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Revenue Models

Pay Per Click (PPC) Advertising

In February 1998, GoTo (founded by Bill Gross) offered advertisers the option of bidding to appear at the top of search results in response to specific keyword searches.

On October 8, 2001, GoTo.com, Inc. renamed itself Overture Services, Inc. and, in 2003, Overture was acquired by its biggest customer, Yahoo!, for $1.63 billion.

GoTo's business model was based on the idea that web sites that pay more are probably better sites for that search query, so the search engine's ranking was determined by the amount each bidder was willing to pay. As successful and profitable as this model turned out to be, it never achieved the full potential of the PPC intuition, which would later be fully uncovered when Google understood that, in order to build a successful search engine and therefore bring traffic to its ads, search engine results must not be determined by advertisers in any way.

Google separated completely its advertising business from its search engine algorithm used to rank results.

CPM Advertising

Before the advent of PPC, advertising models were pretty much limited to CPM (Cost per mille), mostly used by large advertisers (the only one who could afford it) on the internet portals of the day, such as Yahoo. The concept of targeted traffic wasn't yet a basic element of online advertising.

Affiliate Programs

Before Amazon.com launched its popular affiliate program, in July 1996, there were already a number of affiliate programs on the web: PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage (April 1996), and a few others.

In June 1997, Amazon applied for a patent (6,029,141) on all the essential components of an affiliate program, which was granted in February 2000.

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