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Why the cards are stacked in Google’s favour – for now

I do wonder how far Google will go in forcing its advertising product onto its target market. Although the company has developed the most powerful advertising option in history (generating an astonishing $US43billion last year), it must be all too aware that Google AdWords is still just that: an option. However, at present the company’s strategy seems to be to ensure the product delivers results to its users and therefore remains indispensable to its advertisers, rather than worrying too much about how AdWords is perceived by the advertisers.

The most obvious manifestation of this decision is the way that adverts have slowly taken over the Google results pages. We’ve all seen results pages like the one below, which feature 9 advertisements, 3 “shopping results” and just 1 proper search result …which is simply the Wikipedia page.

Google Search Results screen

Our immediate reaction to this might be that Google is only concerned about its advertisers, and not the people searching. But I’d maintain the opposite is true: advertisers want exclusivity, after all. Armed with more data than any commercial company has ever held in history, Google knows that when people type a generic product type into that search box, they either want some background (hence the Wikipedia result) or they’re looking to buy something. And Google can argue quite plausibly that it’s going to deliver better buying options to people if it lets market forces dictate what’s shown – in other words, just show a page of adverts for the product.

So Google’s page full of adverts is responding to user demand, not pandering to advertisers. It just so happens that this strategy makes the company huge amounts of money.

If you’re skeptical about this, think of a potential purchase which you’ve used Google for recently: maybe a new kettle, a holiday, or a ticket to an event. I’d suggest that the adverts at the top and side would be exactly what you’d focus on. Who cares about the companies which Google has decided to put at the top of the free search listings? It’s the businesses which are commercially active enough to be advertising that I want to have a look at.

So for now, as advertisers, Google has got us over a barrel. There’s ever-decreasing opportunity to appear prominently in the results without paying, and it’s going to cost steadily more to buy your way in. But while the paid-for product remains so cost-effective (and it is), we’re going to keep on buying it. Google’s challenge will be in retaining customers when – one day – the RoI isn’t as amazing. Then it’ll need to learn a whole new set of marketing skills based around customer retention, which it does very poorly at present.

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