Screwgle™ - Google's new ad revenue model

It's wallet-emptying good...


Google's strict code of secrecy calls for extra silence when the subject is AdWords, the epic money-making machine fueling the company's drive towards world domination. But sometimes, the truth slips out.

Earlier this month, during Google's all-important quarterly earnings call, a financial analyst outed the company's plans to squeeze who knows how many extra dollars from the world's online advertisers. Though no one seems to have noticed, this astute money man mentioned "Automatic Matching."

"Automatic Matching" is an AdWords beta program that Google launched ever so quietly at the end of February. Via email, the search giant notified an unknown number of advertisers that if they ever failed to spend their daily ad budget, this new feature would automatically spend it for them.

With AdWords, you arrange for your very own text ads to appear in response to Google keyword searches. The program is billed as an auction. You bid for a particular term or collection of terms - "chia pet," say, or "suppositories" - and if you bid high enough, your ad will turn up each time a web surfer searches on those words. And each time someone clicks on your ad, you pay Google a fee somewhere beneath your bid - until you reach your daily budget.

Of course, if a relatively small number of surfers search on your keywords, you won't reach your daily budget. And that's where Automatic Matching kicks in. When Auto Match is turned on - and it was turned on by default with many (if not all) beta-testers - AdWords automatically spends your unused budget on keyword searches you aren't actually bidding on.

"Automatic Matching automatically extends your campaign's reach by using surplus budget to serve your ads on relevant search queries that are not already triggered by your keyword lists," reads Google's email to beta testers. "For example, if you sold Adidas shoes on your website, Automatic Matching would automatically crawl your landing page and target your campaigns to queries such as 'shoes,' 'adidas,' 'athletic,' etc., and less obvious ones such as 'slippers' that our system has determined will benefit you and likely lead to a conversion on your site."

Naturally, this boosts Google's bottom line. But as search marketing consultant Dan Theis has pointed out, it doesn't exactly benefit the average advertiser.

"They're offering you the exciting opportunity to bleed every penny of your budget every day, advertising against keywords that you didn't want to bid on," Theis says, before unloading the sarcasm. "Sure, if I sell Adidas shoes, why wouldn't I want to get some traffic from people who searched for slippers? I mean, it's not like I'm trying to turn a profit or anything, right?"

Well, midway through that Google earnings call, Bank of America analyst Brian Pitts popped up to ask about the progress of Auto Match - which Google has yet to publicly acknowledge with anything more than some extra words on its AdWords help pages.

"You expanded Auto Match to more advertisers this quarter. Do you see this as a significant driver of coverage going forward?" Pitts asked, referring to the number of Google results pages that include ads. If more pages include ads, then Google gets more paid clicks. And more paid clicks mean more revenue.

Broader topics


Other stories you might like

  • Stolen university credentials up for sale by Russian crooks, FBI warns
    Forget dark-web souks, thousands of these are already being traded on public bazaars

    Russian crooks are selling network credentials and virtual private network access for a "multitude" of US universities and colleges on criminal marketplaces, according to the FBI.

    According to a warning issued on Thursday, these stolen credentials sell for thousands of dollars on both dark web and public internet forums, and could lead to subsequent cyberattacks against individual employees or the schools themselves.

    "The exposure of usernames and passwords can lead to brute force credential stuffing computer network attacks, whereby attackers attempt logins across various internet sites or exploit them for subsequent cyber attacks as criminal actors take advantage of users recycling the same credentials across multiple accounts, internet sites, and services," the Feds' alert [PDF] said.

    Continue reading
  • Big Tech loves talking up privacy – while trying to kill privacy legislation
    Study claims Amazon, Apple, Google, Meta, Microsoft work to derail data rules

    Amazon, Apple, Google, Meta, and Microsoft often support privacy in public statements, but behind the scenes they've been working through some common organizations to weaken or kill privacy legislation in US states.

    That's according to a report this week from news non-profit The Markup, which said the corporations hire lobbyists from the same few groups and law firms to defang or drown state privacy bills.

    The report examined 31 states when state legislatures were considering privacy legislation and identified 445 lobbyists and lobbying firms working on behalf of Amazon, Apple, Google, Meta, and Microsoft, along with industry groups like TechNet and the State Privacy and Security Coalition.

    Continue reading
  • SEC probes Musk for not properly disclosing Twitter stake
    Meanwhile, social network's board rejects resignation of one its directors

    America's financial watchdog is investigating whether Elon Musk adequately disclosed his purchase of Twitter shares last month, just as his bid to take over the social media company hangs in the balance. 

    A letter [PDF] from the SEC addressed to the tech billionaire said he "[did] not appear" to have filed the proper form detailing his 9.2 percent stake in Twitter "required 10 days from the date of acquisition," and asked him to provide more information. Musk's shares made him one of Twitter's largest shareholders. The letter is dated April 4, and was shared this week by the regulator.

    Musk quickly moved to try and buy the whole company outright in a deal initially worth over $44 billion. Musk sold a chunk of his shares in Tesla worth $8.4 billion and bagged another $7.14 billion from investors to help finance the $21 billion he promised to put forward for the deal. The remaining $25.5 billion bill was secured via debt financing by Morgan Stanley, Bank of America, Barclays, and others. But the takeover is not going smoothly.

    Continue reading

Biting the hand that feeds IT © 1998–2022