Targeted

CHAPTER 3

Auctions and the Development of Paid-Search Advertising

Back in the late 1990s, paid-search advertising itself was searching for a new business model. It had gone through several stages of business model development. “If search were a religion, it was polytheistic,” says Danny Sullivan, founding editor of SearchEngineLand.com.¹

Initially search engine marketing was a loss leader for portals such as AOL and Yahoo!. In paid search’s first generation, search engine companies offered advertisers only the option of buying a paid listing on the SERP, called a static listing. Advertisers paid a set fee for the keyword, for the same spot on the SERP, for a set period. Everything was sold in advance, unchangeable, and unresponsive. It was as ...