Traffick - The Business of Search Engines & Web Portals
Blog Categories (aka Tags) Archive of Traffick Articles Our Internet Marketing Consulting Services Contact the Traffickers Traffick RSS Feed

Archive for April, 2012

AdWords “Security Patdown” Got You Down? It Could Be Worse

Friday, April 20th, 2012

No one likes to be the victim of a false positive. Every time you’re “randomly” searched in an airport, you curse under your breath and silently rail against the excessive security. Of course you would, because it’s happening to you. But at a system level, we all agree that we have to do anything we can to keep bad guys from hijacking planes or transacting the kind of business that leads to drug wars and general lawlessness that affects our daily safety.

I feel so strongly about that principle, I’ve taken it upon myself to barge into one-sided forums demanding the banning of airport pat-downs. There are some incidents and false positives, of course, but the answer is not to persecute hard-working security personnel or to make it really easy to wander onto an airplane with a weapon. All you can do is try and make the system better while minimizing some of the inconveniences.

I stated that case in one of those forums, and seconds after doing so, received an email invite implying that I should go join a “Nazi” forum. O-kayyy… surely there must be some balance between considering airport security trivial and the other extreme of living in a police state. You see travelers dress down security personnel all the time, when they’re just doing their jobs. I don’t think I’ve ever seen a single one thanked.

Analogously, there are considerable inconveniences in having an AdWords ad, account, or related site sit in a queue for awhile while Google decides that you’re not a criminal. But to put it in perspective, few have had to enrol in extensive counseling to deal with the trauma. It’s annoying, but the alternative is a bigger nightmare — the specter of a search engine space full of junk, where you can’t get seen because users have given up trusting most of the ads.

Sometimes, then, Google’s automated and human “scam-spotting” activity can affect a legitimate business. More rarely, it can make it impossible for a legitimate business to grow and flourish. In the affiliate and arbitrage marketing communities, and the “info product and aggressive offer” spaces to boot, this security regime has sometimes been trivialized by calling it the “Google Slap.” While it’s true that Google includes some of these kinds of businesses in its policy list of business models that may have trouble showing up in the AdWords system, what it’s trying to protect consumers from can actually be a lot more sinister than that. This runs the gamut from deceptive offers to out-and-out scams: phishing sites, malware, ripoffs, illegal or criminal activity, and more.

Many advertisers aren’t up to speed on the depth of Google’s effort in this area. I just had the opportunity to chat with David Baker, Director of Engineering, Advertising, at Google. He provided some additional insight into some of what’s behind today’s update on the official Google blog covering Google’s editorial and consumer protection activities in the AdWords program.

Unfortunately, the magnitude of the effort is much greater now than it was five to six years ago. “My sense is that there was a dramatic uptick in ‘bad’ and scam type ads in 2008 and 2009,” said Baker.

When consumers are duped or even defrauded, they may point the finger at Google. But more importantly, constant vigilance in upholding standards of trustworthy advertising is needed so that users don’t become gun-shy about clicking ads. Baker noted: “Success in this (editorial and consumer protection in terms of ad and account approval) area is Google’s greatest opportunity for increased revenue. It’s important to us that end users trust the ads.”

As pointed out in the blog post, Google increasingly relies on sophisticated pattern matching and machine learning to look for potential red flags at three levels: the ad, the site, and the account. This is combined with human intervention where serious violations are likely. From here, accounts can be suspended or closed, ads can be disapproved, or all accounts can be blocked from sending any traffic to specific sites.

This is to the extreme end of the continuum of vigilance that incorporates Landing Page and Website Quality into overall Quality Scores. If advertisers were looking for cues as to the degree to which minor user experience and relevancy problems are going to be factored into their Quality Scores and ad eligibility, in my judgment, Google currently has a “fish to fry” problem that is forcing it to devote many resources to playing “whack-a-mole” with the worst offenders. Minor website issues will not typically be a problem for Quality Scores and the resulting CPC’s and ROI.

Another takeaway must be that this strain on Google’s resources may mean slow ad approvals and temporary periods where Google’s pattern matching puts you in a suspicious category. It’s natural to be outraged — “how could they take all that money from Canadian pharmacies (Google paid a $500 million fine for knowingly doing so), and then leave our ads for legitimate medical equipment in limbo for so long just because an algorithm says it overlaps to a certain extent with a suspicious category or pattern? Don’t they know it’s *us*?”

Unfortunately, there are a lot of “us’s” and too few humans at Google (even with a significant increase in resources) to offer speedy approvals at all times. Google may decide to err on the side of consumer protection rather than reducing friction for advertisers.

That being said, Google dislikes any such friction. It does not wish to take steps to make it harder to advertise in general. Baker noted that Google had studied “barriers to entry” like a $1,000 bond (or more), but that overall the system has been such a boon for so many small advertisers (with a hacker mentality, if you will) that it would be a shame to move to a slower-moving ad setup process.

Like many of you, I’ve seen a lot of gray-area ads since I’ve been in the business. In particular, I often feel strongly that a client is getting a raw deal from the auction in light of an unscrupulous competitor’s false claims or — if not literally ‘counterfeit goods,’ then substandard quality that makes a mockery of direct price comparisons. Some competitors also like to rip off content and ideas, even taking the family bios and histories of my client and claiming them as their own. We had one national ecommerce client whose most unscrupulous lookalike competitor was the founder’s own son.

It now seems that Google will be fighting so many battles against hardcore bad guys, it will be difficult to see much movement in any attempts to complain about lesser ripoffs. Resources aren’t infinite, and there is probably no good way to police some of it anyway.

Quite simply, that’s where consumers have to come in. When they receive shoddy goods, etc., we need them to get on various third-party sites and make their voices heard. Google will have to pour far more resources into building and policing their own review platform as well, or that will become merely another platform for gaming by bad actors. Finally, Google is building a Trusted Stores program that will presumably elevate a minority of retailers to a rock-solid status as uncommonly trustworthy.

Google willingly took on the mantle of what they call “organizing the world’s information” — a task that implies “ranking what’s best,” in the minds of many consumers. Along the way to becoming vastly successful in mediating an enormous open marketplace of ideas and commercial messages, Google has assumed a huge burden as a “certifier” of what consumers can trust. Due to the scale, it’s a job that is vastly harder than test-driving a few cars from known manufacturers. That’s why, at times, I have referred to Google as becoming almost like a government (“the guvernment“). While it may be great to be “in power”… it’s also a case of “be careful what you wish for.”

What’s amazing, given the persistence of bad guys with credit cards, is that problems with rogue advertisers aren’t much greater than they are. Google reportedly suspends or closes in the hundreds of thousands of accounts per year. A Google spokesperson also informed me today that Google routinely passes on information about suspicious parties to the legal authorities.

I’ve been working hard for years to explain this paradox. Google wants advertisers’ money, but it must often turn away money if the result will be user dissatisfaction. Legitimacy and trust are currency for a search engine. I still remember the conversation I had in a pitch meeting at a venture capital firm, for a startup I’m involved with. I tried to explain how businesses like Yelp and Google must sometimes incur the wrath of paying businesses, because their overall legitimacy depends on users, which in turn provides the basis for a large advertiser base in general.

One of the partners lectured me condescendingly: “I don’t think Google is in the business of turning down advertiser dollars.” He was wrong then, and he’s wrong now. Google often turns down a lot of specific advertiser dollars in the short run so it can make more from advertising in the long run.

Baker closed his post by noting that he will go on “fighting the good fight” against bad ads. Next time you stop by the Googleplex, maybe you could thank him — if for no other reason than to watch him fall off his chair.

4 Reasons Google’s Stock Dropped Like a Stone for Two Days

Tuesday, April 17th, 2012

Following a positive earnings report, Google’s stock took a beating for two days running after having risen close to an all-time high in the days before the earnings announcement, dropping from about $650 to nearly $600 before rebounding today. What caused the selloff?

Four factors seem to be relevant to the selloff in the midst of what seemed like massively positive financial news:

(1) A simple “sell on news” response to anticipated good news, based on a valuation that had already run up in anticipation of a positive outcome.

(2) After taking awhile to digest, the news that average search CPC’s declined significantly year over year began to sink in more with Wall Street, and this dark cloud outweighed the great news about the actual current cash flow.

(3) Regulatory and legal headwinds: major government privacy and antitrust investigations are ongoing and being renewed from various angles, and Oracle is suing Google for $6 billion.

(4) What sounded like it might be a positive use of cash from an investor standpoint — the announcement of a “dividend,” morphed into a “dick move” whose purpose was to issue more nonvoting shares to further solidify the founders’ share class and iron grip of control over the company by Page and Brin (and to some extent Eric Schmidt). Outside advice and input from shareholders, this signals, will be treated with increasing levels of indifference. Wall Street can think as one mind on issues like this and at least temporarily, seek to punish companies for transparency problems and governance structures the Street doesn’t like.

All of these factors probably had something to do with the selloff, but which really matters? #4 is probably the least likely to stick over the long haul. Markets and Wall Street cannot really “think as one mind” on corporate governance issues — opportunistic money is always going to jump in and scoop up shares if the price is right, defecting from any unspoken pact to uphold broader shareholder or Wall Street interests in a showdown with some relcalcitrant geek execs.

The issue is #2, but it’s unclear whether it should be an issue. Naturally, stock analysts want to look to the future to understand growth potential. What’s the mix among Google’s core and new businesses? How mature is the core business? Will the new businesses be high margin? A lot of number-crunching needs to go into finding an appropriate valuation.

Wall Street has known that Google would be an amazing financial juggernaut for many years, though it still had to play catchup after the IPO, where it underestimated the potential. The markets, over the long haul, have told the Google tale pretty well. If you were smart enough to understand the company at IPO time, you had a great return. The return in the first five years of the company’s status as a public company were phenomenal.

But Google’s stock has offered anemic returns in the past five years, during the time that it actually enjoyed its most eye-popping financial success. The stock has appreciated just 32% over the past five years. Since the beginning of 2012, it’s down 4.6%.

What do those dropping average CPC’s on search mean, anyway? Google won’t share full details, but at the end of the day it’s definitely fair to say that the search ads market is becoming mature, and future price increases in clicks will be gradual at best.

The Street may have made a slight mistake in diagnosis, however. For the year over year click price average to drop so much, it’s probably not coming from competitive keyword auctions across the board. Sure, some times are tough economically, but many advertisers are still growing and optimizing and are willing to pay premiums for good keywords — more so with each passing holiday season, especially. What has likely helped to drive those prices down is a relaxing of the stringency of Quality Scores at the low end of the auction. So that former white space in the “informational” query stream is now showing more ads selling in the range of a few pennies up to 30-40 cents. Why did Google loosen that up a bit? Probably to earn more total revenue (with no harm to margins). Wall Street may have assumed that a ton of advertisers are willing to pay less for “core” clicks. Not true.

Even with that error in judgment, though, Wall Street may be correct in its assessment of Google’s P/E ratio as fair in a modest range of 18-20. Google’s new lines of business have massive potential. Some are high margin, others are huge question marks. But the maturing of the very high margin core search ads business was inevitable, and eventually growth slows to a crawl. When the markets see evidence that Google’s mobile ads, display ads, social network, and other huge pushes are actually working from a financial standpoint enough to outweigh the risks and costs, it’s at that point the valuation might start to be a bit more forward-looking again. For now, everyone recognizes that Google is an amazing financial machine today, but the majority of analysts aren’t placing any huge bets on the Google of the future. That’s probably not a lack of recognition of the potential of Android, display networks, and all the rest; just a cautious balancing of those trends against the headwinds of regulators, lawsuits, competition from Facebook, possible blunders and distractions, etc.

In the meantime, the “mature” (ho hum) search ads business is incredibly robust, and on quality keywords, click prices aren’t really dropping across the board. Some industries have seen slight pullbacks, and some reckless advertiser behavior has been scaled back. Sounds like the kind of caution by advertisers you might expect in the second deepest and longest U.S. economic downturn in history. Just don’t get too comfortable with the idea of rock-bottom click prices on quality keywords. In this regard, Google’s financial reports are vague at best.

SES Toronto: Speaking Pitches Please!

Monday, April 2nd, 2012

In my role as a member of the SES Advisory Board and past Chair of this conference, I’m here to remind you that SES Toronto is but two months away! And that means we’re looking to have the final session and speaker list wrapped up in  2-3 weeks.

For now, we’re wide open to your pitches for existing sessions, or pitches for new sessions. While you may see a set-looking agenda on the website, keep in mind that for the time being, it is only a draft. By all means pitch.

A couple of background notes:

  • As always, pitching formally through the form (linked from the speaker guidelines page) is an absolute must. It may seem like a formality, but it’s too messy to have people informally expressing interest to individuals on the content team. Unless you are Avinash Kaushik, pitch like everyone else, please!
  • Speaking of Avinash, Google’s Digital Marketing Evangelist, we’re very pleased to welcome him to the Toronto conference to present fresh keynote material. A brilliant presenter and a longtime favorite in the Toronto market, Avinash will galvanize you to better tie your analytics and measurement activities to business results, and to think more ruthlessly about your analytical routines. His blog isn’t called Occam’s Razor for nothing!
  • If you’re pitching a session or just yourself as a speaker, it’s worth noting that in this market some perennially popular themes involve real world enterprise level (midsize to larger company) case studies, Canadian themes and examples, and credible technical information that can translate directly into improved conversion rates, search rankings, ROI, or user delight.
  • Globally, SES has worked relentlessly to keep its content fresh, relevant, and on the leading (if not bleeding) edge. The show’s acronym now stands for Search and Social, and our advanced-level pilots (such as SES Accelerator San Diego) have gone over very well. We’ve heard what the market has been asking for, and we’ve responded. We’re all about no-nonsense, top rated speakers mixing intermediate-level updates with more advanced material, to really stretch your mind and your capabilities. There are only two introductory-level sessions in this entire SES Toronto program, so if you’ve heard that “SES is the show with training wheels,” put that myth to bed. Only if by “training wheels” we mean top-rated sessions, top speakers, great networking, by far the largest SEM + social conference in terms of numbers, and a cast of advisers who travel the world and meet regularly to inject fresh directions into the conference in response to attendee feedback.
  • I’m looking forward to meeting you there. I should be speaking at the event, as usual.
And to make it even more interesting, I have a number in mind. That is the number of consecutive North American SES Events I have spoken at going back to my first one ever. That string remains unbroken at ___, counting the upcoming Toronto conference. If you reply in the comments with a guess as to the number… the correct guess will receive a delicious candy gift from Nuts.com. Second prize is a free book. :)
Enter now … you can’t duplicate a previous commenter’s number. Unique guesses only.
Signed,
Iron Man

 


Traffick - The Business of Search Engines & Web Portals

 


Home | Categories | Archive | About Us | Internet Marketing Consulting | Contact Us
© 1999 - 2013, Traffick.com. All Rights Reserved