In Searching the Web, Google Finds Riches

Emerging as a powerful new marketing medium, Google has found a route to profitability that stands apart in a Silicon Valley that is still crippled by the dot-com crash. Its executives have privately told the board that revenue will soar from less than $300 million in 2002 to $750 million or more this year, with gross profit margins of 30 percent.

That cash is flowing from the likes of Ge'Lena Vavra, an importer of Italian suits in Las Vegas who is among more than 100,000 advertisers to flock to Google in the last year. Last May, she decided to pay from 21 cents to $1.50 each time her ad for discount Italian suits was clicked after a search for words like "Armani" or "Hugo Boss."

One form of Google advertising allows companies to buy two lines of text that appear above the results of each search. A newer ad program, the one used by Ms. Vavra, displays boxed text ads on the right side of a search result. Depending on popularity, advertisers pay anywhere from pennies to dollars when a searcher clicks on the ad.

Before Ms. Vavra advertised with Google, she was selling about 10 suits a month over eBay. Then she bought 50 Google keyword ads using her Visa card. The next morning, she said, sales took off. The business has continued to grow; she now sells almost 120 suits a month. She expects to spend $60,000 this year on Google search ads."Our business exploded from Google, and Google alone," she said.

Google now employs 800 people, yet it handles 200 million searches of the Web each day, a staggering one-third of the estimated daily total. To keep up with that torrent, Google has essentially built a home-brew supercomputer that is distributed across eight data centers.The company stopped giving updates on the size of its computing resources in 2001. But several people with knowledge of the system said it consists of more than 54,000 servers designed by Google engineers from basic components. It contains about 100,000 processors and 261,000 disks, these people said, making it what many consider the largest computing system in the world.

"We are learning that old-fashioned interruption marketing just isn't working," said Hans Peter Brondmo, a technologist who is an executive at Digital Impact, a direct-marketing firm in Silicon Valley. Examples of interruption marketing are banners, pop-up advertising and ads that take over the screen for several seconds, along with unwanted e-mail, or spam.

Google is quietly betting on techniques from the world of artificial intelligence. The company is trying to improve its search quality beyond its original ranking formula by developing software that can infer what a questioner wants by mining a database of millions of queries.