AdWords: Is Google Telling the Truth?

Google AdWords is the program an advertiser uses to buy ad space on Google search and a number of partner sites.

The advertiser bids the maximum they’re willing to pay for a click.

Every time a search runs, an auction takes place.  If there are three display slots, then  Google selects the top three maximum bids.

Each advertiser then pays the maximum bid of the next lower bidder.

So, if you have 4 bidders: $4, $3, $2, $1 and three slots, then $4, $3, $2 are going to win.  They would pay, respectively: $3, $2, $1 per click.

As an advertiser, how do I know who my competitors were and how much they bid?

Now, Google makes a statement about their IAB compliance here.

The Interactive Advertising Bureau (IAB) is a large group of media and technology companies which supports the online advertising business in the United States.  They’re not really a watchdog.  They’re more of a lobby.

Anyway, the IAB has an auditing and certification program that helps ensure that advertisers are only billed for clicks they received.

Great.  Clicks.  Advertisers can measure incoming clicks themselves anyway.

It’s in Google interest to filter out bad clicks so the advertiser can be confident that those clicks came from real prospects.  The advertiser is going to stop spending money if their ad program is not working.  Fake clicks would hurt Google’s business.

That’s not my issue.

I’m not saying Google is doing this, but it would be a simple thing to add a few cents here and there because no one knows who was in the auction or what was really required to get that space.

There are billions and billions of clicks.  A few cents here and there adds up to more than chump change.

If I’m missing some tool I could use to verify the auctions, please let me know.

Heck, even if Google told me what my competitors bid how could I verify that Google was telling the truth?

I think the only way around this is for Google to provide the data corresponding to each auction for each advertiser (in an electronic, easy to transmit format) which the advertisers could independently submit to a third organization which would audit that Google provided the same auction data to each advertiser in each auction and that the amounts Google say were bid correspond to the advertisers own record of their maximum bid at that moment.

No, not everyone would provide this information to the third party — they wouldn’t be concerned whether Google cheated them out of $5 or not — they’re getting results.  But, everyone can be sure that large companies, where an extra $0.01 per click really would cost them, would use that third party.  Their competitors in the auctions are also probably large and likely to participate.

But then, in my evil-conscious little head, Google could play it straight with people who are likely to use the service…  and still distribute fraud across little guys.

I’m glad Google jokes, “Don’t be evil.”

See also AdSense: Is Google Telling the Truth?


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