Google Responds to AdWords Accusations

An anonymous reader writes "Google has issued a statement on the Inside AdWords Blog. Based on the thoroughness of the statement and the use of the word 'precedent' in the second sentence, it appears that the Google PR team huddled with the legal team to get their point across." From the post: "Being rather proud of AdWords as a means to effectively advertise one's products or services, it seems natural to use it ourselves. Since it's a common practice across the industry for companies to promote their own products and services through their own web presence, there is much precedent to do this. It's important to note, however, that our ads are created and managed under the exact same guidelines, principles, practices and algorithms as the ads of any other advertiser. Likewise, we use the very same tools and account interface."

Oooh, "precedent"!

Based on the thoroughness of the statement and the use of the word 'precedent' in the second sentence, it appears that the Google PR team huddled with the legal team to get their point across.

I use the word "precedent" all the time. Apparently I can go around telling people I'm a lawyer now. Sweet.

Re:Oooh, "precedent"!

Guess we won't need good ole "IANAL" anymore...

Re:Oooh, "precedent"!

I use the word "precedent" all the time. Apparently I can go around telling people I'm a lawyer now. Sweet.

Well, Google did set the precedent.

Re:Oooh, "precedent"!

I use the word "precedent" all the time. Apparently I can go around telling people I'm a lawyer now.

Of course you can. In fact, there's even a...what's that word? You know, when something has already happened and it's considered a reasonable example? Darn it all. Well anyway, it's already been done.

Leaps of logic

Based on the thoroughness of the statement and the use of the word 'precedent' in the second sentence, it appears that the Google PR team huddled with the legal team to get their point across.

To bad you can't mod the summary as "Funny".

Nice

They probably set the max per click they'll pay to $10000. It's not like they have to pay for it.

Re:Nice

Check your dictionary under "opportunity cost." I make photographs, I frame the photographs I sell. If I take one out of inventory and put it up on my wall instead of putting it into a gallery or cafe, I'm very much paying for it, even if I don't "have to pay for it."

Re:Nice

They probably set the max per click they'll pay to $10000. It's not like they have to pay for it.

Actually they would. The ads that show up on Google search are the same ads that show up through their Ad Sense program on other people's website. So if they bid $10000 per click, they'd end up paying that (half of it, IIRC, and keeping half) for clicks on other web sites.

And they still pay when it's on their own web site, though not as much. They force another ad out of the #1 spot, and they force the bottom ad out altogether. That's less click-through revenue for them.

And they get unlimited money to price clicks...

It's important to note, however, that our ads are created and managed under the exact same guidelines, principles, practices and algorithms as the ads of any other advertiser.

I think they forgot, "...only we have unlimited play money we can allocate toward each search phrase, so we can ensure Google ads always beat out the paid ads from the unwashed masses."

Think about it...

When Google uses this "play money" they lose the opportunity to make money from outside. It *is* an advertising budget; without it, Google would beat out EVERYTHING, but its revenue would trickle to a crawl. The best way to play the game would be to allocate a budget just like it was using someone else's service; that keeps everything under control.

MOD PARENT UP

It's the exact same dillemma TV networks have. If they spend too much advertising time advertising their own shows, then they don't make enough money from REAL advertisers. But if they don't spend enough, no one knows about their new shows.

I don't see who Google's situation is any different AT ALL. They very likely do the same thing TV networks do, the station has its own "budget" of time they can allocate to promos, and they don't exceed it.

Re:And they get unlimited money to price clicks...

"I think they forgot, "...only we have unlimited play money we can allocate toward each search phrase, so we can ensure Google ads always beat out the paid ads from the unwashed masses.""

This is referred to as "opportunity cost." In this case, if they take an ad spot, they lose the opportunity to sell that ad spot to somebody else. If they, for example, get a discounted price of $20 for internal accounting purposes, and it would have sold at $100 on the open market, that's an $80 opportunity cost.

All companies, big and small, in all industries, deal with opportunity costs like these. I help run a company that makes computer peripherals, and we sell our products to our employees and channel partners at 50% off. We can only build so many of them (assembly lines are a resource that must be allocated), and each product that we sell to our employees is a product for which we could have made more money selling at retail.

If anybody reading this thinks for a bit, I'm sure it will be trivial how the concept of the "opportunity cost" affects you, either at your job, or in your personal life.

Except that it's internal "funny money"

It's internal book keeping money. Funny money. No real cash changes hands like it does with between other advertisers and Google.

-S

Re:Except that it's internal "funny money"

Yes. And furthermore the opportunity cost is equal to the price paid by the otherwise highest bidder for that search term. So, if google wants to own a term, they lose out not only on some amount of money, but the maximum amount of money the market would bear.

Weasel words

From TFA "As does any advertiser, we aim to give our campaigns a budget"

Come on, what you are doing is bidding whatever it takes to get the sport you want.

That pushes up the price for everyone else. Good for you but bad for your customers.

There is never a case where you lie awake at night worrying if you have bid too much.

"Do no evil" is a great motto and Google is a great company. I feel that they have not considered this from the point of view of Adwords buyers. I'd be surprised if they are still doing it in 12 months. Google would no longer be the Google we love if they are.

Re:Weasel words

I'd be surprised if they are still doing it in 12 months.

And in a year we'll see Fox advertising NBC shows? The New York Times with a full page ad for the Washington Post? Maybe I'll buy a new car from Honda and the license plate frame will read "Have you driven a Ford lately?" Let's go all out: preachers extolling the virtues of Zen Buddhism!

A brave new world indeed.

Re:Weasel words

It's not ads, but I've always been impressed by what you get if you search Google and and are offered maps as options.

Search Google for "map san francisco" at almost the top of the page you'll see links for :

          Map of San Francisco, CA
                    Google Maps - Yahoo! Maps - MapQuest

You could argue about them being first, but they give you links to two other popular mapping sites right up top.

Do the same search on Yahoo! Lower than the Yahoo map you'll find a link to MapQuest, but nowhere on the page is Google.

So is that Google advertising Yahoo for free?

Classic Obfuscation

At the end of the day they pay themselves the highest rate for those adwords? I think the accountants/SEC would have something to say about that.

Sure, some admin uses the same interface but the statement ends there for obvious reasons.

It will be interesting to see if there is bottom-line quarter-reporting implications to this practice.

Common Sense

I don't get what all the furor was about it in the first place. Has anyone watched any television channel out there?

NBC does a crap-ton of promos for their other shows as does every other station.

I don't get why a company can't use their own products to promote themselves.

Also I don't get the monopoly argument. Google--Yahoo--MSN Search is no where near the dominance that Windows--EveryoneElse is.

Also part of a monopoly is barriers to entrance. It is so incredibly brain-dead easy to stop typing google.com and start typing yahoo.com or newsearch.com if one day I don't like to use Google. There is no OS creator that can make it that easy to switch OS's.

1) Google doesn't have a monopoly, there are real viable competitors with real market share and it is incredibly easy for new compeitors to enter the market

2) Every company in the world uses their own products to promote themselves

Proof

So far I call shenanigans. I've seen a lot of these articles here and on other sites. Anyone has real proof of google products appearing always in first place in its searches and/or ads?

funny quote

"In fact, we generally aim for a more 'conservative' position."

Really? Strange that 'spreadsheet' would give...

...'Google' as #1 then, don't you think?

Still competing against their customers

Selling a service to customers who compete with you in other areas is always a dicey strategy. It's also known as vertical integration - controlling multiple levels in the supply chain. The risk with that strategy is that lower levels in the supply chain which you control may have difficulty selling their product to your competitors. If I was a spreadsheet or mapping software company (Microsoft), would I use Google to advertise? If I had currency handling (Paypal) software would I use Google to advertise? Not if I could help it - why help the competition. Unless the competition has a monopoly, then you have to deal with them. If Google becomes a major software player they may have to divest the search business and set it up as a wholly owned subsidiary working at arm's length.

Enron-like crash looming?

Ok.. so google pays itself for clicks.. say 10000 clicks a day at some arbitrarily high number like $10000/click. So, will Google then report that as SALES? .. ooh today we earned $100,000,000! See Wall street, push our stock value up - we just made a boatload of cash! ... makes me wonder if the emperor is feeling the draft yet.

Blame the Lawyers

Since there's no precedent for any other group using large words included in the english language.

I don't particularly like lawyers in general, but that really was a cheap shot. I expect better out of the lawyer-bashing slashdot crowd.

and the top google add for this post is ...

It struck me pretty funny that that the top google add for this post was .... (drum roll please) Google AdWords go figure ...

One huge differnce...

"It's important to note, however, that our ads are created and managed under the exact same guidelines, principles, practices and algorithms as the ads of any other advertiser. Likewise, we use the very same tools and account interface."

But Google knows their own search algorithms. I'll bet if I were privvy to the same knowledge, I could make AdWords ads that rival Google's. They play by the same rules but only they know the rules.

to be expected

Google hires away MS's top talent, and people are shocked when they start to act like MS?

Must disclose list of words they are using

That way any potential customer knows beforehand these words are not available for a first place ad, otherwise the word fraud comes to mind.

It's important that this is an auction

There is an important difference between what Google is doing and what television stations do when they run ads for their own shows: the TV stations don't sell their ads in an auction market (at least not usually).

If Google bids for AdWords (either with funny money or somehow with real money) then it is bidding against its own customers in an auction for its own products. Bidding in your own auction ("shill bidding") has long been considered a fraudulent practice.

Tax Liability?

If google:

• gives itself free advertising for other products in its portfolio
• and derives monetary or other substantial benefit
• and values this service for money

Do they, then, have to mark as "income" the money they create in this manner? I mean, the point would be moot if they "paid themselves" and then marked that as income. (And also created a business expense I guess.)

Do they have to bid, like the others, or do they simply bid[0] = bid.highest() + 1 where bid[0] is google's "bid"? If so, does this violate their own bidding rules? It appears by the article that they do bid fairly.

However, if they do not use "real money" to do so, or record any "created money" as income (as it is value, as it is valuable, since they sell it as a service), isn't this a problem legally?

It's because we're rich!!!

It's important to note, however, that our ads are created and managed under the exact same guidelines, principles, practices and algorithms as the ads of any other advertiser. Likewise, we use the very same tools and account interface...

We just pay ourselves more then our competators.

Knickers!

"Based on the thoroughness of the statement and the use of the word 'precedent' in the second sentence, it appears that the Google PR team huddled with the legal team to get their point across."

Was the author smoking a cigarette at the time? In his underpants? Was he pissed off with his wife? Had he run out of beer? Who gives a shit.

What is it with this hack analysis of "how" something was produced. Academics got distracted with this idea of process a long time ago; did a good job of it; and some of them moved on. Don't try it yourself at home kids. Try to paraphrase the actual content.

OH NO! NOT YOU TOO, SLASHDOT!

Don't look now, but this story on AdWords has Google AdWords on it! And the top ad is for Google's ad competitor, but THE SECOND ONE is an advertisement for GOOGLE ADWORDS! And if you click on it, it'll TAKE YOU TO GOOGLE'S ADWORDS PORTAL!

Won't someone please think of the children?! I can't bear to look, but I can't tear my eyes away! Ah Bartleby! Ah humanity! For the love of God, Montresor! Noooooooo!

Google Clueless Again

Boy, they really still don't get it. I couldn't believe they were trying to protray that their employees using the Google system are competing on an equal playing field with customers using the Google system. Reminds me of when Microsoft publicly claimed that there were no undocumented API functions, and their app programmers were competing on a level field with all other Windows app programmers. Claimed that right up until Andrew Schulman raised his hand and said "Umm, here's some undocumented system functions that Word is using."

Sad to see Google as willing to be slimy as Microsoft. They have every right to let their engineers do AdSense, AdWords, and whatever else for fun and profit. But please don't treat us like idiots and tell us that we're competing with them on a level playing field. Applying a Quality Score to everybody ain't a level playing field when some folks sit in an office next to the guy who knows how the secret Quality Score is calculated. Sheesh.

ORLY?

It's important to note, however, that our ads are created and managed under the exact same guidelines, principles, practices and algorithms as the ads of any other advertiser.

So, if a Google employee makes the mistake of clicking on a Google ad from the same shared IP that was used to put the ad on the air, will Google ban itself from the AdSense service?

Re:So what!

You are aware that the original post is about AdWords?

As for not making money on AdSense - are you not paid for the CLICKS? That you only got 5 clicks in 400,000 impressions is not necessairly google's fault. Now if you had some comment re: the quality of placed ads, then there might be something to talk about.