FairSearch - for the right result

shutterstock_237189976

‘Enhanced AdWords’ Will Drive up All Google Ad Prices

Google announced “enhanced AdWords” on Wednesday, by default forcing advertisers to make combined bids on keywords ads for mobile & desktop. The change makes it much more difficult, if not impossible, for advertisers to target keywords differently on mobile, tablet, and smartphone platforms.

So, why did Google make this shift? “Google Acts to Raise Mobile-Ad Prices” was the headline the Wall Street Journal used to explain the strategy:

“The move is an attempt by Google to boost the prices that advertisers currently pay for mobile-device ads, thus increasing its revenues amid concerns that historically low mobile-ad prices will hurt its bottom line, said several ad-industry executives. They added that more people are accessing Google’s Web-search engine through mobile devices.”

In an article entitled “Google AdWords overhaul: Good for Google, but businesses cringe,” ZDNet editor-in-chief Larry Dignan’s sums up the news: “Google launched enhanced AdWords campaigns that should boost mobile cost per click rates—at the expense of advertiser visibility, say search marketing pros.”

As Adobe explained in a corporate blog post, the change will help Google raise desktop prices as well:

“Currently, CPCs [cost-per-click] are lower for tablets given that competition for tablet traffic is still relatively low (but increasing).  By lumping the higher performing tablet traffic in with desktop traffic, revenue per search (RPS) will increase for Google as CPCs increase on the combined desktop and tablet traffic.  This, presumably, will address Google’s mobile monetization gap as an increasing share of searches is coming from tablets and smartphones. The downside for advertisers in the long run is they may see lower over­all ROI as these CPCs creep up.”

Google controls 95 percent of search on mobile browsers StatCounter says, and 72.4 percent of mobile device sales by operating system in Q3 of 2012, Gartner reports. With that kind of monopoly power, Google can do what it wants, and advertisers cannot realistically choose to bypass the dominant mobile OS and ad platform.

Every consumer of a business that advertises on mobile devices – and all will eventually – will lose as a result of Google’s move to raise ad costs across desktop, tablet, and mobile platforms.

Paul DeJarnatt, vice president and group director at Starcom USA, told TechCrunch:

“The largest beneficiary, at least at this stage, appears to be Google itself.” He suggested that Enhanced Campaigns could help small businesses, but added, “For sophisticated marketers and agencies, however, Enhanced Campaigns feels like a step back.”

As Google becomes even more aggressive in using its monopoly power to boost mobile ad rates while limiting advertisers’ choice and control, it is all the more clear that mobile will be the next battlefront. Google’s abuse of dominance must be confronted to protect consumers and businesses everywhere that reach them through the Internet – whether through desktop browsers or mobile, where the next battle between antitrust enforcement officials and Google will likely occur.