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How Google Inflates AdWords Bids

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Re: How Google Inflates AdWords Bids

#2

Post by mmaunder »

If the ads aren't limited to google's own properties, then this costs Google 68% of the total ad inventory that is shown on non-google sites, since that's the rev share.

Are they limited to Google's own properties? I've never used free ads, so curious. In a way that would help validate the theory, but the non-existence of a limitation wouldn't invalidate it.

Interesting observation and I think it's probably correct about the inflationary effect.

Re: How Google Inflates AdWords Bids

#5

Post by veesahni »

mmaunder wrote: post #2

If the ads aren't limited to google's own properties, then this costs Google 68% of the total ad inventory that is shown on non-google sites, since that's the rev share. Are they limited to Google's own properties? I've never used free ads, so curious. In a way that would help validate the theory, but the non-existence of a limitation wouldn't invalidate it. Interesting observation and I think it's probably correct a…

The vouchers give me a cash balance on my account, allowing me to spend it in any way I chose to. So no, they aren't limited to Google's own properties and Google would have to pay publishers on their content network.

However, they operate with an unknown spread between the publisher payout and the advertiser bids - not sure how they would handle payout in the case where no real money was actually spent.

Re: How Google Inflates AdWords Bids

#6

Post by aneth »

This is a great point. Seems even legally questionable to make people bid against "fake" money although I'm not sure what law is being violated. Is it legal as the seller in an auction to give out money to certain bidders, with the obvious effect of raising the price at almost no cost to the seller?

Re: How Google Inflates AdWords Bids

#7

Post by pdenya »

In my experience Google required me to speak to a representative to claim my $100 credit. I had already done research with the keyword tool and had a list of keywords I wanted to use and the prices I was going to initially bid for them.

The woman I spoke to used generic keywords instead of the specific keywords I requested ("Necklace" vs "Bendable Necklace", etc) and set the per-click price much higher than I requested ($3 vs $.15). She required that it was setup that way "to make sure everything is working" and I could "change it later". This burned through $21 of my $100 credit in about 1 minute.

So yes, Google is actively encouraging much higher spending with credits.

Re: How Google Inflates AdWords Bids

#8

Post by mmaunder »

veesahni wrote: post #5
mmaunder wrote: post #2

If the ads aren't limited to google's own properties, then this costs Google 68% of the total ad inventory that is shown on non-google sites, since that's the rev share. Are they limited to Google's own properties? I've never used free ads, so curious. In a way that would help validate the theory, but the non-existence of a limitation wouldn't invalidate it. Interesting observation and I think it's probably correct a…

The vouchers give me a cash balance on my account, allowing me to spend it in any way I chose to. So no, they aren't limited to Google's own properties and Google would have to pay publishers on their content network. However, they operate with an unknown spread between the publisher payout and the advertiser bids - not sure how they would handle payout in the case where no real money was actually spent.

They've said their revshare is 68% in the past:

http://adsense.blogspot.com/2010/05/adsense-revenue-share.ht...

It would require significant changes to their bidding and reporting applications to fudge paying out less for advertiser dollars sourced from a voucher. So I suspect they eat the cost and the net effect is an aggregate boost in earnings.

Re: How Google Inflates AdWords Bids

#9

Post by OstiaAntica »

I've used Google AdWords since it launched. In the past year, I've been locked in a death spiral with the service. The cost-per-click has sky-rocketed even as I dial back my bids and budget. I'm in a low traffic category so there's nothing external going on....Google is getting better and better at extracting every last penny of value from me.
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