"Google's Next Runaway Success: AdWords Select kicks in a network effect for online advertising", Business 2.0 Magazine, November 2002. See also Google's description of the AdWords service.
Google charges by the link and displays most prominently those ads which have the highest click-through rate. (Holding click-through rate fixed, it also boosts those who pay higher price per click-through.) Why don't other sites that raise revenues through advertising do the same thing? Most other sites charge on the basis of "eyeballs" and display prominence depends only on negotiated terms with advertiser. How does Google's policy strengthen the network effects associated with building up (i) the network of paying advertisers and (ii) the network of consumers who pay attention to the ads?
[Categories: Demand (Network externality)]
3:24:41 PM 
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