Chapter 103 Section 1 Google's advertising system
Many people have used Google's products and services for many years, and they have never been clear about how Google makes money, because Google's services are all free.The answer is search ads and content-related ads. (Of course, Google also has some enterprise-level products, but these products account for less than 5% of the turnover.) Many people doubt that Google can generate hundreds of dollars a year with these few tofu-sized text ads next to the search results. Billion dollars in sales, so it is determined that Google must have falsified its financial reports.In fact, it is easy to judge whether Google has falsified its financial reports. If Google does not have enough income, how can it provide global free services for so many years (and video services like Youtube are very expensive), and pay the salaries of 20,000 employees .In fact, Google can generate tens of billions of advertising revenue every year because its advertising system is much more effective than the traditional advertising industry.
Advertising has always been a major source of revenue for the media industry.The price of a New York Times with hundreds of editions is less than one dollar, which is much lower than the cost of printing, not to mention the cost of editing and distribution. The "loss" in it must be filled by advertising revenue.In fact, the income from advertising is the bulk of the newspaper's turnover, and it charges a mere one dollar for the price, but it is to ensure that its readers are real newspaper readers, rather than taking free newspapers back as wrapping paper or mail Wrapped filling.Revenues from radio and television are even more dependent on advertising.The business model that Jerry Yang of Yahoo chose for Yahoo was the model of the media rather than the model of the telephone company. Therefore, it is doomed that many Internet companies must rely on advertising for their income.
The operation process of the initial media advertising industry is roughly as follows.A media must have an advertising department, which is actually a sales department, which is responsible for selling newspaper (or website) space and radio and TV time to advertisers.It costs three things.First, operating costs, such as the cost of newspapers, printing costs, and distribution channels; second, wholesale or retail costs, including giving profits to advertising wholesalers or paying the wages of advertising sales staff; third, order processing, How to publish or broadcast advertisements for various management and arrangements of insertion orders.Except for the first item, these three costs are mainly labor costs.This kind of business model is inefficient. For large media, when the labor productivity remains the same, some labor will be added for every income increase. Expansion will not be quick either.For small media, the cost is higher, and it is impossible for them to support three departments that are responsible for the above three things, so they usually can only get advertisements from advertising wholesalers, but not direct sales.For advertisers, this model makes it very difficult to advertise on (national) major media, so small businesses cannot afford TV and newspaper advertisements with a wide audience, and can only advertise in small local newspapers and newspapers. There are some advertisements on the radio, and it is difficult for the business to develop across regions.
In the early days of Internet development, the operation of portal websites represented by Yahoo basically did not depart from the operation mode of the traditional advertising industry.First of all, it also has the basic costs of company operations, such as server and bandwidth costs, compared to the cost of newspaper paper and printing costs, and secondly, its advertising and marketing department is completely the same as the traditional advertising industry, either relying on its own employees to pull advertisements , or entrust an advertising wholesaler to find an advertisement. (Which method to use depends on whether you pay high wages to your own employees or high commissions to intermediaries.) Third, the order processing and placement is basically manual.Although Yahoo uses a database to manage all of its advertisements, how the advertisements are placed, and where on its type of web pages, is a semi-manual work.Therefore, although Yahoo and Microsoft's MSN are very good in network technology, and their operating efficiency may be higher than that of traditional newspaper media, the way of operation is actually a replica of traditional media.
Although Google is classified as the same type of Internet company as Yahoo, its advertising model is fundamentally different from that of Yahoo.As a company, of course, Google also has basic operating expenses, including data center expenses and bandwidth expenses, which no one can save.However, Google has largely eliminated the cost of the second and third types of advertising.In this way, Google is not only ahead of its opponents in terms of keyword advertising matching technology, but more importantly, its business model is a whole generation ahead of the traditional advertising industry including Yahoo and Microsoft MSN.In this way, it actually uses "foreign guns and cannons" to attack Yahoo and MSN in business.
To understand the essence of Google's advertising system, we must first start with the business model of Double Click.Double-click was born in the late 1990s when the Internet was developing rapidly.All kinds of small and medium Internet sites hope to get a share of online advertising to pay for their operating costs, but these small sites cannot afford too many salespeople to solicit advertisements.On the other side, there are many online merchants who need to advertise online, but these small merchants don't have the energy to discuss advertising matters with each website.Therefore, the double-click company acts as an agent for both ends to bridge the two sides.On the one hand, it has many sales people to pull advertisements, on the other hand, it has established a system to automatically place advertisements to online media (websites).That is to say, it automates order processing and delivery.Its order processing and automatic delivery are implemented as follows:
When the salesperson pulls in the advertisements, Double-Click Company will make them into graphics and animations in several display modes according to several templates, such as banner graphic advertisements, pop-up graphic advertisements, and embedded audio and video advertisements.Each advertisement exists in its server in the form of a database, and can be obtained from its server through a JavaScript.For the website (media) that wants to advertise, it only needs to open an account in the double-click company, and then tell the double-click company what kind of advertisement it intends to do, whether it is a banner graphic or a pop-up animation, etc., and the double-click company will give it some special Links (automatically generated based on information fingerprints, please refer to "The Beauty of Mathematics" for information fingerprints), and then the website only needs to insert these links into its own web pages, as shown in the figure below.The entire ad serving process is automatic.
When a reader of this website browses a webpage of this website, his browser will send a request to the website to get the webpage, and the website will return a webpage containing the link of the double-clicked company.Before the user sees the content of the webpage, the browser will interpret the webpage first, get the link of the double-click company and send the advertisement request to the double-click company, and the double-click company will "randomly" extract the advertisement from the database and return the advertisement to the user.At the same time, the double-click company will know which website the request is from according to the information fingerprint in the request, so as to count the number of times the website displays the advertisement.The entire ad serving process is completely automatic.
In Double-Click's advertising business model, its order processing and delivery are completely automatic, so it goes a step further than traditional advertising methods.However, Double-Click Company has no way of knowing the content of the website and the needs of Internet users during the process of advertising, so its advertising is completely random, and the advertising effect is very poor.Although the double-click company tried to target readers through the personal information of Internet users, it was sued by an organization that protects user privacy, and it was settled after paying tens of millions of dollars in compensation, so it no longer tries to do any specific user targeting. Ad served. (The lawsuit is so far-reaching that it makes it impossible for all social networking sites to use user information for advertising.)
Google's search ads are completely automatic, just like double-click companies.Not only that, but Google's search ads determine the content of the ads based on the keywords searched. The ads are highly targeted, and the effect is an order of magnitude higher than that of the double-click company's random ads.For placing advertisements on webpages, although there are no search keywords, Google extracts keywords from the content of webpages, which can still ensure that the content of advertisements is related to the content of webpages.
Another major improvement of Google over Double-click is that it has created a system that automatically accepts advertisements, thus basically eliminating the cost of advertising sales.No matter who wants to advertise on Google, just fill in a form on Google's website, write a few keywords and advertisement content that you are interested in, and then tell Google the advertising fee that Google is willing to pay every day.In order to make it easier for advertisers to understand the effect of advertisements, Google has an automatic simulation system that tells merchants how many people can see their ads every day and how many people click on them. (Businessmen can calculate the advertising fee per view or click.) In order to make merchants satisfied with the effect of Google keyword advertising, Google charges according to the number of clicks on the advertisement, not the number of times the advertisement is displayed.There is no doubt that advertisers like this charging method, so many companies and individuals have switched from other advertising media to Google.
Of course, there were many engineering problems that had to be solved for this automated system to work correctly.The following problems must be solved in building an automatic advertising system.
First of all, there can be no ad design that requires human participation, so Google's search ads are all text.Although text ads are not as vivid as graphics, they make web pages clean and more popular with readers.
Second, for different advertisements triggered by the same search, the problem of ranking must be solved.Yahoo and Baidu basically rank according to the level of payment, so many advertisements have nothing to do with the content of the search.A Yahoo scientist pointed out his own problem at an academic conference in Stanford in 2006.When people search for Boeing 747 on yahoo, ebay's ad is in the first place, because ebay buys a lot of ad words (including 747) and pays a lot; Google doesn't have the same problem.If the problem cannot be solved automatically, manual intervention is inevitable.
Third, it is necessary to be able to identify malicious clicks to cheat money.
Fourth, to control the rhythm of each advertisement.For example, if a company is willing to spend one hundred dollars a day on Google and pay a higher price for each click, its budget may be spent in one hour every morning, and the company's advertisements will not be visible for the next twenty or so hours. Well, for people who don't surf the Internet early in the morning, they will never see this ad.
Fifth, there must be a way to automate billing and identify invalid credit cards and bank accounts.
Sixth, and most importantly, the system must be self-healing.All data must be kept in many copies.When a server goes down, requests arriving at it must be picked up automatically by other servers of the same type.When an entire data center fails, the traffic arriving at this data center must be automatically transferred to a nearby data center in the shortest possible time.
There are still many technical problems in this category, so I won't list them one by one. Google's approach has greatly lowered the threshold for national and even global advertising, and is very popular with small and medium-sized enterprises.Therefore, as soon as Google's advertising system was launched, many merchants joined in.Before that, Google already had a very large search traffic, and now Google has gradually established its own advertiser alliance, and a perfect money printing machine has been built.Every day, small and medium-sized enterprises and individuals go to Google's advertising system to register, fill in forms and provide payment methods, and their advertisements can be found on Google on the same day.On the other hand, Google has many users who search for commercial information every day, and they always click on the advertisement for a few percent of the time, so that Google receives money.This system is completely automatic, even if all Google employees go home to sleep, as long as the machine does not crash, Google will continue to collect money.It is no exaggeration to say that today ninety-nine percent of Google's employees leave the company for a one-month vacation, and Google's turnover this month will not have much impact.
Another wonderful thing about this banknote printing machine is that it can continuously improve itself through machine learning (Machine Learning) and "print" more and more banknotes.When the number of advertisers and search users exceeds a threshold, the statistical information of their clicks on search results and advertisements can be used to improve the matching between search and advertisement, making the advertisement and search content more relevant, and the click-through rate will be higher.In this way, the effect of advertising will be better, and advertisers are more and more fond of advertising.
In this money printing machine, the cost of operation is the cost of the data center and the cost of bandwidth, while the indirect cost is the R&D cost of building and improving the money printing machine.In this money printing machine, the degree of automation must reach a threshold before it can operate automatically.And when its automation is higher, the cost is lower.In contrast, Microsoft has not had its own advertising source for a long time, so naturally it cannot build this money printing machine.Yahoo, on the other hand, has not paid enough attention to engineering for a long time. Its advertising system is too low in automation and has not reached the threshold of becoming a money printing machine, so profits cannot increase.
Google's advertising model cuts two of the three major costs in the traditional advertising industry, greatly reducing the entire operating cost, and at the same time makes it possible for small and medium-sized enterprises and individuals to advertise on global media. Relying on this revolutionary business model, Google has won the first place in the Internet advertising industry.
When a reader of this website browses a webpage of this website, his browser will send a request to the website to get the webpage, and the website will return a webpage containing the link of the double-clicked company.Before the user sees the content of the webpage, the browser will interpret the webpage first, get the link of the double-click company and send the advertisement request to the double-click company, and the double-click company will "randomly" extract the advertisement from the database and return the advertisement to the user.At the same time, the double-click company will know which website the request is from according to the information fingerprint in the request, so as to count the number of times the website displays the advertisement.The entire ad serving process is completely automatic.
In Double-Click's advertising business model, its order processing and delivery are completely automatic, so it goes a step further than traditional advertising methods.However, Double-Click Company has no way of knowing the content of the website and the needs of Internet users during the process of advertising, so its advertising is completely random, and the advertising effect is very poor.Although the double-click company tried to target readers through the personal information of Internet users, it was sued by an organization that protects user privacy, and it was settled after paying tens of millions of dollars in compensation, so it no longer tries to do any specific user targeting. Ad served. (The lawsuit is so far-reaching that it makes it impossible for all social networking sites to use user information for advertising.)
Google's search ads are completely automatic, just like double-click companies.Not only that, but Google's search ads determine the content of the ads based on the keywords searched. The ads are highly targeted, and the effect is an order of magnitude higher than that of the double-click company's random ads.For placing advertisements on webpages, although there are no search keywords, Google extracts keywords from the content of webpages, which can still ensure that the content of advertisements is related to the content of webpages.
Another major improvement of Google over Double-click is that it has created a system that automatically accepts advertisements, thus basically eliminating the cost of advertising sales.No matter who wants to advertise on Google, just fill in a form on Google's website, write a few keywords and advertisement content that you are interested in, and then tell Google the advertising fee that Google is willing to pay every day.In order to make it easier for advertisers to understand the effect of advertisements, Google has an automatic simulation system that tells merchants how many people can see their ads every day and how many people click on them. (Businessmen can calculate the advertising fee per view or click.) In order to make merchants satisfied with the effect of Google keyword advertising, Google charges according to the number of clicks on the advertisement, not the number of times the advertisement is displayed.There is no doubt that advertisers like this charging method, so many companies and individuals have switched from other advertising media to Google.
Of course, there were many engineering problems that had to be solved for this automated system to work correctly.The following problems must be solved in building an automatic advertising system.
First of all, there can be no ad design that requires human participation, so Google's search ads are all text.Although text ads are not as vivid as graphics, they make web pages clean and more popular with readers.
Second, for different advertisements triggered by the same search, the problem of ranking must be solved.Yahoo and Baidu basically rank according to the level of payment, so many advertisements have nothing to do with the content of the search.A Yahoo scientist pointed out his own problem at an academic conference in Stanford in 2006.When people search for Boeing 747 on yahoo, ebay's ad is in the first place, because ebay buys a lot of ad words (including 747) and pays a lot; Google doesn't have the same problem.If the problem cannot be solved automatically, manual intervention is inevitable.
Third, it is necessary to be able to identify malicious clicks to cheat money.
Fourth, to control the rhythm of each advertisement.For example, if a company is willing to spend one hundred dollars a day on Google and pay a higher price for each click, its budget may be spent in one hour every morning, and the company's advertisements will not be visible for the next twenty or so hours. Well, for people who don't surf the Internet early in the morning, they will never see this ad.
Fifth, there must be a way to automate billing and identify invalid credit cards and bank accounts.
Sixth, and most importantly, the system must be self-healing.All data must be kept in many copies.When a server goes down, requests arriving at it must be picked up automatically by other servers of the same type.When an entire data center fails, the traffic arriving at this data center must be automatically transferred to a nearby data center in the shortest possible time.
There are still many technical problems in this category, so I won't list them one by one. Google's approach has greatly lowered the threshold for national and even global advertising, and is very popular with small and medium-sized enterprises.Therefore, as soon as Google's advertising system was launched, many merchants joined in.Before that, Google already had a very large search traffic, and now Google has gradually established its own advertiser alliance, and a perfect money printing machine has been built.Every day, small and medium-sized enterprises and individuals go to Google's advertising system to register, fill in forms and provide payment methods, and their advertisements can be found on Google on the same day.On the other hand, Google has many users who search for commercial information every day, and they always click on the advertisement for a few percent of the time, so that Google receives money.This system is completely automatic, even if all Google employees go home to sleep, as long as the machine does not crash, Google will continue to collect money.It is no exaggeration to say that today ninety-nine percent of Google's employees leave the company for a one-month vacation, and Google's turnover this month will not have much impact.
Another wonderful thing about this banknote printing machine is that it can continuously improve itself through machine learning (Machine Learning) and "print" more and more banknotes.When the number of advertisers and search users exceeds a threshold, the statistical information of their clicks on search results and advertisements can be used to improve the matching between search and advertisement, making the advertisement and search content more relevant, and the click-through rate will be higher.In this way, the effect of advertising will be better, and advertisers are more and more fond of advertising.
In this money printing machine, the cost of operation is the cost of the data center and the cost of bandwidth, while the indirect cost is the R&D cost of building and improving the money printing machine.In this money printing machine, the degree of automation must reach a threshold before it can operate automatically.And when its automation is higher, the cost is lower.In contrast, Microsoft has not had its own advertising source for a long time, so naturally it cannot build this money printing machine.Yahoo, on the other hand, has not paid enough attention to engineering for a long time. Its advertising system is too low in automation and has not reached the threshold of becoming a money printing machine, so profits cannot increase.
Google's advertising model cuts two of the three major costs in the traditional advertising industry, greatly reducing the entire operating cost, and at the same time makes it possible for small and medium-sized enterprises and individuals to advertise on global media. Relying on this revolutionary business model, Google has won the first place in the Internet advertising industry.