I was a software developer there in the late 90's, and we did some of the first eye-tracking studies on how people used the search engine. What we learned was shocking - no one looked at the flashy ads. The more we tried to make them stand out, the more they looked at the boring text in the middle of the page.
Clearly, the solution was non-flashy ads. Except, that's not what advertisers wanted, and Lycos did whatever advertisers wanted.
I'm sure Google did those same studies when they were working on their ads and saw the same thing. Since they were run by engineers, they made their ads text.
The rest is history.