Original URL: http://www.theregister.co.uk/2009/01/12/how_the_google_stole_christmas/

How the Google stole Christmas

A heart two sizes too small

By Cade Metz

Posted in Financial News, 12th January 2009 23:26 GMT

When Google unloaded the world's largest collection of desktop search ads onto the Apple iPhone, it didn't ask advertisers for their approval. It just unloaded, happily collecting the extra revenue.

As iPhonies began clicking on those ads, advertisers were obliged to pay for them - whether they were interested in mobile clicks or not. If they didn't want their dollars spent on the Jesus Phone - an untried ad platform - they could stop the bleeding. But they had to stop it on their own.

"It's taking HOURS to clean up and turn this crap off," search-engine ad consultant Dan Thies told us in early December, struggling to right his own Google account and several client accounts. "If you don't watch Google 24x7, they will go behind your back and get as deep into your wallet as they can."

And Dan Thies is in the minority. When Google opts advertisers into new ad placements, few realize they can opt out. "If Google turns something on by default," says Richard Stokes, president and founder of search-marketing consultant AdGooRoo, "95 per cent of advertisers are never going to notice it."

In other words, most Google advertisers who have no interest in advertising on the iPhone are advertising on the iPhone. And Google reaps the benefits.

With Google controlling at least sixty per cent of the web-search market, search advertisers looking for heavy traffic have little choice but to embrace the Chocolate Factory's ad platform. And once they've embraced it, Google reserves the right to spend their ad dollars as it pleases.

Yes, advertisers have some control over their own fate. They can cap their daily budgets. They can place ads against keywords of their choosing. But Google has a way of posting ads against keywords you haven't bid on, thanks to (opt-out) mechanisms like "broad match" or the new-fangled "automatic match."

Google's ad platform is so vast and so complex, the typical user doesn't realize which end is up. And even the most experienced users have less control than they realize.

In the end, if Google wants the added dollars, it can simply serve more ads. And this Christmas, that's exactly what happened.

Meltdown-proof

According to Richard Stokes and AdGooRoo - which tracks Google ad placements from servers across the globe - the Chocolate Factory showed 57 per cent more ads per page in the fourth quarter than it did in Q3. Yes, 57 per cent. Midway through the quarter, AdGooRoo saw an 84 per cent leap. This despite a worldwide financial crisis of epic proportions. Yahoo!'s search ad coverage stayed essentially flat in Q4 relative to Q3, AdGooRoo says, while Microsoft's coverage went down.

"You would definitely expect to see some increase in Google's coverage, due to the fact that it's the holiday season," Stokes says. "But it looks like Google is reversing some of the changes they made this year, so that more ads are now appearing."

AdGooRoo Q4 2008 Search Ad Study

How Google stole Christmas

This we knew. Sergey Brin and company admitted as much during their Q2 and Q3 earnings calls. Clearly, as the Meltdown hit, Google decided it was a fine time to crank up its top-secret money machine.

The company insists that recent algorithm tweaks are designed to improve ad "quality." But we find it hard to believe that an effort to improve ad quality results in 57 per cent more ads per page. "I think you're being far more astute than almost everyone I talk to," Stokes told us.

When Google says "quality," it may mean click-through-rate. But if you're an advertiser, quality and click-through-rate are hardly synonymous. Each click boosts Google's bottom line - though not necessarily yours.

Stokes argues that click-for-click, Yahoo! and Microsoft are more adept at generating leads than the Google monopoly. But advertisers still put themselves at the mercy of Mountain View. "There's some pretty good ROI to be found on Yahoo!, much better than Google. But the volume is so much higher on Google," he says. "It takes just as much effort to manage a Yahoo! or Microsoft campaign as a Google campaign, so advertisers - many of whom are shorthanded - are going to choose Google."

And so, this Christmas, amidst the worst economic crisis since The Great Depression, Google capped off what will surely be the most lucrative quarter in its history. That's the word from AdGooRoo's servers. And we have no reason to doubt them.

Wall Street is convinced that Google hit the skids in Q4. But Wall Street is wrong. ®