Google AdWords NARRATOR: What if you knew precisely what your customers wanted at any time and could instantly provide them with it? Well, that's the holy grail that marketers and advertisers have been searching for, for decades because with that information, they could create tailor-made ads that would target directly to customers who were likely to buy their products without wasting money on the people who wouldn't. Just two years after voicing doubts about advertising, Page and Brin went into advertising and changed that industry forever with a system called "AdWords." Type in a specific search term and specific adverts appear in two sections of the Google page. Now if you click on one of those adverts, money flows straight to Google, as the advertiser pays for your traffic to their site. For the consumer, it's as simple as that. But what makes this special for advertising companies is that it's so targeted -- a selling process initiated by a consumer looking for something in particular. Unlike the failed dotcoms, AdWords seem to be the perfect marriage between what the web can do and what consumers want. [Eric Schmidt, CEO of Google] ERIC SCHMIDT: The first rule of the Internet is that you can speak to each individual as though they're a different person. It's not a broadcast mechanism. It's a narrow-casting mechanism. And what AdWords is, is it's a single ad to a single person every time. [Douglas Rushkoff, Author of Life Inc.] DOUGLAS RUSHKOFF: It's catching people in motion. It's catching people who are already in motion towards something already goal-oriented, already halfway there. NARRATOR: Through targeted advertising to consumers, Google and ultimately the web had found a way to pay for itself. But Google's ambition ran even deeper than money. Page and Brin wanted to transform the web itself. They built into their advertising machine the analytical insight of their search engine and crucially this is what cemented Google's influence on the web. Their goal was to filter for consumers relevant ads from the irrelevant ones. So every time you activate AdWords by searching on Google, it unleashes a chain of events which can be illustrated like this. [Background Music] Let's say a car company wants to see their ad appear at the top of the page when someone searches for the words "new car." They tell Google the amount they're willing to pay to make their advert appear. The process is actually an auction so lots of companies might be competing for the top spot. But Google doesn't necessarily give the top spot to the highest bidder. It judges ads based on how relevant they are to the search and arranges indicators of the quality of the advertising company's website. In simple terms, 'P' the price the winner pays is related to the value of bid multiplied by quality. This gets top billing. In this way, Google doesn't just rake in profits, but positions itself as a powerful arbiter of quality and relevance online. ERIC SCHMIDT: Google will make the entire world's information available to you and occasionally will show you some advertisements. If you want to click on those ads, there might be something very valuable for you to click on but you don't have to. I think that's the trade. NARRATOR: AdWords is what made Google the dominant player on the web and very quickly the rest of the web fell into line behind this model. Offer your products and your services for free while funding it behind the scenes with highly targeted advertising. Now the irony is that this ultra-capitalist model requires that the web stay true to its non-capitalist roots. It has to remain an open network, easy to search, with no pay-per-view, and no areas that Google can't go. [Background Music] This open vision of the web also requires us users to play our part, consuming the eye candy in a virtual suite shop of free content. The longer we're online, the more attention we pay, the more information businesses of all kinds can capture, and the more advertising they can sell. ^E00:04:31