I recommend reading John’s interview of Google’s Omid Kordestani, who also spoke at the Web 2.0 conference (see SearchViews’ account). Omid was the first sales/business person to join Google in 1998, and runs sales and global business development for the search&advertising giant.
There are some interesting nuggets of information in this piece:
[Kordestani] has to manage relationships with agencies that want more control over their clients’ campaigns and with publishing partners who see Google as a prime source of online revenue — and a long-term threat to their media businesses. Once [Google] proved that the text ads on Google could be successful and not interfere with the search experience, then it really turned into a science. We applied auction theory to maximize value — it was the best way to reach the right pricing, both for advertisers and for Google. And then we innovated by introducing the rate at which users actually click on the ads … Read more »