Advertisers pay for a well characterized audience (which Google infers from the search terms). Who is in the audience matters quite a bit, which is one point of attack on Google: when you only have 1% (or .01%) of their audience share starting out, you are better served if that 1% represents a significant fraction of a particular market or type of buyer instead of a representative cross section of Google's total audience. That's also a potential point of attack on eBay: you have to take a niche approach. This is often a more reliable way to gain traction than "first/early" or "get big fast." Even better if the niche is initially non-customers or customers whom existing players don't find attractive so that are less likely to mount a competitive response.

True. From the perspective of most advertisers, they only care about their niche. If you your search engine or auction site is the place to go for tradesmen (plumbers, electricians etc.) or some other big money niche, you'd be able to make a lot more then you would with a much larger all purpose engine.