Build story · United States · 1996–2023
Google: turning search into the world's biggest ad business
Two Stanford PhD students built a better search engine, then paired it with an auction-based ad system that charged only for clicks — creating a business earning hundreds of billions a year.
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
by the numbers
- Seed cheque (1998)
- $100,000
- IPO (2004)
- about $1.67 billion raised at $85 a share
- Global search share
- roughly 90%
- Alphabet revenue (2023)
- about $307 billion
- Advertising share of revenue
- over 75%
What happened
Larry Page and Sergey Brin's ‘BackRub’ project ranked web pages by how many other pages linked to them — PageRank. Results were far more relevant than the keyword-stuffed engines of the late 1990s. Google incorporated in 1998, helped by a $100,000 cheque from Sun co-founder Andy Bechtolsheim.
The company resisted banner ads and launched AdWords in 2000: small text ads next to relevant results. In 2002 it moved to a pay-per-click auction where ad position depended on both the bid and the ad's click-through rate, so relevant ads won even at lower bids. Advertisers paid only when someone clicked, which made results measurable.
Google's 2004 IPO used an unusual Dutch auction and raised about $1.67 billion. Search share climbed to roughly 90% worldwide. Acquisitions such as YouTube (2006) and Android (2005) extended its reach. In 2023 Alphabet's revenue was about $307 billion, with advertising making up more than three-quarters.
Timeline
- 1998
Google incorporates in a Menlo Park garage.
- 2000
AdWords launches.
- 2002
Pay-per-click auction with quality scoring.
- 2004
IPO via Dutch auction; Gmail launches.
- 2006
YouTube acquired for $1.65 billion in stock.
what made it work
- A clearly better core product built on a new idea (links as votes).
- Ads that were relevant, measurable, and paid only on results.
- Auction pricing that let the market set prices at huge scale.
- Owning the starting point of the internet — the search box.
the lesson
Advertising that is useful to the user and measurable for the buyer can be worth far more than advertising that is merely seen.
Apply it to your business
- 1Make your marketing measurable so you can pay for results, not impressions.
- 2Relevance beats volume: the right message to the right person wins.
- 3A clearly better product earns the distribution you later monetise.
Laws at work in this story
Figures are rounded and drawn from public reports, company filings and widely cited coverage at the time. Check the company's latest filings before relying on any number.