Google Raised Ad Prices To Hit Revenue Goals, Google Executive Said

Sep 20, 2023 - 7:31 am 7 by
Filed Under Google Ads

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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:

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 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."


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