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Google Goes on the Defensive About Yahoo Ad Deal Cost Projections

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Google is none-too-thrilled about a SearchIgnite study suggesting that search advertising prices would increase by 22%. Now they're fighting back by saying the study was misleading. Here are their main points:

  • Ad prices are not set by Yahoo! or Google, but by advertisers themselves
  • Yahoo! won't be able to see the current auction prices for Google ads, just as Google won't be able to see Yahoo's prices
  • The report mistakenly assumes that Yahoo! will serve Google ads for as many of its search queries as possible. This contradicts Yahoo's own statements that their plan is to serve Google ads on search results pages where they have few relevant ads to serve.
  • The report includes a misplaced focus on cost per click (CPCs) rather than the more important measure for advertisers -- return on investment of their advertising dollar.
  • the study fails to take into account that fact that Yahoo! shows significantly more ads per page than Google

I'm sure the analysts will be split on whether they agree with Google or not.

But one thing Google is getting wrong is the timing. This week's fast collapse of companies in the financial market and the mortgage problems that have plagued the U.S. for a year now are only reminders of the great risks associated with companies becoming TOO BIG.

Of course, forging an ad deal with Yahoo is not the same as taking on irresponsible loans, but consumers, Wall Street, and the feds are undoubtedly wary of big promises made by big corporations. And Google has become just that in a short 10 year time frame.

Even without the current mess, antitrust concerns abound. And while Google may have permeated our culture, for some the side effects of such power have been extremely costly.

In a week after a devastating hurricane and financials falling left and right, Google is not exactly demonstrating sensitivity to the current consumer and regulatory climate by supporting their desire to expand their overwhelming majority market share even further.


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