Google's first strategy to generate an income from it's Search Business was the Google Device. Described as a "Search Appliance" and displayed as a bright yellow rack server box, it wouldn't really have become the billion dollar system that AdWords is today.
But Google was right to stray away from the other monetisation routes of the day - like Yahoo's $299 search-inclusion service. This meant that the Google Search results were "organic" (or algorithmic) and influenced by a community rather than than by paying advertisers.
This was a major shot in the arm for smaller companies. Because Google had reduced the number of results from any domain to just 2 per 10 results, while a big brand may have been number 1, there was plenty of room for newcomers. Consumers could, for the first time, gain unbiased views on products and services, quite often not available in their own town or peer group. It was a major boon for the little guy - the consumers and the brands!
When Google appointed a new (and current) CEO, Eric Schmidt, he helped Google develop the AdWords system (also called Pay-Per-Click/PPC) and paved the way for Google's epic IPO. One of the more curious aspects of this, is that while Google has a strong policy on Paid for clicks (and we abhor paid for links), they've previously opted to name their AdWords adverts "Sponsored Links".
We welcome the correct use of the word Ads, in-line with FTC ruling that forces bloggers, writers, twitter users and other digital content creators to acknowledge client or otherwise commercial links, mentions or recommendations as such. This has caused huge confusion, and its not helpful to people who have clearly been confused between a number 1 organic ranking and a number 1 advert (aka sponsored link).
This has to be one of my all time favourites (note: organic rankings change cyclically but the point is valid):
