Case Study: Winning With Google AdWords
A 2002 case study on the shift from flat-rate impressions to click-based pricing, and how one advertiser rebuilt its account to take advantage of it.
In February 2002, Google rebuilt AdWords from the ground up. Advertising had launched in October 2000 as a flat cost-per-thousand-impressions product, where an ad’s position depended mostly on how much its owner was willing to pay per impression. The 2002 rebuild switched to cost-per-click pricing and, critically, began weighing an ad’s click-through rate alongside its bid when deciding where it appeared. An ad that people clicked could now outrank a higher bidder that people ignored. That single change rewarded a different set of skills than the old model had, and advertisers who adapted quickly gained a real advantage over those who kept running the same broad campaigns they had built under the old system.
A composite advertiser, and what it got wrong
Picture a small business selling specialty office furniture online (an illustrative example, not a real named company) that had run a modest AdWords account since 2001 under the old impressions-based pricing. Its campaign structure reflected that era: a handful of broad keywords like “office furniture” and “desks,” generic ad copy reused across all of them and no real attempt to match search intent to a specific landing page. Under CPM pricing, this had been a fine, low-effort way to buy visibility. Under the new click-through-weighted ranking, it was actively expensive: broad, generic ads pulled in a lot of impressions from people who were not close to buying, produced a mediocre click-through rate and lost ranking position to competitors with tighter, more relevant campaigns.
What changed
The fix started with keyword lists. Broad terms were split into narrower phrases that matched actual buyer intent, “ergonomic office chairs” and “standing desk for small office” rather than “office furniture” alone. Ad copy was rewritten to speak directly to each narrower group instead of reusing one generic line across dozens of keywords, since specific copy earns higher click-through rates than generic copy aimed at a broad audience.
Landing pages followed the same logic. Instead of sending every click to the homepage, each ad group pointed to a page that matched what the searcher had typed, which improved both the click-through rate Google was now rewarding and the rate at which visitors converted once they arrived.
The result
Within a few months, the account’s average click-through rate improved meaningfully, and because Google’s new ranking system rewarded relevance rather than bid alone, the same or lower cost-per-click bids now bought better ad positions than the old broad campaign had achieved at a higher cost. The business was not spending dramatically more. It was getting more relevant traffic for a comparable or lower price, simply because the campaign had been restructured to match how the auction worked after February 2002.
The takeaway
The lesson from this period had less to do with AdWords specifically and more to do with a pattern that keeps recurring in digital advertising: when a platform starts rewarding relevance rather than raw spend, the businesses that win are the ones willing to rebuild their campaigns around narrower, more specific targeting rather than the ones that simply raise their bids. In 2002, that meant tighter keyword lists, matched ad copy and dedicated landing pages. The specific mechanics have changed many times since, but the underlying principle, that relevance beats volume once a platform can measure it, has not.
Keep exploring: browse more Marketing Strategy guides, see everything we published in 2002 or check out the Digital Business Marketing Awards.
