Google's biggest risk: competing against AdWords and AdSense customers
Google unabashedly conveys its belief that it is in its rights, and in its power, to not only be a master of “the world’s information,” but to be a master of the world’s advertising, as well:
- Google.com AdWords
- Google AdSense Google Network
- Google Publication Ads
- Google dMarc Digital Broadcasting Ads
- Google Checkout AdWords Icon…
Google is achieving its unprecedented industry domination and financial success while operating against many well established American business norms.
The Google advertising auction engine, which fuels the Google money machine, requires advertisers to purchase advertising from Google in ways that contradict how media buys have historically transacted.
Before Google, advertisers insisted on published media rate cards, and routinely negotiated down the published ad rates. In the Google world, advertisers purchase advertising in a blind fashion. At its AdWords “Help Center” Google poses a standard business question which, in the Google world, becomes almost rhetorical:
“How much does AdWords cost?" Google’s non-answer:
In the Google AdWords program, the cost of your campaigns really depends on you -- how much you're willing to pay and how well you know your audience. It all boils down to knowing your own goals and applying them to your account
In the Google world, “how much you're willing to pay” translates into competitors willingly bidding up their own ad spends.
Before Google, advertisers insisted on audited circulation numbers and “make goods.” In the Google “you pay only for clicks on your keyword-targeted AdWords ads” world, “click fraud” is calculated in the cost of doing business, rather than regarded as a potentially deceptive business practice.
Before Google, companies considering entering into commission-based partnerships, insisted on upfront commission schedules from the prospective partners. In the Google AdSense world, Google requires its prospective publishing partners to “trust Google,” and that is what thousands of Website publishers are doing. Google’s rhetorical AdSense question:
"How much will I earn through this program?" Google’s non-answer:
we don't disclose the exact revenue share, our goal is to enable publishers to make as much or more than they could with other advertising networks. The best way to find out how much you'll earn is to sign up and start showing ads on your web pages.
Google, however, is at a watershed moment in the company’s short, but wildly successful, history. Google acknowledges in its 10-Q statement, March 31, 2006:
Our business has grown rapidly since inception, resulting in substantially increased revenues, and we expect that our business will continue to grow. However, our revenue growth rate has generally declined over time, and we expect it will continue to do so as a result of increasing competition and the difficulty of maintaining growth rates as our revenues increase to higher levels.
What is Google to do? Normally, companies grow by developing complementary products and services. As Google wants every single company and service as its advertising client, or publishing network partner, however, all complementary products and services also represent Google customers or partners, or prospective Google customers or partners.
eBays’ reaction to Google’s launch of the Google Checkout online payment system may portend a rocky future for Google.
Although “Google Speak” has repeatedly put forth that Google’s online payment service is not competing against eBay’s PayPal, a week after the launch of Google Checkout, eBay placed the payment service on its “Payment Services not permitted on eBay” list.
eBay is one of Google’s largest customers and Google is at risk in competing against its own AdSense and AdWords customers.
SEE: Google Checkout vs. eBay PayPal: Schmidt and Whitman 'best relationship'?