August 07, 2005

From Humble Beginnings to a Multi-Billion Dollar Industry – Search Engine History

The Engines

Search engines have come from robotically crawling as many sites as possible to using complex algorithms to include only the most relevant results for its users. They were first developed at universities with “Wandex” being the very first. These early engines did not provide a very user friendly search experience. Their back ends just cataloged as many pages as it could and the front end did not have a good system of displaying relevant results. There were also directories such as dmoz and Yahoo! where people would manually decide which sites to include, but this method is very time consuming and can miss many relevant sites.

Old Google LogoIn 1996, Google humbly began as a Stanford University project called BackRub by two graduate students, Larry Page and Sergey Brin, in an effort to rate and sort listings by analyzing “back links”. They used the presumption that if other people felt strongly enough to link to a specific website, then that link is a sign that the website contains valuable content – the more “back links” a site has, the more valuable, or relevant it is. BackRub became so popular that at one point, over half of Stanford’s network traffic was being used by their program.

Search Finds Revenue

Search engines needed to make money and many would display banner ads when users searched for terms. In 1998, introduced paid placement with the idea that websites who pay to be listed will be more relevant for searchers. Then, in 1999, AltaVista, one of the top engines at the time, shook the search industry with its launch of an auction based paid inclusion program. Websites could bid to show their listings for two weeks when certain keywords were searched. However, after only a few months, AltaVista ended their advertising program indicating the other search engines would need to be careful when approaching advertising.

Search Turns ProfitableBy the end of 2000, the major search engines were offering some sort of paid listings program. Most were using pay per click, paid inclusion (paying a specific fee to be listed), or both. GoTo continued to grow using its auction based pay per click system, rebranded its company as Overture, and finally turned into Yahoo! Search Marketing when it was acquired by Yahoo! in 2003. Google has had its AdWords PPC program in place since 2000. Yahoo! and Google have had partners such as MSN, AOL, and other major engines, but as the industry continues its rapid growth, these partners are beginning create their own pay per click services; the two most recent being MSN Keywords and Ask Jeeves Sponsored Listings.


U.S. and Canadian advertisers spent $4 billion on search engine marketing in 2004 with over 80% of that figure on paid placement alone. Being a new and booming industry, there are many changes occurring in the overall industry. Search engines are continuously trying to increase revenue by targeting niche markets. Pay Per Call has been started by MIVA (formerly FindWhat) to show advertisements with phone numbers that even businesses without a website can use. Search engines are broadening their reach with services such as content and local targeting. Local targeting is also a growing market that can be used by small businesses to compete online in their geographic area. Content programs will show relevant ads based on the overall content on the page or site. They are also in the process of bringing image/banner ads back into their advertising mix. These are just some of the many changes happening in the industry today. Being such a dynamic industry tomorrow will bring even more innovations.

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