Google is one of its own Biggest Ad Buyers

[engine]

According to the Wall Street Journal research, Google is one of its own biggest buyers of ads on the search engine, and the ads appear 91% of the time.

[wsj.com...]

“We have consciously and carefully designed our marketing programs to not impact the ad auction. All our bids are excluded from the auction when determining the price paid by other advertisers, and we have strict rules and processes — set to tougher levels than our customers — to govern the use of our own ads products,” Ads for Google products topped Google search results 91 percent of the time [recode.net]

[keyplyr]

I see Google product ads very seldom on my Adsense pages, but then I don't block any vendors and only block political & religious categories.

I would assume that publishers that block many advertisers and/or categories would see more Google product ads filling in the empty units.

[toidi]

@keyplyr

from what i could read fr the article before the spam cut me off it sounds like it is only referring to ads in the serps. Google ads are always at the top of the page no matter what the competition is paying. But they aren't cheating. They do it fairly.

[keyplyr]

Thanks toidi, that link wouldn't load for me.

[Brett_Tabke]

I think the title of the thread is misleading. Google does NOT buy it's own ads.

[NickMNS]

There is something wrong with their approach.

If I am advertiser and I want the top spot, I bid in an auction for the top spot, I win the auction against the participants and then another party that did not participate takes the top spot and then I get the second spot. How does that work.

Accounting wise, how much is Google writing on its books for that top ad, for the inter-company transfer payments? They should be charging market price, but if they are not participating in the auction how is the market price set?

[engine]

I think the title of the thread is misleading. Google does NOT buy it's own ads.

From that article in WSJ...

the search giant has been buying millions of its own ads and displaying its products such as Google Home and Nest thermostats atop search results, over those of ad-buying customers.

I wonder if it really "buys" or has a set budget "allowance". I doubt we'll ever know unless Google says one way or the other.

[aristotle]

I'm confused. If google literally buys its own ads, who does it pay the money to?

[NickMNS]

@aristotle it pays the money to itself. That is, it transfers money from one division of Alphabet to another. So let say the guys over at Nest are suddenly selling a lot of thermostats, they then can start placing ads using Adwords.

If the Adwords division is in Ireland (low tax region) and the Nest division is in Canada (high tax region) this allows the corporation to transfer money into the low tax region by increasing expenses in the high tax region. In this example the increased expenses would be in marketing expenses in the high tax region, thus increasing profits in the low tax region. All this is perfectly legal, and necessary, provided it is done in accordance with the tax laws of the land. In general the rule is to use the market price as the transfer price.

Now if Google is not participating in the market what price are they setting as the market price? Maybe, this is why they do not participate in the auction (market), because the added demand would push up prices, this would hurt both the tax man and Google's true customers.

But if the added inventory used up by Google would be made available to the market, then the market price would drop. So not participating in the auction (market) benefits Google.

So which is it?

Anybody looking for doctoral thesis in economics?

[Shepherd]

Google said that when it competes for ads, other advertisers are charged as if it wasn’t bidding, meaning its participation doesn’t directly inflate prices ...

I know that google is not that stupid so they must just be flat out lying.

After spending millions on adwords we finally quit adwords 4 months ago. Preparing FTC complaint and hoping google decides to pursue the final bill we are disputing. Unfortunately the FTC goes nowhere unless others complain, but it is promising that the WSJ did a story.

If a business is trying to advertise on google in a niche that google is in OR has invested in, that business is going to get raked over the coals for their adwords spend. Might be a little jealousy talking here but google really has put themselves in a great position, not only are they able to stifle their competition, they are also able to make money off of them!