Understanding Google - Macleans.ca

Understanding Google

Look no further than the company’s chief economist

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Hal Varian, a 62-year-old professor at UC Berkeley, is Google’s chief economist. Why, you might ask, does a company like Google need one of those? Varian is the brains behind Google’s complex and revolutionary AdWords system. AdWords is the method that Google uses to sell ads online and it is what Wired describes as possibly “the most successful business idea in history.” It earned the company $21 billion last year. But it is also incredibly complex, and based on some groundbreaking economic ideas. Basically, it’s “the world’s biggest, fastest auction.” Every time someone searches—millions of times a day—an automatic auction takes place, matching advertisers to search results. It’s a system that Varian helped hone to near-perfection, and one that’s feverishly analyzed by Google (which has even developed a Keyword Pricing Index to help track  the auctions). It has turned the ad business from Mad Men glamorous to flat out geeky.

Wired

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