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In this recitation, we'll be
going over the basic steps

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in building, solving, and
analyzing a linear optimization

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model.

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The problem we will
use to demonstrate this

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comes from Google AdWords, which
is the advertising system used

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by Google.

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Let's begin by talking a
little bit about Google.

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As you may know, Google is a
major company in the United

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States that provides
products and services related

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to the internet.

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Google's official
mission statement

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is to organize the
world's information,

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and to make it universally
accessible and useful.

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Although Google today
develops a variety of products

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that includes things such
as the Android operating

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system, the Google Glass
wearable computer, and even

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self-driving cars,
Google became famous--

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and is still most widely known--
for its search engine, which

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can be found at www.google.com.

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The search engine lets
the user enter a query.

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Google then searches
through the web pages

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accessible on the internet,
to return links to websites

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that best fit the search query.

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Now, how did Google come about?

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Well, the idea of
Google originated

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as a research project
of two people--

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Sergey Brin and Larry Page.

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This was in 1996,
while they were still

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graduate students at
Stanford University.

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Their idea, in a nut shell,
was to measure the importance

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of a web page to a
particular query,

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not just by measuring how much
that query occurs in that web

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page, but also by considering
the links to that web page

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from other web pages.

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They quickly found
that this idea could

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form the core of
a search engine,

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and they found that the
search engine actually

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worked quite well.

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They eventually named it Google.

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And in 1998, they incorporated
Google as a company.

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In the same year, they
received their first funding.

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At the time, they had a database
of 60 million web pages.

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Six years later, Google's
initial public offering

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took place, and Google became
a publicly traded company.

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After going public,
Google has continued

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to grow at an immense pace,
acquiring other internet

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companies like YouTube in 2007.

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In 2013, Google's traffic
reached more than a billion

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unique monthly visitors.

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Today, more than two-thirds
of all the searches

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done on the internet are powered
by Google's search engine.

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Now, you may be rather surprised
to hear that Google does not

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actually make any money
directly from its search engine.

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In fact, Google's search engine
is free for anyone to use.

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So then, how does
Google make money?

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And the answer is --
through online advertising.

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Basically, Google sells space on
its web pages-- in particular,

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results of its search
queries-- to outside companies.

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These companies can then
place advertisements, or ads,

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on these spaces.

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Let's take a look at
a concrete example.

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So here we have a screen shot of
the results of a Google search.

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The query here was "nine
inch nails tickets".

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Nine Inch Nails-- if you're
not familiar with it--

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is a critically acclaimed
industrial rock band

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from the United States, that
recently toured North America.

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On this page, there are only two
search results-- here and here.

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The first is a link
to Ticketmaster,

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which is a company that
sells concert tickets.

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The second is to the tour
page of Nine Inch Nails'

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official website.

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All the remaining links
on this web page are ads.

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In this case, these
are mostly links

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to other third-party
companies that resell tickets.

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Now, you may be asking,
why do companies

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advertise with Google?

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Well, there are several reasons.

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As you saw a few
slides back, Google

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receives a lot of internet
traffic, as a lot of users

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conduct searches on Google.

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So an ad placed
on Google could be

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seen by a very large
number of users.

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At the same time, Google's web
pages-- and the ads in them--

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are formatted in a very
clean, visually appealing way.

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Lastly, companies that
advertise with Google

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can select which queries their
ads will be displayed for.

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This is a very useful feature,
because a company can then

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target specific
customers that they

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think are likely to
buy their product,

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or to use their service.

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Google's online advertising
system is known as AdWords

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and is responsible
for more than 97%

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percent of Google's revenues.

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In the next video, we'll
go into more detail

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about the components
of the AdWords system.