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Hal Varian & The Google Auction

September 22, 2012

Hal Varian, Google’s Chief Economist, explaing Google’s AdWords auction, based on William Vickrey’s second price auction thesis published in 1961.

What seems like an obvious innovation (bid x quality score = ad rank) helped Google knock the snot out of Overture (and Yahoo following their acquisition of Overture for $1.6B in 2004).

The tweak allowed Google to go from zero to $5B in revenue a year in just four years. Amaaazing.

~ Zorilla City


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