image ads if need be, but it would be much harder to roll back from image ads to just plain text. Text it would remain—at least it would if the ads were successful, about which I had my doubts. We added color backgrounds to distinguish the ads more clearly from search results, but they still looked to me like a throwback to the pre-Windows days of DOS.

Jeff and Howard never expected their hacked-together system to grow into an economic engine. It was just a prototype to prove we could actually serve ads ourselves. Sales gave engineers information about what advertising they'd sold, and the engineers input each ad by hand. The system wrote directly to the database and there was no way to back it up. The gross inefficiency of this manual system bothered Larry. Once it was up, however, no one wanted to take it down.

"The targeting stuff ended up not working so well," Jeff Dean admitted recently, "but we used the core ad-serving systems for many, many years. The nugget of that original design is still in there."

Engineers Ed Karrels, Radhika Malpani, Matt Cutts, Howard Gobioff, and Chad Lester took over as keepers of the advertising flame. They would develop the features demanded by clients and keep the limping system from collapsing under its own weight. Jane Manning joined the group as a project manager and became the port through which the sales team channeled customer requirements. All of the sales team, that is, except for Bart.

Bart Woytowicz, a six-foot-six retired semi-pro international basketball player and bon vivant, headed sales operations. He liked to talk directly to engineers, and the engineers liked talking to him since he was the end user of the code they were writing. Besides, Bart always could be counted on to lighten the mood, as he once did at Halloween by wearing a leather S&M mask and a baseball uniform and claiming to be San Francisco Giants player "Barry Bondage." Bart didn't feel obligated to beat up the engineers about deadlines and deliverables. That was the project manager's job. He did, however, assure them of something they already suspected: the flat-rate CPM pricing we offered advertisers was a dying business model.

The market was shifting to "cost per click" (CPC) pricing. With CPC, advertisers paid for ads only when users actually clicked on them. It was the way our competitor GoTo worked. In GoTo's model, the price paid for each click was determined by a real-time auction, and those advertisers willing to pay the highest CPC won the most prominent positions on the page.

The GoTo model was innovative but flawed. It encouraged advertisers to bid high, but not to target their advertising only to relevant keywords. An attorney representing asbestos victims in a class-action lawsuit, for example, for whom each new client might be worth tens of thousands of dollars, could bid high for dozens of unrelated keywords to blanket results pages with his asbestos ads. ("Mesothelioma" was for a time the most expensive keyword you could buy on Google.) Ninety-nine percent of the ads would be ignored, but the lawyer wouldn't care, because most of that exposure cost nothing. Those off-target, high-bid ads, however, bumped other, more relevant ads to less prominent positions where they'd be clicked on less often. Since GoTo only got paid when the ads were clicked, that would be money out of their pocket. GoTo instituted a manual review process to ensure that advertisers only bought keywords relevant to what they were selling, but they were fighting a losing battle.

Larry recognized that the bidding aspect of the GoTo system had value. The flaws, though, he didn't know how to fix, and he remained skeptical that we needed a CPC pricing model to compete at all. If we did, we certainly didn't