Google sees a gold mine below the search bar

BEFORE Sergey Brin and Larry Page founded Google, they wrote a research paper as doctoral students at Stanford in which they questioned the appropriateness of ads on search engines.

“It could be argued from the consumer point of view that the better the search engine is, the fewer advertisements will be needed for the consumer to find what they want,” the pair wrote in the 1998 paper.

Two decades later, it’s not unusual for a smartphone user to see only ads on a Google search page before scrolling down to the regular results.

When Google’s parent company, Alphabet, reports earnings this week, the internet giant’s big profits are expected to demonstrate yet again that the billboard space accompanying Google queries is the web’s most valuable real estate for advertisements.

In the 17 years since Google introduced text-based advertising above search results, the company has allo- cated more space to ads and created new forms of them.

The ad creep on Google has pushed “organic” (unpaid) search results further down the screen, an effect even more pronounced on smartphones. Not advertising on search terms associated with your brand or displaying images of your products is tantamount to telling potential customers to spend their money elsewhere.

The biggest development with search ads is the proliferation of product listing ads, or PLAs. In a departure from its text-based ads, Google started allowing retailers to post pictures, descriptions and prices of products at the top of search results in 2009.

Product ads made up 52 percent of all Google search ad spending by retailers in the first quarter of 2017, versus 8 percent in 2011, according to the digital marketing agency Merkle. “P.L.A.s takes the search engine results page to a different level,” said Andy Taylor, Merkle’s associate director of research.

A Google spokeswoman said the company’s goal had always been to quickly give people the best search results. “Our goal has always been to deliver results that people find immediately useful, which is even more important on mobile devices with smaller screens,” said the spokeswoman, Chi Hea Cho.

“For most queries, we show no ads,” she said, “and we recently removed right-hand text ads for all queries. For highly commercial queries, our extensive testing shows that people find relevant ads and offers extremely useful.”