Karmazin’s destination that day was Building 21 at 2400 Bayshore Parkway, offices Google had acquired from the giant computer and software vendor Sun Microsystems. The two-story building shaded by trees was called the Googleplex, home to the company’s engineers and separate from the building housing Google’s finance and sales staff. Just outside the conference room on the second floor the visitors paused before a twenty-one-inch CRT monitor resting on a small table, which displayed a rotating three-dimensional globe flashing with bursts of colored light, each burst representing millions of Google searches being conducted all over the world. The screen was dark only in places like central Africa and Siberia, where the lack of electricity precluded searches. A second monitor showed samples of the search queries being conducted around the globe at that moment. “You realized the power of it,” said Bressler. “And at the same time, you walked into this ratty conference room.”
Waiting to greet them in the cramped Yellow Room was Google cofounder Larry Page, then thirty. With jet-black eyebrows, short black hair pushed down on his forehead, a permanent five-o‘clock shadow, dark eyes that often remain fixed on the floor, and wearing a dark T-shirt and jeans, he seemed strange to Karmazin, as he does to many who meet him for the first time. He was stonily silent. Sitting next to Page was Google CEO Eric Schmidt, whose shirt and tie, frameless glasses, and relatively old age-he was then forty-eight-were more welcoming. “Eric looked like me,” said Karmazin. Google’s cofounder, Sergey Brin, born the same year as Page, arrived late and out of breath in a T-shirt, gym shorts, and on Rollerblades.
Karmazin began the meeting with what he thought was a joke: “Don’t worry, guys, I’m not here to buy you!” Over the next several hours, the three computer scientists and the mogul sat in mismatched chairs on a tan and soiled shaggy carpet, discussing their respective businesses. Schmidt and Brin did most of the talking, and they spent as much time speaking of Google’s culture-engineers who always worked in teams and were given a sense of freedom, three free and healthy meals a day, free massages, hair-cuts, and medical attention-as about technology.
As they adjourned for lunch, Karmazin, walking past offices crowded with engineers and dodging colored physio balls used for stretching or as chairs for staff meetings, saw the evidence. Lunch was served in the employee cafe-six white Formica tables surrounded by metal folding chairs-where free buffet meals were dispensed daily by Charlie Ayers, whom the Google founders proudly introduced as the former chef for the Grateful Dead. To Karmazin, a corporate belt-tightener who had endeared himself to Wall Street by selling the Picassos off the walls of CBS headquarters, the perks seemed extravagant. Google’s corporate mission statement proclaims an aim “to organize the world’s information and make it universally accessible and useful.” It quickly became apparent that Sergey Brin and Larry Page saw themselves as missionaries. Karmazin’s only corporate mission is to make money.
Schmidt and Brin explained that Google was a digital Switzerland, a “neutral” search engine that favored no content company and no advertisers. Their search results were “objective,” based on secret algorithms, and no one could bribe his way to the top of a search. They explained how search worked. The speed of each search-now averaging about a half second to answer each query-relied on an elaborate infrastructure. Google in 2002 had scanned or indexed 3.1 billion Web pages, about 80 percent of what was then the World Wide Web. (By early 2009, there were an estimated 25.2 billion Web pages.) These pages were stored in a giant database and indexed by subject. Google software distributed each query among many hundreds of thousands of PCs and servers that are stacked in data centers and which work in tandem, simultaneously collecting different document links. The search is accelerated because Google stores on its servers three copies of its previous searches. Thus, Google does not have to scan the entire Web each time the same question is asked.
When a question is typed into the Google search box, the task is to divine the searcher’s intention: when you wrote “Jobs” in the query box, did you mean employment or Steve Jobs? The query may produce thousands of links, but the promise of Google-what Google considers its secret sauce-is that the ones that appear near the top of the search results will be more relevant to you. The company’s algorithms not only rank those links that generate the most traffic, and therefore are presumed to be more reliable, they also assign a slightly higher qualitative ranking to more reliable sources-like, for instance, a New York Times story. By mapping how many people click on a link, or found it interesting enough to link to, Google determines whether the link is “relevant” and assigns it a value. This quantified value is known as PageRank, after Larry Page.
All this was interesting enough, but where the Google executives really got Karmazin’s attention was when they described the company’s advertising business, which accounted for almost all its revenues. Google offered to advertisers a program called AdWords, which allowed potential advertisers to bid to place small text ads next to the results for key search words. Nike and Adidas might, for example, vie for ad space adjacent to keywords such as sneakers or basketball. All auctions for ads are run online, through an automated system. The highest bidder gets to place a small text ad appearing at the top of a gray box to the right of the search results; up to ten lower bidders win ad space below the coveted top listing. The minimum bid per keyword is set by Google. A commonly searched word or phrase like eBay or Jet Blue might cost only a penny or two, while a more esoteric phrase like helicopter parts might fetch fifty dollars per click. In a second advertising program, AdSense, Google served as a matchmaker, marrying advertisers with Web destinations. If Intel wanted to advertise on technology blogs or a hotel in London wanted to promote itself on travel sites, Google put them together via a similar automated system. In both auctions, there were no ad reps, no negotiations, no relationships. Unlike the ads Karmazin and traditional media had sold for more than a century based on the estimated number of people reading a newspaper or watching a program (called CPMs, or cost per thousand viewers), Google’s system (CPC, or cost per click) ensured that advertisers were charged only when the user clicked on an ad.
It was Google’s ambition, Schmidt and Page and Brin liked to say, to provide an answer to the adman’s legendary line “I know half of my advertising works, I just don’t know which half.” To help them sort through the digital clicks, Google and other new media companies relied on what are called cookies, software files that reside on a user’s browser and keep track of their activities online: search questions asked, Web pages visited, time spent on each Web page, advertisements clicked on, items purchased. Because of these cookies, Google’s searches improve with use, as they become more familiar with the kind of information the user seeks. Although the cookie doesn’t identify the user by name or address, it does assemble data advertisers crave and couldn’t get from traditional media companies like Karmazin’s.
And unlike traditional analog media companies, which can’t measure the effectiveness of their advertising, Google offered each advertiser a free tooclass="underline" Google Analytics, which allowed the advertiser to track day by day, hour by hour, the number of clicks and sales, the traffic produced by the keywords chosen, the conversion rate from click to sale-in sum, the overall effectiveness of an ad.
Thus, the several hundred million daily searches Google performed in 2003 (today the number is 3 billion) provided a tantalizing trove of data. Google helped advertisers target consumers not just by age, sex, income, profession, or zip code, but by personal preferences for leisure time activities, frequently visited locations, product preferences, news preferences, etcetera. Google took much of the guessing out of advertising. “Our business is highly measurable,” Schmidt said. “We know that if you spend X dollars on ads, you’ll get Y dollars in revenues per industry, per customer.”