Hal Varian, Google’s chief economist, provides an in-depth and insightful overview of how the ad auction works. Hal describes how the auction system works so that consumers always see the most relevant ads and advertisers get the most value. He also provides insight into the key components of ad rank: bid, quality and formats, and the way all of this works together to determine your ad’s position and cost.



  1. Can anyone answer where this was filmed?
    It looks a LOT like this was filmed at the UC on Carnegie Mellon campus (and that the background looks across the cut, over towards Warner Hall).
    I don't really care either way, but this is going to bug me until I find out.

  2. I do not understand how he came up with those scores for the ad rank. And also how he came to the eventual costings (why can the highest one bid 27 cents less to still beat number two? Since their bid was three dollars). Maybe it's a stupid question because the video seems so clear, but maybe someone doesn't mind explaining it to me a bit more?