Junior Member from US
joined:June 9, 2008
This is just a theory based on a handful of facts. I'm not claiming it's entirely right. I welcome your thoughts.
1. All advertising is growing 3% a year worldwide. There is only so much of it that Google can grab from other media companies before its own revenue growth rate begins to slow.
2. As a result, Google started taking back revenue it was sharing with its partners by distributing ads to them with lower CPCs and click potential and keeping more of the better-paying ones. The evidence of this comes from Google's financials that started to hide partner metrics several years ago.
3. Changes in privacy and the political environment put another squeeze on Googe revenue by restricting its ability to track users and personalize ads. The evidence: quite a few people have said that AdWords performance declined sharply earlier this year (myself included).
What's a Google to do?
1. Make ads more relevant than organic search results. The evidence of this is the massive 62% growth in ad clicks this year, far higher than any previous year.
2. "Soften" highly relevant organic search results in the rankings because they compete too much with ads. I've seen countless examples of it and read countless complaints about it.
3. Increase rankings for big brands that carry AdSense. They attract higher CPCs because of the breadth and depth of their content as well as offer much bigger audiences. Besides, if you are Google, you like thousands of big sites more than millions of small ones for efficiency's sake.
All of this means that Google is sacrificing organic relevance and its massive market share on purpose for the sake of maintaining its profit and stock price. Otherwise, they would both fall.
The evidence of this is my experience: As a long-time media manager for print and online, I've seen it done many times. Sacrificing market share for profit is a common strategy.
Sorry for the long post.