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Networked Life by Mung Chiang

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2 How does Google sell ad spaces?

2.1     A Short Answer

Much of the web services and online information is “free” today because of the advertisements shown on the websites. It is estimated that the online ad industry worldwide reached $94.2 billion in 2012. Compared with traditional media, online advertisements’ revenue ranked right below TV and above newspapers.

In the early days of the web, i.e., 1994-1995, online advertisements were sold as banners on a per-thousand-impression basis. But seeing an ad does not mean clicking on it or buying the advertised product or service afterwards. In 1997, GoTo (which later became Overture) started selling advertisement spaces on a per-click basis. This middle ground between ad revenue (what the ...

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