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How Google Altered Ad Auctions to Increase Your CPCs

Ángel Simancas
Updated on_
October 9, 2023

Recently, during a federal antitrust trial, a statement by Jerry Dischler, the Vice President of Advertising Products at Google, came to light. In this statement, he claimed that Alphabet Inc., Google's parent company, has made significant adjustments to its advertising auctions, a practice aimed at ensuring it meets revenue targets. In some cases, these changes have led to ad prices surging by up to 10%.

These modifications to auction dynamics primarily affect the sale of search ads, including text ads and shopping promotions that prominently appear on result pages in response to user queries. 

Google often makes these changes, which may involve increasing ad costs or minimum bidding thresholds, without notifying advertisers of the changes.

In a revealing email exchange from May 2019, Dischler and his team discussed their efforts to fine-tune ad auctions to meet revenue targets outlined by Chief Financial Officer Ruth Porat.

The pressure to achieve these targets was palpable, as Dischler noted the potential negative consequences for Google's market position and stock price.

While Dischler expressed deep concern for revenue, he stressed the impact on employee morale and the sales team's performance, highlighting the importance of achieving these targets for the company's overall health.

Therefore, it is crucial to emphasize the need for tools like Dolnai AdCreator, which can help advertisers regain control over their Google Ads accounts. These tools empower advertisers to align Google's services more closely with their interests and goals, offering greater transparency and control over their advertising campaigns.

The ongoing antitrust trial asserts that Google has unlawfully maintained a monopoly over online search through financial arrangements with web browsers and smartphone manufacturers, effectively preselecting Google as the default option for users.

Google's payments to companies like Apple Inc. and Samsung Electronics Co. in exchange for this preferred status have raised concerns about anti-competitive behavior.

Over 60% of Google's total revenue derives from search ads, amounting to over $100 billion in 2020. Advertisers have fueled consistent growth in this segment since 2012, with growth rates consistently in the "high teens."

During cross-examination, Dischler emphasized Google's commitment to delivering "honest results" in its search operations. He insisted that financial considerations don't compromise the quality of organic search results, maintaining a clear separation between ad-driven and organic search teams.

While Dischler acknowledged that some auction changes resulted in 5% or potentially even 10% price increases for advertisers, he also indicated the risks of attempting a 15% increase. He believed such a move could lead advertisers to explore alternatives like Meta Platforms Inc. or ByteDance Ltd.'s TikTok, which would be detrimental to Google.

Nevertheless, it's crucial to highlight that advertisers can gain more control over their advertising budgets and outcomes by leveraging tools like Dolnai AdCreator. These tools allow advertisers to navigate fluctuations in ad prices and better align their advertising strategies with their objectives, minimizing the impact of Google's auction adjustments.

Ángel Simancas
Updated on_
October 9, 2023
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