Google Gets Grief from Groups

By Clint Boulton  |  Posted 2008-09-17 Print this article Print

Varian also said the report does not acknowledge that ad prices are not set by Yahoo or Google, but by advertisers  through the auction process. This process, he promised, will remain unchanged by the agreement.

The economist, who has taken a more active role in speaking out about Google's search business plans since Google and Yahoo announced their partnership intentions June 12, also said the report includes a misplaced focus on cost per click (CPCs) rather than the more important measure for advertisers -- return on investment of their advertising dollar.

One of the reasons Google's ad system has performed so well for advertisers is that our ads tend to be highly relevant to user queries, which makes it more likely that a user will click on an ad and purchase the advertiser's product. We have found that advertisers are generally willing to pay more per click so long as those clicks result in more sales. We anticipate that our agreement with Yahoo will bring more relevant ads to Yahoo users -- which is better for both advertisers and users.

Varian also said the SearchIgnite study "mistakenly assumes" that Yahoo will serve Google ads for as many of its search queries as possible, even though Yahoo has denied it will serve Google ads on search results pages where they have few relevant ads to serve.

Varian has other, lesser quibbles with the report but you get the gist. But why come out swinging now, two months after the SearchIgnite report? I'll tell you why.

Clearly, Google's back is against the wall because pretty much everyone with a stake in the search ad space that isn't named Google or Yahoo is complaining. The clock is ticking for Google and Yahoo on the voluntary 100-day review process by the DOJ.

From the Rural Corngrowers Association, to entities as big as the Association of National Advertisers to the World Newspaper Association, which represents 77 national newspaper associations and 18,000 newspapers worldwide, Google is getting grief for alleged anticompetitive practices.

How will the DOJ respond to the deal?


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