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Monday, September 15, 2008

Google Ads Perfect? No. Flawed But Not a Monopoly.

Google ads are certainly not perfect. However, the Google advertising system is far better than those of its nearest competitors, Yahoo and Microsoft. Google benefits from a network effect, not a monopoly. Because it has the best search engine (at least the perception thereof), it has attracted the most users. That has attracted a large number of advertisers to use AdWords. Since AdWords is also distributed on content sites, that large advertiser base has attracted a large number of publishers. Because of that large publishing base, Google can attract even more advertisers. See the network effect? Google's dominance, then, has been achieved by creating the best advertising system (both in terms of ad management via AdWords and ad distribution via AdSense).

Where is the monopoly? Users are free to use other search engines. Advertisers are free to use other online advertising platforms. Publishers are free to monetize through other advertising networks. Google might be the best choice for advertisers and publishers, but that does not make it a monopoly. Now, before anyone reading this thinks I'm a Google fanboy, I think serious flaws exist in the Google advertising platform. Over the years, I've written about some of these flaws. Examples:
  1. Contracted Matching Flaw - description of the problem and some solutions
  2. Domain Parking Flaw - a distinctly non-Googley design
  3. CPC Flaw - expanded matches should have different bids (this might be changing soon)
What's impressive about Google, however, is the rapid pace of the evolution of the AdWords/AdSense system (case in point). Their innovation is what has left both Yahoo and Microsoft in the dust. Now, Yahoo is seeking a bailout - from Google. And Microsoft is, in essence, seeking a bailout - from the DoJ. I'd rather see Yahoo and/or Microsoft (or a new company?) innovate to compete with Google. Advertisers and publishers need viable competition, but not government intervention.

BTW, writing today reminds me of this old idea:
back to overture

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2 Comments:

Blogger Nick said...

Google may not be a monopoly (yet), but they are pretty close in terms of the power they can exert over advertisers.

One of my AdWords campaigns was recently a victim of the Google Slap, with keyword bids that had been under $0.40 for 2 years suddenly shooting up to $1, $5, and $10 minimum bids. Since I couldn't operate profitably at those bids, the campaign has sat dormant for months.

Because the majority of my traffic was from pay-per-click ads, and they have a 70% search share, I lost 70% of my traffic - overnight. Their dominant position and unwillingness to negotiate has basically put me out of business.

They know advertisers have nowhere else to go that will deliver the same results so they think they can charge whatever they want. Sounds monopolistic to me, and a far cry from "don't be evil."

Tue Sep 16, 11:34:00 AM EDT  
Blogger Richard said...

Hi Nick. Sorry to hear about your plight. Clearly, there's a danger for a business to rely too much on a single source, such as Google. Did you call AdWords Support to troubleshoot your particular situation?

Also, the high minimum bids were likely due to landing page quality issues. Is your site one of these types that merit low landing page quality scores?

If not, then a flaw in the Google ad system is likely the culprit. I'd talk to AdWords Support to resolve the problem. If your site does fit the criteria, then it's not worth the effort.

Note that minimum bids are going away. It might be worth resuming your AdWords campaign under the new Quality Score system.

Tue Sep 16, 04:30:00 PM EDT  

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