> Recode’s Peter Kafka recently interviewed Buzzfeed CEO Jonah Peretti, and Peretti said something really insightful: what if Google’s ads really aren’t that good? What if Google is just taking credit for clicks on ads just because people would have been searching for that stuff anyway? I’ve been thinking about it all day: what if Google ads actually aren’t that effective and the only reason they make so much is bill…
Google's ads make good money because:
(1) The overture model for running a search ad market works well (Google acquired and adopted a mature system). (2) targeted ad markets get better with scale. The larger the market share, the smaller a& more targeted a segment is. (3) Ads are also search results. Over time, Google has nudged users to select ads... on high value searches.
On that last point: The value of a click varies in orders of magnitude 18c for this one $12 for that one. In the early days, this meant you could buy clicks for pennies. These days, Google limits the supply of low value ads and increases the supply of low value ad clickers.
On average, users might even see or click on fewer ads than 10 years ago. On high value search terms, advertising prominence & click-throughs are through the roof.
If Google is "playing dirty," this is where the incentive is highest... and achieves the goals which Google has strategically used to grow revenue for years now.
Playing dirty is even a weird term here. A newspaper may have a journalistic ethos whereby ad-selling squares don't get to editorialise journalism... whether they stick to it or not. By what ethos is Google not supposed to let ad selling concerns influence organic search?