Jerry Dischler, Vice President and General Manager at Google, said under oath in 2020 that Google tuned its ad prices to meet its revenue targets. Ad prices went up 5% to sometimes 10% without communicating those changes to advertisers.
This news comes from Bloomberg who reported "Google has tweaked its advertising auctions to ensure it meets revenue targets, sometimes increasing ad prices by as much as 5%, an executive for the company testified Monday at a federal antitrust trial."
The report says that Google "frequently makes changes to the auctions it uses to sell search ads." Even when those "tunings" impact ad prices, Google typically doesn’t tell advertisers, Dischler testified, according to Bloomberg. "We tend not to tell advertisers about pricing changes," he said.
"My goal was to get creative so we could meet our quota," Dischler said. Google's team discussed ways of "shaking the cushions" to find more money from the ad system.
The PPC industry is not happy but also not surprised by this:
So I always knew this was the case, but to see it actually stated by the VP of ads is astounding!
— Anthony Higman (@AnthonyHigman) September 19, 2023
And what do you think smart bidding is? A smart way for Google to be able to easily manipulate ad prices! SMH pic.twitter.com/rwvpCmWC0M
Many years ago, a senior member of the Ads team, who had previously only referred to users, technical issues, Quality Score algorithms, etc., publicly referred to his team as the "Revenue Team." For sure, don't kid yourself. They can and do fiddle constantly to maximize 💰
— Andrew Goodman (@andrew_goodman) September 19, 2023
Color me shocked 🙄
— Samara Hart (@pixsym) September 19, 2023
More: "The parties buying the ads would have been unaware of these “tunings” of prices; 'we tend not to tell advertisers about pricing changes'. The email also describes other options for boosting revenue that include making Search more prominent for Chrome users."… pic.twitter.com/w1uhXd7Lh6
— Glenn Gabe (@glenngabe) September 19, 2023
They also restricted bidders from bidding on keywords with low search volumes, long tail kewords, or low click costs. However, they still allowed broad/phrase to bid on those same restricted keywords above using the more expensive broad/phrase keyword to generate more ad revenue.
— Nate Louis (@N8Louis) September 19, 2023
PMax just takes this to another level, as I've been saying all along.
— Andrew Goodman (@andrew_goodman) September 19, 2023
Smart Bidding is an interesting conundrum. Often it is quite smart. But if you see your average CPC on a large dataset go from $0.80 to $2.70 you know who must be smiling the most.
Dischler said he didn’t know if the change led advertisers to place higher bids, but it increased Google’s revenue.
One change that increased Google’s revenue, known as RGSP, switched the auction so the runner-up was given the top advertiser slot and the actual winner the second spot, according to Dischler. Oftentimes major advertisers like Amazon.com Inc. or Booking Holdings Inc. win any ad auctions where they bid and take the top slot, Dischler said. With RGSP, “we flip them,” Dischler said. “Otherwise, Amazon always shows up on top.”
Forum discussion at X.
Update: We got a statement from Google: "Search ads costs are the result of a real-time auction where advertisers never pay more than their maximum bid. We’re constantly launching improvements designed to make ads better for both advertisers and users. Our quality improvements help eliminate irrelevant ads, improve relevance, drive greater advertiser value, and deliver high quality user experiences."
