Google House Ads Under Fire for Conflicting Interests

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Google seems to be going through a bad patch after loosing its search market shares to Yahoo and now its under fire for its policy of publishing house ads on its search engine results page. Prof. Eric Goldman made an interesting revelation at Search Engine Land about Google’s self-promoting ads. Google is different from other companies as it uses keyword-bidding auction system for ads. Google’s promoting its interest with Adwords system for its own products that is conflicting in many ways.

It’s common for business to use house ads to self-promote their own offerings. As Goldman’s research provides, Google differs from other publishers as it runs house ads to self-promote their own offering.

This process distorts the value of search ads for other advertisers who try to bid on the same keywords. It’s impossible to know whether Google is playing fair.

One of the greater issues is that Google is bidding in its own auctions. There are several instances like the ads Google unveiled during the launch of Nexus One phone. Further, they used the ads to tell the world that it might leave China.

The search are placed according to two factors - quality of the ad and the price advertiser can afford to pay per click. According to Goldman Google has more than enough knowledge regarding the same process unlike the advertisers who doesn’t have similar access.

For instance, if the advertiser bids for $1 per click to take the top slot on the sponsored list, Google might gain from this bid by a keyword at $3.

Goldman argues that individual departments that want to run house ads have to bid just like anybody else without special knowledge, and that they have to use their marketing budgets to pay for those ads.

Google response to the statement was straight.

All search engines run ads to inform users about services that they offer. Google isn’t an exception in this practice.  It’s a advertising platform and use it in the way that advertisers do