As Google purges its advertiser list of “undesirables” (like MFAs, incentivized sites, affiliate marketers, or anyone who bids under $.20 a click), much discussion has been focused on the impact of this strategy to Google’s bottom line. As noted in prior columns, there’s no doubt in my mind that Google’s decision is driven purely by financials, and that this will only grow their revenue and margins.

One question that I haven’t seen discussed much, however, is how Quality Score will impact Google competitors – particularly Yahoo and MSN. After all, message boards like WebMasterWorld have been filled with angry advertisers promising to never advertise with Google again and shift their entire budgets elsewhere.

On one level, it seems like there will be two obvious consequences here. First, Yahoo and MSN will get more advertisers; after all, there’s lots of opportunity for business from these two publishers, but many advertisers don’t want to spend their time with the terrible user interfaces unless they absolutely have to.

Second, the relevancy of the paid results in Yahoo and MSN will likely decrease slightly. It’s sort of like when your neighbor fumigates their house and all the bugs flee . . . to your house. The “bottom of the barrel” advertisers like MFAs aren’t going to give up without a fight, and if Google won’t let them play, they’ll take their ball and play somewhere else.

In Google’s worldview, the end result would likely be a slight increase in revenue for MSN and Yahoo but a decrease in relevancy for these companies. And recall that Quality Score doesn’t hurt Google’s revenue at all, since any lost revenue is easily recouped by higher paying advertisers showing up through broad matching. So Quality score, in theory, is a win-win-win for Google.

Theory and reality, however, usually diverge, and Quality Score is no exception. I predict three unintended consequences:

1. Advertisers understand the importance of diversity: Many marketers have made millions of dollars buying AdWords and AdWords alone. Sure, you could experiment with MSN, Ask, or Looksmart, but why take the risk or spend the time?

That strategy may have worked – and may still work – but surely many advertisers are starting to worry about putting all of their eggs in one Google basket. I would think that any advertiser that relies on AdSense, affiliate links, lead generation, or for that matter anything that is not a major brand name should have at least 20% of their online budget dedicated to “non-Google” spending.

Sure, it will be hard work, and sure, some traffic sources you test will have low quality and click fraud, but the alternative is waiting until next November 6 – a month before Christmas – to have your entire online marketing budget yanked by Google.

2. Antitrust lawsuits: Google’s hidden pricing system which adversely impacts some advertisers without any means of recourse, combined with Google’s near monopoly of search marketing will be a legal problem for Google down the road. It is one thing to change an organic algorithm to improve the relevancy of free search listings, but quite another to charge different advertisers different prices for the same exact ads.

Imagine what would happen if your local electric company decided that they were going to charger customers differently but they refused to tell customers what factors went into the different prices (well, other than a vague list of ‘factors’ that could impact your price). From month to month, you would have no idea whether you would have to pay $100 to keep the lights on or $1000. And what if you noticed that prices seemed to only increase as a result of these changes, and that the electric company always seemed to hit their financial numbers each quarter?

Granted, Google only has a 60% market share, as compared to the 100% market share enjoyed by local utilities, but a 60% share is more than enough to be considered a monopoly. And monopolies cannot manipulate prices without transparency or any sense of fairness.

3. SEO Comes Back Into Vogue: In general, I believe that companies are going to invest more and more in SEO as SEM becomes more efficient and arbitrage opportunities slowly evaporate in paid search. Quality score will only speed the transition to SEO for many advertisers. After all, if you have the choice between trying to optimize for paid search (which, if successful, means you have the right to pay for exposure on Google), 0r 0rganic search (which, if successful,is basically free money), many marketers will elect to shoot for the free traffic over the paid traffic.

For Google, this means that they may have unintentionally created a whole new crop of SEO gurus. And since many of these people are the “scum” (read: MFAs) that will do whatever necessary to drive traffic to their sites, Google may have created an army of black-hat SEOs. Black-hats who, by the way, happened to be very angry at Google at the moment.

In this sense, maybe the fumigation analogy is appropriate here as well. Google “exterminated” the vermin from AdWords, only to send these folks into the ranks of black-hats trying to manipulate Google’s organic results.

Epilogue: Als Sie Mich Holten, Gab Es Keinen Mehr, Der Protestieren Konnte

Right now I read a lot of bi-polar discussions on WebMasterWorld about Quality Score – advertisers who have been impacted are angry and sometimes frightened about Google’s increasing willingness to use their market share for financial gain without any regard for who is hurt as a result.

Others, who have not been impacted, believe that if your site has been banned via Quality Score, you are a scum marketer and you deserved the harsh treatment. And it goes without saying that their site could never be impacted, since they are a “good” marketer.

These “good marketers” remind me of the “good Germans” who watched from the sidelines as their countrymen were (often arbitrarily) persecuted in the 1930s by Hitler’s henchmen.

A famous poem attributed to Pastor Martin Niemoller speaks of this sentiment:

“When the Nazis came for the communists, I remained silent; I was not a communist.

When they locked up the social democrats, I remained silent; I was not a social democrat.

When they came for the trade unionists, I did not speak out; I was not a trade unionist.

When they came for me, there was no one left to speak out.”

Obviously, Google and the National Socialist movement cannot really be compared. But as many advertisers happily drive big holiday sales on AdWords, it may be worthwhile watching your back – Big Google may be watching.

1 Comment

  1. Boris November 24th, 2006

    Wonderful post.It’s a shame you don’t post more often.

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David Rodnitzky
David Rodnitzky is founder and CEO of 3Q Digital (formerly PPC Associates), a position he has held since the Company's inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up. David is a regular speaker at major digital marketing conferences and has contributed to numerous influential publications, including Venture Capital Journal, CNN Radio, Newsweek, Advertising Age, and NPR's Marketplace. David has a B.A. with honors from the University of Chicago and a J.D. with honors from the University of Iowa. In his spare time, David enjoys salmon fishing, hiking, spending time with his family, and watching the Iowa Hawkeyes, not necessarily in that order.