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back to article Eye of newt: Inside Google's AdWords auction

When Google chief legal officer David Drummond testified before Congress last week, he didn't disappoint. He splattered Capitol Hill with the sort of shameless nonsense we've come to expect from Mountain View's number one huckster. In short, Drummond told all those Congresspeople that if Google is allowed to rule 90 per cent of …

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Happy

ask jeeves!

Use www.ask.com instead nearly as good as google for standard searches, nice clean interface with unobtrusive ads.

It already has 5% market share in search and if more people use it will only get better.

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Black Helicopters

The evil empire

Need I say more?

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Dead Vulture

Get rid of MS-Monopoly and we might help control Google

Google pay for programmers to work on free software and few programmers could give a monkeys about who controls advertising. IT professionals do care about operating systems and application stacks as these directly affect our interests. Of course all monopolies are inherently evil but not all are worth expending personal effort over. So the media industry that made Microsoft into what it is can slaughter their own sacred cow first and then IT pros might find the time to be bothered about a newer monopoly which the media business hates - if there is any independent advertising-funded media left by then.

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Anonymous Coward

Good article

Interesting assessment of the situation; the problem is that very few advertisers or agencies really look at AdWords in those terms, preferring instead to play the game, crooked rules and all. And ultimately (if they subscribe to the 'quantity over quality of the audience' view), they don't have a huge amount of choice. Yahoo is losing share; Live Search doesn't reach nearly as many, and the other players are even further behind. What is needed to improve the situation is more competition, but that competition relies on consumers knowing the difference between search engines, and seems a long way off.

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Anonymous Coward

@ask jeeves

I believe that ask jeeves is essentially a google adsense partner, type in "hosting" into their engine and the top 4 results are syndicated google ads - not sure how using ask jeeves is going to help google advertisers, although it certainly will help google!

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where

does the ad revenue at ElReg come from.. do you give certain clients preference depending on what they'll pay you? ..you're probably very upright and correct and never shade the truth of hit returns from ads etc..

i know you everyone else doesn't call their sales process an Auction but... semantics aside.. is there much difference between what the GoogleMonsta does and what every other SalesLizard type does other than the scale of the operation?

'You give us this much and you'll get that much.. or thereabouts.' Standard sales proceedure writ large..

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Paris Hilton

Cool

Google has invented the first, fully vetted and documented ponzy scheme. The 419s should be very proud!

Paris, 'cuz she should know about being on top of a pyramid...

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Bronze badge

Simple really!

You pays your money and you take your chances.

Oh, and it has always been that way!

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Who cares?

EVIL GOOGLE TAKING OVER THE INTERNET!

Drastic assumption IMO.

Maybe the advertisers actually get good results as compared to the money spent. In a market driven business, ask the market if they like google ad words, not a bunch of google-conspiracy-theorists.

Of course the news that all is well is not really news and the vulture would likely not report that.

Gord

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@Lol Whibley

'You give us this much and you'll get that much.. or thereabouts.' Standard sales proceedure writ large..

This is the point - they _aren't_ saying what you get for your money, and some people are getting better value than other for poorly defined reasons*

OK, normal advertisers do preferential treatment as well, but in a way that seems more logical

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Boffin

Silly Journalists...

AdWords are for professionals with money to spend on them. Just like every other advertising platform out there. I'm sorry you poor folks can't play the big boys' game, but that's the way the ball bounces, doesn't it?

Or do you expect Google to be a model of socialism at the expense of their credibility, their advertisers and their bottom line?

Just because one can upload a file and call it a website does not make it a GOOD website.

Just because someone can fill out a form, tag a credit card, compose a few lines of text and submit a bid does not make their work a GOOD advertisement.

And a BAD ad that links to a BAD website is not good for Google, so your BAD ad, regardless of how much you are willing to pay, will ALWAYS be shown lower in the results, if it is shown at all. It's up to you to write better ad copy and provide a better website for that ad to link to, if you want your "quality score" to improve. That takes diligence, education and money, just like every other advertising program on the planet.

I've been PPCing since GoTo came out with the first major model, and Google's is the ONLY one that makes any kind of sense for everyone concerned. I've been at the bottom of the results, but through learning how to write better ad copy and learning how to provide a more credible experience to those who have clicked on my ads, my ads are now at the top of the results, and I pay less for them, too. And make no mistake ... it's an ongoing process. If I am not deeply involved with maintaining my "quality", I WILL lose positions. As a professional, I can understand that, and I work to overcome it instead of whining about Google's "black box". (BTW, it's "black" because there is little value in letting ignorant or malicious advertisers know exactly how to game their system. Does even that part of it make sense to you?)

You're saying that Google should have NO say in the relevance of its paid results. After all, if it were the kind of rudimentary auction that you are capable of understanding, then simply paying more would result in a better position ... but it baffles you that there is a more complex algorithm in play.

Fancy that ... Google has a deeper understanding and interest in the relevance of the content they show to their website's visitors than you do.

Stop your whining about things you don't understand, Metz. Your willingness to slander Google in this article speaks volumes about your (complete lack of) involvement in the programs it offers.

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@AC

Only in the ElReg comments section can the dangers of Google AdWords be blamed on Microsoft.

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Flame

@James Butler

The problem isn't that the ad system is a black box that serves ads; that's OK. As you say Google have a right to choose the ads that they serve through their system. The problem is the "90% market share is OK, everyone wins". Monopolies are **never** a good idea.

There are two fundamental problems:

The black box is acknowledged to be pretty much unaudited, with no public accountability other than too Google's shareholders. You sign up for something that you cannot verify, and when Google have a bad quarter you suddenly find yourself 50% more dollars out of pocket because they tweak some algorithm setting to prioritize higher value adds - that's bad.

It definitely becomes bad when a single company basically gets to police what people read on the internet. Search is the only real way to find most sites on the web, and if Google become a monopoly with an agenda and suddenly decide to filter what people can see on the web then it becomes a real problem! The "well people don't have to use it argument" is crap - the oil and pharma industries have generally shown how far monopolistic industries are willing to go to further their own agenda.

No corporation is that idealistic, no corporation honestly gives a s**t about anything other than making lots of money, and letting one company control any area is bad, be that old style heavy industry or IT.

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@Pete H

"You sign up for something that you cannot verify, and when Google have a bad quarter you suddenly find yourself 50% more dollars out of pocket because they tweak some algorithm setting to prioritize higher value adds - that's bad."

If, in fact, that were happening, then I agree that would be a bad thing. However there is no evidence that indicates anything of that kind happens, and I've never seen anything like that happen in all the years I've been an AdWords advertiser. We spend over $100,000 per month with Google, and, believe me, we would notice if that suddenly went up to $150,000 just because Google was having a "bad quarter". (Has that even happened, yet?)

And it's not easy but it's definitely possible to verify what is happening with your AdWords spend. It's called "tracking". I wrote our company's program to do just that, and we can account for literally every penny we spend with Google. And I have never seen any of the behavior they are being accused of.

And let's ease off on the "monopoly" term, shall we? There are literally hundreds of competitors out there ... they just happen to suck at delivering relevant search results, so people CHOOSE to use Google.

Don't confuse the market share that Google has EARNED with other giganto-corp "monopolies" who use coercive contracts to keep competitors out of the shops. The current MS and the old AT&T come immediately to mind, and both are being/have been punished for their abusiveness.

Google is where they are because they make the best product of its kind on the planet. They do not and can not "police what people read on the internet". They simply provide their own vision of search results from their own web address, which is easy to NOT type into the address bar, and people choose to place advertisements with them. There's nothing wrong with that.

I'm sure someone at some time in the future will be able to gain market share, just as soon as they can figure out how to do better at providing more relevant search results. Lord knows Microsoft and Yahoo have been throwing lots and lots of money at the challenge, but ... their results STILL suck when compared to Google. And you'll note that they aren't jumping on this "monopoly" witch hunt bandwagon ... they KNOW Google has gotten to where they are because of hard work and fair play, and that's still not illegal.

If Google "become a monopoly with an agenda and suddenly decide to filter what people can see on the web", then I agree again ... it WOULD be a real problem. But that's just paranoia. They have never shown any signs of keeping people from discovering any manner of crap. It's just that most of the crap doesn't make it to Page One ... and that is the way a good search engine works.

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Anonymous Coward

@James Butler

Since when is Google ( or any other entity) entitled to rule what a "good" ad is?? A bad ad is reflected in resulting low clicks, purchases or whatever and ultimately lower income for the ad creator. This in turn will naturally eliminate those who offer either bad quality ads or services.

On the same note if this system is indeed as fair as stated, then we won't see a backlash by unhappy smaller advertisers shunning the services as they can't compete with the big advertising guys. Likewise an article stating the process could be deemed unfair will likewise be considered by those testing it's assertions. If Google is indeed being a little more evil than appropriate then the market will ultimately bring it to bare. I would suggest this is already taking place in established markets already, with growth being driven by geographic expansion. There is only one direction to head in the event of them reaching 90% market share …… and it’s not up!

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Hold tight to that Monopoly term!

It doesn't matter how many competitors you have, what defines a monopoly is how much market power you have. It doesn't matter how good your products are or how things came to be that way, 90% market share is a monopoly, pure and simple.

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Google Adwords is the word

For a few pennies I managed to get my site www.aceruser.com (shameless plug) appear on the first page whenever someone searched for Acer Aspire One. And I only have to pay if someone clicks through. As this is a personal hobby site there is no way I could afford to advertise it any other way.

Can’t say fairer than that.

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James Butler

"I've been at the bottom of the results, but through learning how to write better ad copy and learning how to provide a more credible experience to those who have clicked on my ads, my ads are now at the top of the results, and I pay less for them, too."

"BTW, it's "black" because there is little value in letting ignorant or malicious advertisers know exactly how to game their system. Does even that part of it make sense to you?"

Is #1 not a more polite way of saying #2?

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90% of what?

Market share of what? Ads distributed? Ads Purchased? Ad purchasers? I see the number floating around but not really defined. Market power is not just a function of how much market dominance you have, but the barriers to entry for other options. And there really isn't any barrier, as an advertiser, to setup affiliations for advertising and cross-linking with related websites.

Google Search doesn't exactly have a lock-in, either. If they are discovered to be censoring and we aren't happy about it, there isn't any need to keep using it to the exclusion of other search engines. And it is these eyes that Google ads depend on.

Even if Google is the only big player in town, there really is nothing explicitly requiring you to use the big player to get the job done that I can see. At least not yet. Sure the economies of scale work for Google in this case. But I find it difficult to believe that the only way to ever get your message out is to fork over cash to Google. No matter what narrowly defined marketshare they are said to possess. It isn't like legacy matters in this market, really. Divesting in Google doesn't mean you lose all the repeat customers you've already acquired.

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Bronze badge
Coat

Was running ADs on Adwords in 2005 to make extra money

But when they changed the rules and made it a lot more expensive to buy words, I stopped using it. I made myself a affiliate website which cost me 3.5 dollars a month to run and makes between 50 - 200 dollars in profit each month.

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Stop

@James Butler...

You say...

"Google is where they are because they make the best product of its kind on the planet. They do not and can not "police what people read on the internet"

If you look at examples of Googles behaviour in china, I think you will easily stumble across the evidence that would contradict this statement.

How about changing the meaning of words and figures of speech, such as the 2nd Superpower example here on the reg.

I don't hate google, but I do feel like their dominance is not so friendly. I only hope they don't become in any way shape or form like Microsoft.

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@Old Straw

"If you look at examples of Googles behaviour in china, I think you will easily stumble across the evidence that would contradict this statement."

Aside from them being the most open about the fact that they are censoring the point remains that Google cannot censor more than what is required by government and allowed by people.

If other searches exist that censor less of what people don't want censored, people will naturally move to include those searches because nothing binds them to use any one Search.

In the case of China, I don't think Google is dominant. I believe Baidu is. And they are all forced to censor results to the government's satisfactions. But Google actively tells you that results are censored. So in censoring it is one of the most open.

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Paris Hilton

AdBlock, NoScript and CustomizeGoogle

Isn't Googles business model a bit screwed when anyone and everyone can download Firefox and install AdBlock Plus, Adblock Filterset.G updater, CustomizeGoogle (and set the options) and NoScript?

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Thumb Up

@Alastair

Fair enough ... I was being a bit rude to Mertz. Although I get a bit steamed at unfettered slander, that's no reason to slip into rudeness. My apologies to anyone who was offended by my tone or statements. I'll try to do better in the future.

@AC 01:41 GMT

Google doesn't "decide" what is a "bad" ad or what is a "good" ad ... their algorithm (yes, developed by their engineers) RECOGNIZES patterns that demonstrate the "goodness" or "badness" of any particular ad based on its performance characteristics (and further refines that assessment with additional factors), and then shifts its position in the results accordingly.

I think it's kind of cool that Google's programming is so sophisticated that people are ascribing human characteristics to it, like "deciding" and "policing" and "preferential treatment". That's some damn fine programming!

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please people!

Thank you James Butler for taking the time to comment setting this crap article straight. I don't think anybody could have said it better.

Google doesn't police what I read, if they serve crap from advertisers trying to bilk the system (like this author), I just don't click it. Lose for everybody.

Over the years the content I'm served from Google has just gotten better and better, to the point that I'm served results from Microsoft URL's more relevant than even Live Search manages.

I will never stop using Google, even with Internet Explorer's obfuscatory default Live Search.

Can this site please stop bitching about AdWords now??

@Anon, like Peter, you completely missed the point, this is not about the advertiser and his budget, as the user this is about ME and my time and what I WANT. I would be so totally pissed off with Google for not weeding out advertisers bidding high for crappy ads that nobody clicks on, this would basically be free spammy advertising. Sounds like this quality index is doing the trick.

I'm little perplexed by everybody bleating bout Google being a monopoly. The advertising market is huge incorporating radio, newspapers, magazine, tv, direct marketing etc etc. Advertisers have lots of ways to slice their budget, online spend accounts for a sliver of that.

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Quality Definition

Apparently, quality now means "makes money for Google". So ads with better quality make more money for Google and thus get preferential treatment over those ads with lesser quality, i.e., make less money for Google.

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