AdWords in the Total Google Context

Google rose from nothing to become the world’s most popular search engine in just a few months because it did one thing faster and better than all the rest: help Internet searchers find what they were looking for. I don’t want to overload you with the details of Google’s search algorithm (especially because it’s such a secret that if I told you, I’d have to kill you, and I would have to understand words like eigenvector and stochastic in order to explain it), but you will become a better Google advertiser when you get the basic principles. The most important word in Google’s universe is relevance.

When you type a word or phrase into Google, the search engine asks the World Wide Web for the best page to show you. The big innovations Google uses are a couple of calculations: One, called PageRank, is basically a measure of the popularity of a particular page, based on how many other Web pages link to that page and how popular those pages are. (Sort of like high school — the definition of a popular kid is one who is friends with other popular kids.) The other calculation is known as Page Reputation, which answers the question, “Okay, this page may be popular, but for which topic?” The Page Reputation of a Web page determines whether it will appear in a given search; the PageRank determines whether it will be the first listing, the third, or the four million and eleventh.

The entire Google empire is based on this ability to match the right Web pages, in the right priority order, with a given search phrase. The day Google starts showing irrelevant results is the day after you should have sold all your Google stock.

When Google started, it only showed the results of its own calculations. These results are known as organic listings. Organic listings appear on the left side of the Google results page .

In the early days of AdWords, your ad was shown based on a combination of two numbers: your bid price, or how much you were willing to pay for a click (that is, someone clicking your ad and visiting your Web page), and a very important metric called Click-Through Rate (CTR), which is the percentage of searchers who click your ad after seeing it. Now, Google also takes into account the quality of the fit between the ad and your Web site. If searchers exit your site so fast that they leave skid marks, Google figures that they didn’t find what they were looking for, and you’re penalized for irrelevance.