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Is Google’s Business Model Essentially Flawed?

Posted by Steve Cameron
Steve Cameron
Steve Cameron is the Director Owner of Advent Communication. With more than 25 years experience he has a deep...
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on Monday, 02 March 2015 in Google

I know… that reads like pure link bait.

It’s not.

It’s a serious question.

I’m not talking about everything Google does; they’re not the worlds richest company for nothing. I’m talking about the Google AdWords platform.

Here’s why I ask the question.

There are many, many people generating phenomenal business through Google AdWords. Companies like Amazon and Expedia simply can’t spend money fast enough. Affiliate marketers can flip customers faster than a 50 year old short order cook can flip burgers.

But because of this everyone – and I mean everyone – who is in business at one time or another is looking at “spending some money on Google ads”.

Let’s think about that for just a moment. This is probably historical. Everyone knows someone, who knows someone, who built an empire on the back of a few dollars spent with Google.

No-one would ever say “Let’s throw a few hundred dollars at some ads in Time magazine, see what happens…” That would be a BIG decision. We’re talking about Time Magazine. You don’t just “run an ad” in Time Magazine. You do some market research. You get a fancy agency to design your ad. And you make absolutely sure that you’ve got someone checking (somehow, anyhow) if that ad generates a response or not. After all, this is big money… and we’re talking Time Magazine!

But spending money on Google? That’s not as serious. It’s a few cents for a click, right? (Actually, wrong – but the assumption is still there). After all “How much can I lose?”

So on the one hand we have willing customers who don’t really take the platform seriously.

On the other hand we have Google. They’re so friendly. With their funny Google Doodle’s and their primary colours. I’ve written about this before, but it is almost shamefully easy to start running your ads on Google. Sorry, let me rephrase that… it is almost shamefully easy to start spending money with Google.

You got a website? Yeah?...Great! You got a credit card? Yeah?... Great! Let’s get started.

I’m not even going to mention AdWords Express, but you can literally get your ads running on Google in five minutes. Google will help you, they’ll scan your site for keywords, they’ll help you write your ads. They’ll suggest the budgets and the bids.

And off you go.

OK – Here I have to stop and redress the balance, because Google is starting to sound like the Pied Piper luring all the village children off to, well, wherever the Pied Piper took all the village children Not a nice place.

But I have absolutely no doubt that Google are genuinely trying to make the platform simple precisely to try and level the playing field. To allow the smaller, local business to compete with Amazon and Expedia, Walmart and Best Buy. This is in their DNA. It’s probably the most Googley thing there is – a truly equal opportunity for everyone to reach the same potential customer and present their offer at the precise moment the prospect is looking to scratch their itch.

And from Google’s perspective this is what they do.

But in reality what happens is this:

The AdWords noob has got all their ads running on the search and display network. All their keywords are broad match. They didn’t switch on auto-tagging – but that doesn’t really matter because they don’t have Google Analytics installed on their home page – which is where all their traffic is being sent. They didn’t know about ad extensions. Or Quality Score. Or any of the other layers.

Amazon have them for breakfast. Expedia have them for lunch. And their ads appear at 4am in Austria to people who speak German even though they are a small local business in Canada, and closed for the night.

After a week has gone by, they have spent $1,000. They’ve had 2,000 clicks to their home page – they think – actually they’re not sure. But they’ve had no extra business, no extra calls and no-one filled in the contact form on their website – which is strange because that’s what they thought most online visitors would do.

So who’s to blame?

Caveat emptor – buyer beware. It’s your money, you can’t blame Google for allowing you to spend it. But by the same token any AdWords manager would know that these campaigns are never going to work. They simply can’t.

So what happens next?

And this is where I suspect the business model is flawed.

Google are continuously attracting more and more lambs to the slaughter. Again it sounds deliberate – and I know it’s not. But they are coming, and it is a slaughter. Many of these advertisers are struggling to break even in terms of ROI let alone make a profit, so they stop once they have tired of the platform…. never to return. And they will tell anyone that asks them that Google Ads don’t work. They are a scam. They were cheated by Google.

And this would be bad enough, but it gets worse. The platform is becoming ever more complex. And the tools, scripts, automation and basic management skills that the bigger advertisers are using is making it even harder for the noob to compete.

It’s like a demolition derby where one guy is driving a Hummer and the other a golf cart. Sure, you’re both in the race, but my money’s on the Hummer.

When AdWords launched it was a cute baby. Pretty simple to use, friendly and readily trusted. But it has come of age. Or at least it’s become a surly teenager. It’s not easy and it’s not cheap. And it’s hard to get it to collaborate with you.

As it moves into adulthood it is going to have to decide if being nice and friendly to it’s new customers is a fair reflection of it’s true character. As the saying goes, with great power comes great responsibility. Online there is no greater power than Google.

And if Google indirectly and unwittingly hurts it’s clients, then that cannot be good for business. The end game is where the distrust of Google from frustrated small advertisers becomes part of the general psyche and we lose trust in everything that Google does.

The way much of the AdWords set up process is configured, they may well be doing more harm than good to their paying customers. And that is probably a core definition of a flawed business model.

What do you think? Should Google take more responsibility for customers making a success of their campaigns, or should they make is simpler and simpler with more automation?

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