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Google Secretly Alters Ad Auctions to Boost Revenue Targets

Google has acknowledged that it modified ad auctions covertly to hit revenue targets. The search engine regularly modifies the auctions it employs to sell search advertisements, raising the cost of ads and reserve pricing for the typical advertiser by as much as 5%. A Google executive acknowledged that the price of advertising fluctuated during the auction process to satisfy revenue goals. This week, Google’s advertising tactics were highlighted in an ongoing federal antitrust trial.

Google’s Executive Testimony

According to testimony from Jerry Dischler, Vice President and General Manager of Google’s Advertising Products, the company modifies its ad auctions to achieve set revenue goals. These modifications include price hikes of up to 5% without the advertiser’s knowledge. He admitted to the U.S. Justice Department during the Antitrust Trial that the business may have raised pricing for some inquiries by as much as 10%. The testimony is a piece of a bigger lawsuit in which the US DOJ accuses Google of illegally maintaining a monopoly on online search. As the trial goes on, more and more details are emerging about Google’s pricing adjustments, its rivalry with Amazon, and the effects of its policies on advertisers.

Read More: Google Boosts Performance Max with URL Contains Targeting Tool

Advertising Practices of Google

During the federal inquiry, Dischler also disclosed that the internet behemoth frequently modifies its ad auctions. Without telling advertisers, these changes are made with the intention of selling search advertising. He also expressed worries about revenue and the potential impact on employee morale of a big decline in Google’s stock price. This applies particularly to teams in expensive areas. He also made it clear that his intention was to think outside the box so they could fulfill their quota. The majority of Google’s income comes from search adverts. According to Dischler, the corporation will make more than $100 billion from search ads in 2020. Since 2012, Google’s ad revenue growth, according to the DOJ, has regularly been in the high teens.

So I always knew this was the case, but to see it actually stated by the VP of ads is astounding!

And what do you think smart bidding is? A smart way for Google to be able to easily manipulate ad prices! SMH pic.twitter.com/rwvpCmWC0M

— Anthony Higman (@AnthonyHigman) September 19, 2023

Changes in prices and Increasing Competition

Dischler acknowledged that some adjustments to auctions led to a 5% rise in expenses for regular marketers. In certain cases, price increases reached 10%. Nevertheless, he thought that a 15% price hike would cause the majority of marketers to go to rivals like Meta Platforms Inc. or ByteDance Ltd.’s TikTok. Even so, he admitted that he had no reason to think that Google wouldn’t continue to attract enough advertisers to grow its revenue.

Read More: Google Unveils Fresh Consent Management Rules for EEA and UK

The threat from Amazon

When it comes to retail advertising, Amazon is growing twice as fast. Amazon is currently posing a serious threat to Google in the retail advertising market. Dischler acknowledged that companies that make consumer goods have threatened to switch their advertising budgets from Google to Amazon.

Why do tweaking ad prices matter?

The argument made by the Justice Department that Google has an unlicensed monopoly may be strengthened if Google can increase ad prices without seeing considerable competition. Given that Google’s search engine is a free offering for users, the government is unable to apply this defense against Google itself. They can counter that greater competition might have addressed other problems like search industry privacy requirements.

Why did Google tweak search ad auctions?

To ensure that his team exceeded the sales goals that Google CFO Ruth Porat had communicated to Wall Street, according to Dischler, staff members allegedly shook the cushions. He penned the following to his employees in an email in May 2019:

If we don’t meet quota for the second quarter in a row and we miss the street’s expectations again, which is not what Ruth signaled to the street, so we will get punished pretty bad in the market. I care more about revenue than the average person but think we can all agree that for our teams trying to live in high cost areas another $100,000 in stock price loss will not be great for morale, not to mention the huge impact on our sales team.

Read More: Imagine Communications Join Forces with Google Ad Manager

Walmart Connect Partners With Snap, Roku And TikTok To Measure Online Shopping Ads

Walmart introduced a series of “Innovation Partners” that can support measuring how social media and CTV ads affect sales. For the first time ever, the retail giant is expanding its ad reach beyond its own eCommerce platform. Walmart Connect announced a new “Innovation Partners” category. This category will include video-specific measurement deals with TikTok, Snap, Roku, Fireworks, and TalkShopLive. This partnership will help to measure any sales that come from ads.

Interesting Read: Walmart Connect: Walmart’s Ambitious Advertising Plans For Its Programmatic Platform

Expanding their ad business

In recent times, Walmart has expanded impressively and has a $2 billion ad business. As Walmart’s ad business rebranded to Connect last year, it’s added new partners and ad tech companies since settling on The Trade Desk as a DSP tech provider. Advertisers and brands can buy ads with Walmart data through The Trade Desk, Walmart’s ad platform. The company added eCommerce search ad specialists such as Pacvue, Skai, and Flywheel Digital as partners in 2021. The Walmart Connect program also welcomed 14 additional analytics and ad optimization companies in July.

In the expansion mode, the retail media platform partners with TikTok and Snap to measure social commerce, Roku for CTV ads, Firework, and TalkShopLive for live shopping content. Seth Dallaire, executive vice president and CRO of Walmart, wrote in a post,

“As the media funnel continues to collapse, advertisers are realizing the opportunity to reach shoppers on leading platforms where they are increasingly spending their time.”

Interesting Read: Foodpanda Forays Into Adtech In Partnership With Group M

The Innovative Partners

Walled gardens like Roku, TikTok, and Snap aim to demonstrate their ad platforms’ value.

The Snap agreement is a “first-of-their-kind type partnership”. It will bring advertisers Snap Ads, Collection Ads, and Snap AR with Walmart Connect geo-based measurement of omnichannel sales lift. This is the first time advertisers can buy Snap ad units through Walmart Connect and get in front of the unique Snapchat audience (75% of 13-34 year-olds in the U.S.), who hold over $1.9 trillion in spending power.

TikTok and Snap will not have their inventory available through The Trade Desk’s Walmart DSP. They are walled gardens and as a result, no outside programmatic trading desks are allowed.

The first-to-market pilot between TikTok and Walmart Connect will provide advertisers with the opportunity to serve in-feed ads on TikTok, leveraging the impact of TikTok’s sound-on full-screen video format together with Walmart Connect’s targeting and measurement.

Unlike other walled gardens, TikTok’s ad platform is widely regarded as under-attributing its own revenues. Whereas, other walled gardens generally over-attribute in their own favor. The reason behind this is that TikTok uses last-click attribution and a session-length attribution window, so it will miss sales if users don’t click and convert immediately.

Walmart recently partnered with Roku to make TV streaming the next e-commerce shopping destination. Streamers can purchase featured products fulfilled by Walmart directly on the streaming TV platform. Walmart Connect will connect brands to customers through the T-commerce platform on Roku. Advertisers will receive insights on the effectiveness of Walmart Connect measurement.

Walmart is also working with live video platforms with sponsored brand placements- TalkShop Live and Firework to produce online sales programming on Walmart.com. Walmart is testing the new service on brands such as J&J, P&G, and Samsung, among others. The program on Walmart Connect’s advertising platform is not automated but a managed service. Brands will get the performance reports of how ad campaigns influenced sales on TikTok, Snap, and Roku. 

Interesting Read: Foodpanda Forays Into Adtech In Partnership With Group M

A tight race

With its ad platform, Walmart competes with Amazon, which has also invested in live shopping programs. In addition, Amazon’s roaster of talent streams sales events, most prominently on holidays and Prime day. Roku and Pinterest have already partnered with Kroger to enter the market, and Kroger’s own ad business has been expanded with PubMatic and Magnite.

Marketers and publishers are keen to discover how consumers react to social media advertising by making purchases or engaging with it. Even though social commerce is still in its infancy, Walmart’s partnerships with social media platforms show that they are proving that their ads do lead to sales. Rich Lehrfeld, Walmart SVP and GM of the Walmart Connect group told AdExchanger,

“Over time you’ll see our partnerships starting to expand into different areas that are really what our advertisers, or what we call our customers, as well as suppliers and sellers are asking us to do because they love our measurement.”

Advertisers can leverage Walmart’s unparalleled first-party omnichannel data to deliver measurable sales performance. Furthermore, it integrates with several PPC management tools that are used by eCommerce businesses.

Interesting Read: The Journey From Deterministic To Probabilistic Marketing

Digital Advertising v/s Digital Marketing: Know the Difference.

In this digital age, marketing is no more a choice but a prerequisite for businesses who are leaving no stone unturned to get their message across to the customers effectively and powerfully.

Then the question arises, in order to put forward the message in the right way to the right people, which one to go for? 

Marketing or Advertising?

Well, aren’t they both the same?  The answer is ‘No’.

There is a thin line of difference between them. This article will help you to understand it and justify the answer to the above question.

Know the basics-

Digital Advertising:

It is also called online advertising, web advertising or internet advertising

Digital advertising is defined as a form of marketing or advertising where businesses leverage internet technologies to deliver their promotional advertisements to customers.

In simple words, if you see an ad on the internet, it is called digital advertising.

There are three types of digital advertising:

1. Pay-per-click (PPC) ads: (Adwords search ads, bing ads, etc)

For example, the ads you see in search results.

                                Image Credit: Wordstream

2. Display ads : (Banners, video, mobile, pop-ups, etc)

For example, this ad by eBay is promoting its products. eBay is the biggest player in banner advertising and invests a lot of money in display advertising.

Image Credit: Bannernack

3. Social ads: (Facebook, Twitter, YouTube, etc)

For example, A ‘suggested post’ on Facebook is a social ad.

Image Credit: Social Media Examiner

Digital Marketing:

Digital Marketing includes all the marketing efforts using the internet or digital technologies. Businesses leverage digital channels like emails, search engines, websites, social media, blog posts, logos, and everything else that is helpful in online promotion and connect with current and prospective customers.

There are six types of digital marketing:

1. Search engine optimization (SEO)
2. Social Media Marketing (SMM)
3. Content Marketing
4. Email and Mobile Marketing
5. Affiliate Marketing
6. Online advertising

The following infographic explains digital marketing in detail:

Image Credit: Smart insights

Now that we know the key processes in each segment, let’s look at the major differences –

• Digital Advertising is a part of Digital Marketing

Digital Marketing is a broader term whereas digital advertising is a part of it. This raises a question,

Is digital advertising necessary for your business?

Not really. Your business can survive without digital advertising. 

Why and How?

The definitions make it clear that digital advertising is a subset of digital marketing. When you start with a business idea, from that very moment you are involved in marketing and not advertising.

Product creation, Product Pricing, Packaging, Promotion, market segmentation, target audience are all a part of your business strategy and marketing mix.

  Image Credit: BBC UK

Digital advertising is part of the marketing mix. It comes into play when you use the internet to promote your product or service or to generate traffic. However, you can also choose from other tactics – a search engine, content management, social media, email marketing, etc to generate traffic.

It is not necessary to use digital advertising at the promotion stage to reach your target audience. 

For instance, DemandBase in one of the campaigns used white papers, infographics, Slideshare, and webinars to generate new leads. This helped the company to generate over $1 million in new revenue through content marketing resulting in 1700 new leads and connect with 125 webinar viewers.

You can run your business without digital advertising but not digital marketing. The purpose of all marketing techniques is to generate leads and generate traffic and so you can choose any tactic – SEO or PPC or both whichever helps to grow your business.

• Digital Advertising is an activity while digital marketing is a process: 

Digital marketing helps to build a strategy to market your business in the following way:

• Define your target audience,
• Ways to attract, engage, convert and retain the customers, 
• Evaluate existing and new digital channels like SEO, PPC, content marketing, etc
• Analysis and monitoring

In broader terms, digital marketing is a process that runs your entire business on the internet and it begins from the moment you start with the business idea.

       Image Credit: Abhiseo

The digital marketing process is continuous. It begins with the research phase and continues until the refining stage and the data from the refining stage is used again for the research to develop a new marketing strategy. It is a perpetual and never-ending process.

Digital advertising is an activity in the digital marketing process. It fits at Step 6: Promote- the purpose is to promote your primary digital identities (blog, website, app, product or anything else) via ads to relevant people in order to generate traffic. To do this, a digital advertiser will need inputs from a digital marketer on what to promote, who to promote, advertising budget, etc. An advertiser will accordingly create an ad to generate traffic.

• Digital advertising is tactics while digital marketing is strategic

A strategy is a long term and complex plan which involves decision-making at various levels while a tactic is a short-term plan or means to achieve the desired result. 

Digital advertising is tactical in nature as the promotion of a particular product or an offer to the target audience is momentary and short term. Subsequently, it can be easily replicated by competitors.

For instance, Facebook ads are short-lived. You might run an ad on Facebook to promote your product or an offer during Easter. Once you achieve the goal from the campaign, you will discontinue it and move on with another ad campaign or platform.

Whereas, digital marketing is strategic in nature that involves long term planning, projections, defined goals and objectives, budgets and resources to achieve the objectives.

For instance, Slack is a collaboration tool that allows teams to share files and communicate easily. They had an amazing rise at the launch with 15000 users in 2014 to over 500,000 in less than a year, and currently holds nearly one and a half millions of which are paid accounts.

Their strategy was clear from day one – focusing on the customer experience. They believe in selling solutions and not products. The company acknowledges to 8000 help desk tickets and up to 10,000 tweets every month.

This is what digital marketing plan does versus a digital advertising campaign that shows results instantly.

A digital ad campaign if fails will not impact the business overall but if digital marketing campaign fails it will affect the running of the business immensely.

• Digital advertising promotes the brand while digital marketing develops the brand image.

Digital Advertising promotes a brand, product or services. A compelling ad engages the customers, generates leads and creates brand awareness.

For instance, Typeform, a survey software company offers a freemium option with a condition that customers should include a thank-you page that includes its logo and message. It is a win-win situation that helps customers get to know the product for free and the brand gets free advertising. 

              Image Credit: ThinkIt Training Institute

Digital marketing builds a brand and brand image with a strategy in place. You plan the logo, design, taglines for your brand. You will develop a strategy on how your brand will be perceived by the target audience and what message your brand will convey to the target audience. It is a long term planning to build a robust brand image based on values and ethics that remain etched in the minds of the consumers.

• Digital Advertising is sales centred while digital marketing is audience psychology centred.

Digital marketing is not always sales-driven. The ultimate goal is to increase your ROI and sales but along with building a relationship with the target audience.

Let’s say you write a blog and publish it not only to increase traffic and revenue but build a relationship with your readers. This is what digital marketing does, it is based on audience psychology. To understand your target audience, their needs, and wants, it is essential to know audience psychology.

On the contrary, digital advertising focuses on a specific segment of the target audience that can be reached via ads. For instance, if you pay $50 for a $5 CPM slot, you are content as long as you get your 5000 impressions. In digital advertising, you are not much concerned about who sees it as long as the ad is performing and reaches out to the people.

Conclusion-

After reading this article, you may now have a clear idea about digital marketing and digital advertising. They are not the same and has an individual role to play.  Let’s have a short recap to have no doubts in mind.