Why would Google place Pay Per Click (PPC) text ads for Geico next to organic listings of my two favorite web design companies in Indianapolis (Small Box Web Design and Slingshot SEO)?
Google does pride itself on their “separation of church and state” i.e. their religious segregation of the non-paid, organic search departments from the paid advertising departments. Both paid and organic search use separate algorithms and Google has a strict policy of keeping the two branches incommunicado. Their professed goal is to keep the organic results “pure” and untainted by commercial interests. Are they trying to prove a point that organic listings really are separate from paid listings?
Or maybe the paid search algorithm blew a fuse? Or maybe it was part of a calculated strategy to increase ad revenue?
In my opinion it’s most likely the latter. But before I get into that, let me describe how it happened:
Screen 1:
Earlier today I Googled “car insurance” because it’s a very expensive click with fierce competition and I was curious to see who was organically number one and who was paying for the ad space to be alongside them. There was nothing too surprising: a bunch of organic listings for car insurance along side paid text ads for the same thing.
Screen 2:
Then out of vanity I googled “indianapolis web design company” to see Small Box at the top and also to see who was paying for the neighboring text ad real estate. Image my surprise when I found that Geico and Allstate were paying for that space!
Screen 3:
I thought, “Maybe Google’s PPC algorithm is broken and is just showing the text ads late.” So, I searched for “group health insurance” to see if local web design companies were listed next to insurance brokers. But there were no text ads for web design companies in Indianapolis.
You can see the sequence of search engine results pages (SERPs) in the three screen shots below:
What was going on?
After some searching I found a few blog posts addressing this strange Ad Words phenomenon. Turns out that for roughly a year Google’s been using cookies to track the search history of users even when they’re not logged into their Google account.
They then use this search history to create custom text ad listings that blend the previous queries. See this blog post to see how previous searches for “weather forcast” and “holiday to spain” listed text ads for Spanish weather forecasts. You can see this same sort of blending of searches in the last screen shot above. The searches “indianapolis web design companies” and “group health insurance” generated text ad #5 for a web design company targeting insurance agents and agencies that need a website.
In this article from last summer Google confirmed that they were tailoring text ad listings based on previous queries and the author is more than a little critical of Google’s lack of transparency in how they do it. It even looks like this prior search “feature” is coming to organic listings too.
But none of this fully explained or described what I experienced. The text ads alongside the listings of Small Box and Slingshot SEO were not a blend of “car insurance” and “web design”. You might think it’s a blend of “indianapolis” and “car insurance”, but Ad Words has been serving up geographically targeted ads based on our IP addresses for ages (to see an example of this look at the #4 text ad in the first screen when I queried “car insurance”). Instead the “car insurance” text ads completely trumped the “web design” text ads. Why?
I can’t prove it and haven’t done any testing that could even be remotely described as “scientific”, but I have a hunch that Google is doing this to squeeze as much money out of advertising as they possibly can.
On average, a text ad’s click following a query for “car insurance” can cost as much as $26, but a click for “web design companies” brings Google less than $5 – and a click for “indianapolis web design companies” will cost less than half that. So, if you were Google and had the choice of selling a click for $25 or for $2.50, which would you pick?
The cost per click for text ads displayed following a search for “group health insurance” is roughly $10. This probably explains why I didn’t see any text ads for web design companies alongside the organic results for insurance carriers and brokers.
This is clearly a nice feature if you’re an owner of Google stock and depending on the circumstances it could be a nice feature if you’re a search engine user (especially when the previous queries blend appropriately to deliver targeted results). But is it a feature you want as an advertiser?
If you’re Geico, do you want to be paying $25 for clicks that come from ads displayed alongside web design companies?
If you’re one of our unfortunate competitors that has to pay to get on page one, are you happy that your ads for a highly targeted search got trumped by ads for more expensive search terms?
does seem a little shady on Google’s part. Also, is this being disclosed to advertisers that their ads might run for queries that have nothing to do with their product?
I would imagine Google is doing this because it works in generating more revenue. But they should be clearer about this practice in order to keep their good name free from tarnish. Isn’t their slogan “Don’t Be Evil”? Not that this is really, it’s just a little shady. Watch the slippery slope Google!
Google publicly announced that they were deploying the previous query “feature” last summer. So, they aren’t trying to hide it. But it was not well publicized and kind of on the downlow. Plus, like everything having to do with their search algorithms it hasn’t at all been transparent.
I wonder if I had clicked on the Allstate ad next to our organic listing, what would Allstate’s Ad Words reports show as the search query that triggered that click?
My guess is that it would be burried in the “10,242 other unique queries” on their search query report and they’d be charged at the $25 rate. IMO that’s not at all transparent.
Wish I had time to test that though. But even more than that I wish Google would just tell us so there’d be no need for testing.
may be the key is in “Indianopolis” word
Aggie, screenshot #2 seems to show that the keyword ‘indianapolis’ got blended into the previous query. However, I’ve been served up geographically targeted text ads on short tails searches for ages based solely on my IP address. So, I’m not sure how strong the blending is at that point. The fact remains that not a single text ad for web design companies showed up on screen #2. I doubt that the keyword “idianapolis” is to blame, b/c there are plenty of web designers here in Indy paying Ad Words for text ad space — they just aren’t willing to bid $25 per click.
I guess my comment is it doesn’t bother me one bit. What’s good for Google is good for the web and if they couldn’t make money they couldn’t offer all of their awesome services.
I am much more bothered when they go along with limiting searches in foreign countries based on the governments leaning on them.
Even that not much, we have lots of choices for search and advertisement. If it didn’t work they wouldn’t do it.
PJ,
I’m not at all against Google making money. They’ve given us all A LOT of cool, free stuff funded entirely by their ad revenue.
But I definitely don’t think that whatever’s good for Google is good for the web.
The thing that bugged me the most about this is Google’s lack of transparency to their advertisers. If I had clicked on the Geico ad on screen 2, how would Geico know what they paid for that click? Currently, there’s no way that I know of for Geico to find out.
What if Geico doesn’t want to pay for clicks from delayed ads? Currently, there’s no way I know of for them to opt out.
These are the sorts of business practices I’d expect from Microsoft — practices in large part motivated by their belief that whatever’s good for Microsoft is good for computing.
yeah, that really is the issue, if they are charging a business for one term (car insurance) and then they are showing up for another (web design) then they shouldn’t be paying for the more expensive term. It’s basically fishing for clicks on a weaker (cheaper) search query. It is also a dis-service to the people that paid to be on the web design search. They aren’t showing for their search. To me it looks like it is a case of Google putting money in front of the users, both ad seller and searcher.
Jack just sent me this NY times article on the very same topic.
Even though the SEOs have known about the “previous query” feature and personalized text ads for over a year, it looks like Google’s letting the public know via mainstream media channels.
A couple interesting things from the story:
(1) Google doesn’t have to use cookies. It just stores the history of URLs you’ve visited. When searching Google, you’re URL contains your search query.
(2) Google’s apparently more concerned with search engine users freaking out over privacy issues – not advertisers freaking out over the inability to fully know or control their PPC spend.
As someone who is clinging to the idea that the Web is run by squirrels carrying bits of information in their cheeks, I thought it was because Google figured out that Web designers might not have the best driving records.
The number one search hit on my blog is young boys feet. Totally icky. I guess I should quit post photos of my Chuck Taylor clad feet.
I always wondered how the pay per click thing worked.
As always, I learn a ton from your discussions.
Thanks!
Google does not think web design means car insurance, you got the wrong idea bud. The companies that advertise on Google AdWords are paying/including those keywords in their AdWord campaign.
So this my friend is not coming from Google, it’s set by “Travelers.com, Geico.com etc”
Google should make money, for pit sake they are giving us all types of free services, just imagine, my current custom webmail memyself.com has 7+GB of space, that cost money. Not mentioning all other, for example Blogger.com etc.
Be good
Emil
ukmk,
Simply put, you’re wrong. Check out the New York Times article I linked to in the comment below. Google has publicly admitted that they serve up ads based on previous search queries.
I find it preposterous to believe that Geico and Progressive are bidding on the keyword “web design”. If I were to believe that Geico and Progressive showed up b/c they’re bidding on “web design”, I’d have to ask myself why are only insurance companies bidding on “web design” and not accident lawyers, dui lawyers, structured settlement outfits and anyone else paying out the nose for their clicks?
The only reasonable answer is that none of them would ever waste their ad budget by bidding on a keyword as completely irrelevant to their industries as “web design”.
So this my friend is definitely coming from Google. It can’t be explained away as aggressive bidding by the car insurance companies.
As for whether or not that’s a good or bad thing — I’m divided. From what I’ve seen, the way Google has been blending search queries to serve up ads has – for the most part – been beneficial to the user. I’ve had some moments where I’ve wondered how Google read my mind.
But sometimes Google completely misses the mark as in the screen shots above. The only reasonable explanation I’ve seen for why it missed the mark is that they are chasing the money.
Is it wrong for a for-profit entity like Google to chase profits? Definitely not.
Is it smart for them to chase profits in the way they did above? That’s can be debated, but if they aren’t careful they’ll find themselves vulnerable to the next wannabe Google-killer.
As for your notion that it’s ok for Google to do whatever it wants to generate money b/c they give us all sorts of free stuff. Hogwash!
First of all, the reasoning’s flawed. Giving away free stuff in no way absolves you from the nefarious methods that may have been used to acquire the money which allowed you to give away the free stuff.
Secondly, there’s no such thing as a free lunch. Even if I’m not forking over any cash, Google is collecting my info or getting me to do something that will make them money. Just like any other for-profit entity Google doesn’t give a damn about you, me or the next guy. Their motto: “Don’t be evil” is pretty revealing in this regard (I much prefer your motto: “Be good”). Anyway, if Google didn’t think it could profit off the information collected or the page views generated by the free stuff, we wouldn’t see that free stuff. With Google it’s always quid pro quo.
At least Bill Gates is trying to stop Malaria with the money he’s made without requiring the beneficiaries to fork over their private info or use visit one of MSN’s web properties. The most altruistic thing I’ve seen Google do lately is to make it easier to figure out how long it takes to walk rather than drive to the closest Blockbuster (but that requires subjecting ourselves to their sometimes not too pertinent advertising).
Agreed, Ben.
I do not see any possibility of MULTIPLE insurance companies paying for search phrases like “indianapolis web design” (even if web designers are notoriously bad drivers
.
It is certainly possible that “indianapolis” is included in multiple auto insurance adword campaigns. And it might be possible (if bracketed improperly) that these car insurance campaigns could come up for ill-advised searched which just contain the word “indianapolis”. But this does not explain why THREE separate companies would show up next to each other.
I think the only possible answer is that Google was continuing the ads from the previous query. Which sucks for the advertisers.
Karl
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