Gerrymandering ad traffic patterns
Google repainted their lanes a few months back. They changed where 22% of internet traffic outside walled gardens go. Will this power move from ad’s biggest power player affect their antitrust trial?
Let’s play this out in suburban Peoria. You’re on your way to school drop off. You’ve left just enough to make it. But, on your way, the two-lane road you take is down to one. Road work. Damn. You’re stuck in a line of cars literally a mile long and your Swiss-timed precision routine has become a Frankensteined Vostok.
Ample evidence suggests that Google can direct and redirect our movements on the digital superhighway. Their bad-content update a few months back radically changed traffic patterns. Hard-working plebs who ran websites got decimated. That traffic showed up as a surge of new readers at Reddit. Reddit went from the 68th most-recommended site in Google’s search results to fifth. Their traffic is up 51% versus last year.
If you listen closely, you can almost hear Jack Nicholson and Tom Cruise doing an iconic courtroom scene in my reimagined movie,
A Few Good Ads
DOJ (Cruise)
Your ads work, is that right?GOOGLE (Nicholson)
We can direct traffic where we want it to go.DOJ
Is your abilty to control traffic why your ads work?
Of course. People go where we tell them to go. They see our ads. It’s our data — in action.DOJ
So — traffic is the same as ads.
Agencies buy our ads because they know traffic is money and they also know we control the internet. We’re the unburly, untattooed person on the road works crew who swivels the sign from slow to stop.DOJ
What if agencies don’t buy your ads?
A brand’s longevity may be in danger.DOJ
Grave danger?
Is there another kind?
Stubbornly, we won’t stay in the lanes Google prefers for us. Notice, I said Reddit traffic, not “users.” Reddit is not converting people to users. They talk about daily active uniques and weekly active uniques, not new users. Which is fine. For now. Reddit ad dollars moved in nearly lock-step with traffic. Revenue is up 54%.
That’s a problem. According to Benjamin Black, Co-Head of Internet Equity research at Deutsche Bank, Reddit makes $17 a year showing ads to users with an account. They (only) make five bucks when we show up from Google as “uniques.”
Do Google’s ad work as well as people think they do? Perhaps not.
One of my favorite ad business writers, Catherine Perloff, bylined this story: Perks From Media Owners That Aren't Disclosed to Clients. She and Trishla Ostwal dug up documents from Google’s upcoming adtech antitrust trial and found that Google pays agencies to push their products.
Back to, at least 2016, Google paid agencies hundreds of millions in “incentives.” Google will give agencies cash back and other discounts ranging from 4% to 6% of spend it they buy a certain amount of stuff. It nudges ad buyers to stay in their lanes.
To be fair, Google is not alone in this. Other platforms and publishers offer incentives to buy their digital ads too. It’s money that the agencies can and do keep.
Which, to me, is the biggest problem. If all this digital ad stuff works as well as we told it does then why the incentives?
Let’s let Tom and Jack wrap this up for us.
A Few Good Ads (continued)
Sometimes agencies need incentives. We give them money because --DOJ
But that's not what you said. You said your ads were awesome because you control traffic.
Yes. That’s correct, but --DOJ
You said, “Traffic is money. A brand may be in danger.” I said, “Grave danger.” You said --
Yes, I recall what --DOJ
I can have the Court Reporter read back your --
I know what I said. I don't need it read back to me like I'm a damn --DOJ
Then why the incentives?
[pause]
Google?
[pause]
Why did you --
Sometimes agencies need incentives.DOJ
No sir. You made it clear just a moment ago that you control traffic. Agencies buy your ads because your ads are awesome. They buy ads or brands die. So your business shouldn’t have been in any danger at all, should it have been, Google?
You little bastard.
Oh, this trial is going to be awesome!