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Google Responds to AdWords Accusations
An anonymous reader writes "Google has issued a statement on the Inside AdWords Blog. Based on the thoroughness of the statement and the use of the word 'precedent' in the second sentence, it appears that the Google PR team huddled with the legal team to get their point across." From the post: "Being rather proud of AdWords as a means to effectively advertise one's products or services, it seems natural to use it ourselves. Since it's a common practice across the industry for companies to promote their own products and services through their own web presence, there is much precedent to do this. It's important to note, however, that our ads are created and managed under the exact same guidelines, principles, practices and algorithms as the ads of any other advertiser. Likewise, we use the very same tools and account interface."
No, they covered that aspect and denied it.
This does cost Google money. If they sell the words to themselves, then they are not receiving money from someone else for the words. Hence, it costs them money and they do not have an unlimited budget.
I don't read your sig. Why are you reading mine?
Yes. And furthermore the opportunity cost is equal to the price paid by the otherwise highest bidder for that search term. So, if google wants to own a term, they lose out not only on some amount of money, but the maximum amount of money the market would bear.
"I think they forgot, "...only we have unlimited play money we can allocate toward each search phrase, so we can ensure Google ads always beat out the paid ads from the unwashed masses.""
This is referred to as "opportunity cost." In this case, if they take an ad spot, they lose the opportunity to sell that ad spot to somebody else. If they, for example, get a discounted price of $20 for internal accounting purposes, and it would have sold at $100 on the open market, that's an $80 opportunity cost.
All companies, big and small, in all industries, deal with opportunity costs like these. I help run a company that makes computer peripherals, and we sell our products to our employees and channel partners at 50% off. We can only build so many of them (assembly lines are a resource that must be allocated), and each product that we sell to our employees is a product for which we could have made more money selling at retail.
If anybody reading this thinks for a bit, I'm sure it will be trivial how the concept of the "opportunity cost" affects you, either at your job, or in your personal life.
Sitting in my day care, the art is decopainted.
Check your dictionary under "opportunity cost." I make photographs, I frame the photographs I sell. If I take one out of inventory and put it up on my wall instead of putting it into a gallery or cafe, I'm very much paying for it, even if I don't "have to pay for it."
I'm a nature photographer.
you also don't understand how the ranking of ads in pages works either. You cannot pay for the top position, end of story. An critical aspect is the click thru rate, without a good CTR no matter how much you bid you will be forced lower and lower and eventually off the sponsored links altogether.
The brilliance of the adwords system is the dependency of CTR - essentally relevance. Ads which have high CTR have high relevancy and thus are positioned better and those advertisers pay _less_. Don't believe me? Open an adwords account and play with it. About $10-20 total should give you enough time to figure out how it works.
Don't adwords work by ordering the ad results by highest bidder?
No.
They didn't use "precedent" to refer to case law, so I don't see what's so legal about that. Precedent is a real English word, you know, not some special legal term.
A NYC lawyer blogs. http://www.chuangblog.com/