Google ad costs irk businesses more than alleged monopoly
NEW YORK » When asked about Google, Bryan Clayton voices a familiar lament among small business owners.
“You keep getting squeezed further and further down the search results page,” says Clayton, CEO of GreenPal, a company that operates an app to help homeowners find lawn care. “As a startup, you don’t have a milliondollar advertising budget.”
The Justice Department sued Google on Oct. 20 for anticompetitive behavior, saying the company’s dominance in online search and advertising harms rivals and consumers.
Owners such as Clayton have a different beef. What’s unfair about Google, they say, is the way it gives the greatest prominence in search results to the companies that spend the most on advertising.
Companies covet the top spots in Google search results — the first page of rankings, and the top of subsequent pages. As more companies vie for one of these spots, the cost can jump out of reach for a small business.
Google controls about 90% of global internet searches. The Justice Department sued Google last week, alleging it uses monopoly power in search to squelch competition.
Business owners’ concerns about the cost of advertising aren’t directly related to the government’s lawsuit, although the company’s dominance of the search market has been alleged to be a factor in driving up the price to buy ads in its vast digital marketing network.
To buy ads, companies bid on keywords. For example, a sporting goods store might bid on words like “baseball” and “hockey” in hopes of landing higher in search results and being more easily seen by customers looking for equipment for those sports. The problem businesses face is they can be outbid by companies with deeper pockets. So the sporting goods store that can only afford to pay $2 a word can lose out to stores able to pay $10.
The cost of an ad also depends on how often computer users click on it. Google has different types of ads, and whether an ad appears locally or nationally can also affect pricing. So can the time of day an ad appears.
Mark Aselstine has spent as much as $30,000 a year on Google advertising, but he’s not sure his wine gift basket company will be able to afford Google ads this holiday season. He expects an already competitive time of year to be even more intense as more wine retailers seek customers over the internet due to the coronavirus outbreak.
“I don’t think we’ll run a single Google ad this year. I suspect it will be well out of our price range,” said Aselstine, owner of Uncorked Ventures in El Cerrito, California.
If Aselstine can’t afford Google, he has alternatives. Microsoft’s Bing search engine, cheaper but not as popular among computer users, is one. Aselstine can also increase his use of Google’s unpaid search. Like the paid version, he’d seek to use keywords in his ads that prospective customers are likely to search for; depending on the words he chooses, he might get a good ranking, although it will still fall below ads and paid listings.
R.J. Huebert, who buys Google ads on behalf of the law firms, manufacturers and a credit union that are his clients, also sees prices going up because of the competition among advertisers, but the owner of HBT Digital Consulting says, “I think it’s the cost of doing business.”