Google’s Hogwash: How auctions set ad prices

Google’s recent blog entry on how Google sets the ad prices for their Ad-words program is a sheer hogwash.

Hal Varian, their chief economist, explains the entire bidding process and how the highest bid price and quality score determines the final prices of the bids that the advertisers have to pay.

I respect google’s ad-words program creator and conceptualizer for bringing the Online Ads to reality and making it a Star performer for Google with over a Billion dollar in revenue. However, now it’s just become a clear machine for google to hogwash advertisers by their complex statistical algorithms gimmick.

For Eg: If I have set-up a budget for lets say $10/day the cost of the adwords is low. However, if I increase my daily budget to $100 the cost of the same keyword will go high even when there is no other bidder for the same keyword. I have tested this multiple times.

Also, lets say the quality score determined by google is low. However, I might have a strategic benefit behind choosing a certain keyword for a limited time period. The automated process can not identify that and Google changes the cost of the keyword exorbitantly just as a “curbing tactic”.

Also interestingly google’s content network gets a very high clickthru rate than the search network. So, isin’t it obvious that Google should somehow provide that information on the campaign report that who are the people clicking in the content network.

When google complains about click frauds…it makes me wonder…what if its a 2 way fraud?
Why does google has to increase the bid price even when no one else is bidding?

Also, I am just wondering why the people who were chief architects and key contributors in a lot of google’s products have left google ? Here are they now and how facebook is stealing people from google.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s