In a recent revelation, Google has come under scrutiny for its questionable practices in search advertising auctions. Once again, we’re seeing Google’s seemingly relentless pursuit of profits at the expense of advertisers (most of which are SMBs).
Bloomberg reported that Jerry Dischler, Vice President for Google’s advertising products, admitted in a federal antitrust trial that the tech giant has been manipulating ad auctions to meet revenue targets, often resulting in significant price hikes of up to 5 percent.
This brazen disregard for its advertisers and users alike underscores Google’s selfishness and proves it’s really in it just to make a buck.
The Secrecy Behind Google’s Price Manipulation
One of the most disturbing aspects of Google’s actions is its apparent lack of transparency.
Dischler openly acknowledged that when Google makes adjustments to its ad auctions, which can impact ad prices or reserve pricing (minimum spending on an ad), Google rarely informs advertisers. This lack of disclosure is a deliberate attempt to keep advertisers in the dark while exploiting their budgets “so [they] could meet [their] quota.”
Furthermore, an email exchange from May 2019 between Dischler and his team shed light on Google’s true motives. They discussed making changes to ad auctions to meet revenue targets set by Chief Financial Officer Ruth Porat.
Dischler’s words betray Google’s fixation on financial gains. He stated that they needed to “shake the cushions” to ensure they didn’t miss the Street’s expectations. This revelation exposes Google’s primary concern: revenue, even if it means sacrificing integrity.
Remember when Google’s guiding principle was “Don’t be evil”? That’s laughable.
Manipulating for Profit, Not Quality
Google maintains that financial compensation does not influence the quality of search results. While this may be true, it doesn’t bode well that Google’s willing to increase prices across the board just to hit a quota. We (advertisers) are rightfully concerned that Google could compromise the integrity of search results and ultimately affect the user experience.
The Monopoly Game
The Department of Justice alleges that Google has maintained an illegal monopoly over online search through deals with web browsers and smartphone manufacturers to ensure Google remains the default search option. Google’s practice of paying substantial sums to companies like Apple and Samsung in exchange for preselection has allowed it to dominate the online search market.
Approximately 60 percent of Google’s total revenue comes from search ads, which amounted to over $100 billion in 2020. This revenue stream has consistently grown and made Google the undisputed leader in online advertising.
Most of us can’t even fathom how much money $100 billion is. Did Google really need to take it from the “little guy” to hit revenue goals? Doesn’t seem like Google is hurting.
Market Competition and the Threat of Alternatives
Jerry Dischler claims that Google’s dominance in the advertising industry is not absolute. There are alternatives like Meta and TikTok, which have begun to lure advertisers away from Google’s clutches. This shift has less to do with user dissatisfaction with Google and more to do with customer behavior changing through social media.
Perhaps the real threat to Google’s search monopoly is Amazon. Amazon’s growth in search advertising for retail has been remarkable. Dischler noted that Amazon now surpasses Google in the retail advertising space and is growing at twice the rate (say what now?!). Amazon’s ability to provide better results for ecommerce shopping has migrated users, which in turn prompts advertisers to reallocate their budgets and marks a real threat to Google’s supremacy.
Dischler conceded that if Google were to raise prices by 15 percent, many advertisers might migrate to competitors. This highlights the precarious position Google finds itself in, as it must strike a balance between maximizing profits and retaining advertisers.
Yet, the fact that such manipulations are even being considered is a testament to Google’s self-serving approach.
Conclusion
Google’s actions demonstrate a clear disregard for the well-being of advertisers. Google is prioritizing profit margins above all else. The lack of transparency and potential impact on search result quality raise serious ethical concerns.
The question remains: will Google’s selfishness ultimately lead to its downfall or will it continue to prioritize profits over principles? I guess time will tell.
