Starting with a few algorithms, Sergey Brin and Larry Page coded a company from scratch that today has a market cap approaching $90 billion and a stock price of more than $300 a share. When conventional wisdom said there was no money in search—that a search engine had to be an add-on to a portal to attract users—Brin and Page figured out how to sell ads based on keyword searches. Although Overture, now owned by Yahoo!, patented the idea, Google perfected it.
In seven years, the company has never known failure. But the more Google’s stock price kisses the clouds, the more it looks like the search monster may have peaked. About 99 percent of Google’s revenue comes from advertising. Roughly half of that money comes from paid keyword searches—when I search for “edible body paint,” I’m greeted by a number of “Sponsored Links” for online merchants (Kama Sutra Products, Body Candy) that have bid on these specific keywords. The other half of Google’s ad revenue comes from its AdSense program, which offers commissions to site owners who run ads on their Web pages.
But if you live by advertising, you can die by advertising.