Google's Three Ball Juggling Act
Posted On: 2007-11-06
Have you ever considered that Google is one of the most adept jugglers the world has ever seen? Let's think about it for a while and maybe you'll begin to see what I mean and you might even see that perhaps even this great juggler is about to start dropping the balls.
Adwords
The first ball in this three ball juggling act of Google's is Adwords. That's the program that Google offers businesses, both big and small, as a way to get qualified traffic to their websites.
Now there was a time when Adwords was relatively cheap and the return on investment, once you subtracted click fraud from the equation, was quite good. Of course there was also the small problem that major businesses were basically being held to ransom by the program and needed to bid on their own brand terms but if you can ignore that slight problem then Adwords was a pretty good deal.
Adsense
This is the second ball in Google's three ball juggling act. Here was what looked like an amazing deal for those who wanted to monetize their websites. There were no hassles, no dramas, no effort ... just add a couple of lines of code to your website and the ads appeared and people clicked on them.
And from Google's point of view Adsense was the most amazing marketing tool available to them. For the cost of just a few cents Webmasters across the planet were prepared to display advertising for Google that should have cost them a whole lot more.
Everywhere you look on the Web there's Google Adsense advertising looking back at you. You'll even see it on sites that are trying to sell something other than Adsense to you. Where else would you see such stupidity and such a great deal for Google?
Wall Street
Here is the third ball that Google is juggling. Now that Google has gone public Wall Street is expecting it to turn bigger and better profits every quarter and Google does not want to disappoint the gnomes on Wall Street ... plus bigger profits means more money in the personal pockets of the Google hierarchy too.
As recently as last quarter analysts were suggesting that we would see a quarterly profit figure from Google that would be somewhat less than the previous quarter. But Google didn't want to disappoint Wall Street so it produced a vastly bigger profit than the previous quarter.
How could it do that in such tight economic times?
And right there is the problem with Google's juggling act. It might look good and Google might look totally in control but it's probably about to reach the point where Google is lose control and the balls are all going to hit the ground.
The problem
How could Google produce a bigger and better profit last quarter? Well think about it for a moment and ponder what your Adsense revenues were last quarter. Our traffic was way down and our revenues were down by about a third.
Were your revenues down too? Anecdotal evidence suggests that most Adsense advertisers noticed a real drop in their income from Google last quarter. Even though the cost to the advertisers has risen the income to the publishers is dropping because Google doesn't want to disappoint Wall Street
Then there's what the Adwords advertisers are seeing. Google tries to pass off what they're doing as improving the experience for their surfers and advertisers by pushing their landing page quality scores. You either improve your landing page or you pay a whole lot more for your Adsense advertising.
But who decides whether your landing page has the required 'quality' or not? Of course it's Google and of course, if you're an Adwords advertiser, you're going to pay more because Google doesn't want to disappoint.
All it takes is for one advertiser to be prepared to pay more for their Adwords advertising and it pushes up the cost for all the other advertisers too
So keeping all those balls aloft at the same time is getting harder for Google but which ball will it drop first? Wall Street is happy for another quarter, Adsense users are grumbling but changing to some other form of income earning advertising is difficult and most advertisers are too lazy to look for any other income streams. So its unlikely that the web site owners are about to jump ship.
And that just leaves the Adwords advertisers and the word out there is that they're very very unhappy. Margins are so tight it's almost impossible to see anything positive, major companies are lined up to sue Google over the use of their brand names to advertise other businesses and even small mom and pop businesses have just about had enough.
All it will take is for Google to drop one ball and the act is over ... but does Google even recognize they have a problem and if they do can they possibly find a solution?