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April 14, 2007

Why There's No DoubleClick Ad on

John Battelle tells Google's story in "The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture". An interesting episode happens in 1999, when Google still tried to find a business model and when DoubleClick's banners didn't seem the right way to make money.

Near the end of 1999, Google Inc. had thirty-nine employees, most of whom were engineers of one stripe or another. Omid Kordescani, Google's newly hired sales chief, was still plowing the fields for enterprise deals, but they were few and far between. With more than $500,000 (and growing) going our the door each month and less than $20 million in the bank, you didn't need a Stanford PhD to do the math: the company needed a business model that worked.

There was always the failback of simply running banners on Google's prodigious traffic — one deal with DoubleClick, an ad network that specialized in serving graphical banners, would probably net the company millions of dollars. But that felt like a sellout — DoubleClick's ads were often gaudy and irrelevant. They represented everything Page and Brin felt was wrong with the Internet "They didn't want to turn the Web site into the online version of Forty-second Street," recalls investor and director Michael Moritz.

Instead, the young executive team decided to try a more focused approach—it would sell text-only ads to sponsors targeting particular keywords. When you searched for "Ford cars," for example, an ad would appear at the top of the results for Ford Motor Company. These first advertisements were sold on a cost per thousand (CPM) model. (…)

Turns out the ads worked well enough, but they didn't scale. Revenue was limited by Kordestani's ability to sell, and despite his talents, it was difficult to book enough orders to create a healthy business. "It didn't generate much money," Brin recalls, referring to the program as a "hand-patched life preserver." DoubleClick, he adds, was the ocean liner Google would swim to should the life preserver fail.

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