Marketing Matters: The History of Google Ads

Google’s advertising platform, now known as Google Ads, has come a long way since its inception. What started as a small experiment has grown into one of the most influential and profitable online advertising systems in the world. Google Ads is now Alphabet’s most important source of revenue and will bring in $224.47 billion in 2022.

Before Google launched the world’s first self-service online advertising product – Google AdWords – in 2000 as an experiment with 350 advertisers, Google sold only premium sponsorship packages that allowed companies to have their logo and a short text appear on the search engine’s home page. The minimum budget for a Sponsored Link is $10,000 over 3 months.

AdWords was originally based on the cost-per-impression model (CPM), in which advertisers pay each time their ad is displayed, regardless of whether it is clicked. It was not until 2002 that a switch was made to a cost-per-click (CPC) model, which made online advertising more accessible and measurable. The most expensive search term in Google Ads history is “insurance,” with some companies willing to pay nearly $55 per click. In second place is “gas/electricity,” which is only a few cents cheaper!

AdSense launched in May 2003, enabling users to display targeted AdWords on their own websites. 

2005 was a big year when it came to releasing new platform features as we know them today. In June, Site Targeting was introduced, allowing advertisers to choose specific sites to appear on rather than just targeting specific keywords. In just two months, Google introduced Quality Score, which became a pivotal metric for ad rankings, as it considered the relevance of an ad’s keywords, the quality of a landing page, and CTR. The first Google Analytics and AdWords API were launched in November, allowing developers to interface directly with the platform to create custom applications.

The ability to target specific demographic groups in the U.S. was introduced in 2006. It was also the year Google acquired YouTube for $1.65 billion. This opened the gates for video advertising and gave AdWords clients a new platform and format.

In April 2007, Google acquired DoubleClick, providing advertisers with a simple and efficient way to manage both search and display ads in one place, while offering superior tools for targeting, serving and analyzing online ads.

Google introduced the Display Network in 2008, which allows ads to be served on many websites beyond Google’s search results. It includes more than 2 million websites and reaches more than 90% of the world’s Internet users, making it one of the most extensive advertising networks in the world.
This year also saw a beta test of demographic bidding on the content network, which allows advertisers to change bids or even stop ads for demographic profiles from showing on certain sites.

From 2009 to 2013, Google rolled out:

  • Interest-based advertising, 
  • AdSitelinks, which allowed advertisers to provide additional links to contend deep within their sites, 
  • The ability to reach users based on their past interactions with a website, 
  • Negative keywords, 
  • Targeting based on location and location of interest, 
  • Dynamic Search Ads, which allowed for the specific content on your website to be shown, depending on a query,
  • And lastly, Enhanced Campaigns, which help advertisers reach people based on location, time of day, device type, and more. Across all devices, without having to set up or manage multiple accounts. 

In 2016, Google AdWords removed almost all ads from the right sidebar on search results pages, moving closer to a mobile-first approach. From that moment on, four ads would appear above the natural results and three below. The service also increased text ad limits for the first time in history to two headlines (30 characters each), one description line (80 characters), and an automatically generated domain in the display URL. In the next year, Similar Audiences for Search and Shopping and Customer Match for Shopping became available. 

In 2018, Google decided to retire the AdWords name and rebranded the service as Google Ads. This was part of a broader effort to simplify their branding and reflect the platform’s evolution beyond just “words.”

In April 2020, Google extended more stringent identity verification to all advertisers. A personal ID and/or business records must now be verified before advertising. And in December, user control over ads became a priority for Google. First, ad settings were introduced that allow users to know why they were shown that ad and to opt out of certain categories and ads. For users struggling with alcohol and gambling, this was a tremendously powerful gesture. This line of user-friendliness continued in 2021, when Google allowed users to see all the ads an advertiser had run in the past.

That same year, Google made Performance Max available to all Google Ads customers for free, making it easier to tailor campaigns to real-time insights.

In February 2022, Search Ads 360 was born, enabling advertisers to create cross-platform campaigns, being more intuitive to use and reflecting insights from years of data collection.

Google Ads has been in constant flux since its launch in 2000. The 2022 security and privacy updates have prompted advertisers to invest more in first-party data, even as the phase-out of third-party cookies has been pushed back to 2024. However, 2023 promises to be very fruitful when it comes to updates. First, the new version of Google Analytics came out in July with new audience settings and metrics. Marketers are looking forward to the new local ad options like Auto-Suggest, Similar Places, and Navigation Ads. Soon you will also be able to see what ads your competitors are running in the SERP. And Youtube will have audio ads and automatic voiceovers. Stay tuned and discover the exciting new possibilities Google Ads has to offer!