http://www.webpronews.com/topnews/2007/03/22/googles-ads-less-is-more

In class, we began to discuss how Google runs their auctions for their ad slots. But, one thing that this article brings to attention is the fact that Google runs fewer ads than its competitors. In a linked blog, we find that when “San Francisco Sushi” is searched on Google, we get 2 ads on top and 3 ads on the side. When the same search is done on Yahoo, there are 2 ads on top, but on the side there are a whopping 8 ads! So, why does Google seem to “limit” the revenue it could be making by only offering a few ads?

The answer lies in the research Google has done. Their research has discovered that fewer ads means lower revenue in the short term. However, in the “long term the advertising revenue actually goes up.  Why?  They found their users started trusting the advertising more and were more likely to click on ads.” With fewer ads, Google can provide ads that are more relevant to the search. This ties into Google’s new “pay per action” advertising policy, as advertisers will have to pay for fewer accidental clicks. With more relevant ads, and less clutter on their web searches, Google feels that it can get potential clients to its advertiser’s websites.