Friday, January 20, 2017

Ads for Google Products Dominate Its Searches

Google Buys Millions of Its Own Ads

It turns out that Alphabet Inc, one of the largest advertising businesses, sells itself the most ads.  While many of us are aware that there is some bias in the reported results that occur, it is surprising to me that Google products and its subsidiaries products appeared in the top spot for 91% of 25,000 recent searches related to the items.  In 43% of these searches, the top 2 ads were for google-related products.

As a shareholder, personally, I like it.  As a consumer, however, it just means that one needs to be aware of what they are seeing when they search for a product.  The highest item on your search list isn’t necessarily the most popular or the one that fits the best, but rather, a product that google wants you to purchase. Per Google, when it competes for the ad space against other advertisers, it claims that other advertisers are charged as if it wasn’t bidding – meaning that prices shouldn’t be inflated. 

The implications:  Google holding top ad slots for search ultimately increases competitors bidding for the remaining slots for views.  This also means more in-house products that Google is able to showcase and sell, but at the cost of displaced ad revenue from other companies.

These will be interesting metrics to track over time.  Per Google, it says that its house ads appear on a much smaller portion of searches than in 2010.

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