Google has admitted to quietly tweaking advertising auctions to meet revenue targets.
The search engine “frequently” changes the auctions it uses to sell search ads, increasing the cost of ads and reserve pricing by as much as 5% for the average advertiser.
For some queries, the tech giant may have even raised prices by as much as 10%, according to Google Ad executive, Jerry Dischler at the federal antitrust trial.
Google tends “not to tell advertisers about pricing changes”, he added.
Why we care. Google’s admission has sent shock waves through the digital marketing community, with some now questioning whether the search engine manipulates Smart Bidding for profit. Digital marketing expert Anthony Higman shared on X:
- “So I always knew this was the case, but to see it actually stated by the VP of ads is astounding! And what do you think smart bidding is? A smart way for Google to be able to easily manipulate ad prices! SMH.”
Why is Google on trial? Google is on trial for allegedly using underhand tactics to ensure it stays the world’s leading search engine. The U.S. Justice Department claims Google, which owns a 90% market share in search, paid massive sums to companies like Apple to make it the default search engine on products like the iPhone.
What are search ads? Search ads refer to the text and shopping promotions you see displayed at the top of Google’s search results page when users perform queries.
More than 60% of Google’s total revenue is generated by search ads. In 2020, search ads earned the company more than $100 billion, according to Dischler.