Sunday, July 06, 2014

Dear Google: Thanks For The Ad, I Was Gonna Buy It Anyway


When you get the results of your Google search, do you click on the sponsored link (the top one) or the regular link (just below it)?

I asked this at a lunch the other day, and some people said they deliberately click the non-sponsored link.

Personally, I always click the sponsored link, because I like Google, and I'm happy for them to get the money.

But the question remains - do they deserve that money?

Let's say I owned an online cat store called TopCats. I buy search advertising for my store, on Google. The next day, someone searches for TopCats, sees the sponsored link, clicks on it, then buys a cat from my store. Google can then tell me "See, search advertising works brilliantly!"

But here's the thing - that person was going to buy a cat from me anyway.

Yes, I understand if someone searches for "buy high-quality cats online" it would be worth me showing them an ad for TopCats. But when someone searches for my store by name... aren't Google simply doing the equivalent of slapping an ad on my front door? Sure, people see it, and then afterwards buy, so it might look effective. But the only people who see the ad are the ones who were going in anyway.

This phenomenon is apparently a real thing, called 'endogeneity'. If you want to read more about it, there's more in an article by The Atlantic here.

Just to be clear, I like Google a lot. I use their product multiple times a day, and I think it's awesome. It's fairly certain I couldn't live without it. Since I'm a sucker for gadgets, I'll probably even give Google Glass a go. And since I'm shit at driving, I'm really looking forward to driverless cars.

So I'm not wanting to criticise Google, in any way. They should get lots of money for what they do. Lots.

But $60 billion* a year - is that fair?

*Google's revenue was $15.4 billion in the most recently-announced quarter. More than 90% of this revenue comes from advertising. The company doesn't break out search from display and other forms of advertising, but it's safe to say that search is big.

8 comments:

@simonislawson said...

Getting rid of the people who were going to convert anyway (removing baseline)1 is one the biggest challenges facing digital advertising programs. Some do it well, many don't.

ThePunkRockShop said...

The other bit of "genius" is being retargeted with ads for product AFTER you've bought it. Happens a lot. Total media wastage.

Digital101 said...

Simon, are you saying you understand Google Search? I ask because isn't Google Ads set up so that you can actually choose to purchase your company name or just run off organic?? eg. you don't actually have to buy 'TopCats' unless you want to stop your competition buying it and potentially taking the customer who you mention was Gonna Buy It Anyway.
Yes, buying your own company name could be seen to be a silly move as the person is searching you by name. But the choice is there for advertisers to protect them and ensure they capture every potential lead.
Basically the argument you put up is actually one which is in the hands of the advertiser and not an issue with Google - unless I'm misunderstanding your point.

Anonymous said...

Its necessary if your competitors end up on top of your 'organic' results. Otherwise I say its a waste of a CPC.

Anonymous said...

Ummm, don't buy your own brand term, then there's no ad to click on...

Scamp said...

Digital 101 you are quite right. It is the advertisers themselves, ultimately, who choose to spend the money with Google in this way. I guess I am not criticising Google for offering the service. Just whether it's worth buying.

Mary Mary said...

Purposely choose the non-sponsored ones.

Anonymous said...

Well, it's not entirely the advertisers fault. Since Google allowed the purchasing of competitive terms, you kind of need to protect your own brand when people search for it. Otherwise Nike might have a direct competitor, or an intermediary (Sports Direct or something) nip in and buy the sales.

They also sneakily benefit from two things - one is that when you go to google the cursor defaults to the search box. Someone worked out that the pure laziness of users typing in the name of the site they wanted to go to anyway made Google about $1b per year (I can't find the source).

Then, they released a very successful browser called Chrome. Interesting thing about Chrome - even if you type the brand into the address bar it defaults to search. As opposed to Firefox, which thinks you are probably looking for Nike.com and brings you directly to Nike.com.