Commentary

Google Backdoor Ad Practices Revealed By Those Who Lived It

The U.S. Department of Justice has opened a door for advertisers, publishers and tech platforms' executives to begin discussing Google's hidden practices as the justice department continues to hear testimony during Alphabet's latest antitrust trial in Virginia.

Some believe billions of dollars have been overpaid to Google and other companies during the past 20 years, because there is a lack of transparency. They are grateful the Justice department has stepped in.

Integral Ad Science (IAS) co-founder Will Luttrell said no individual advertiser could or would be important enough to change the practices of any platform. "There is way too much money in the collective practices swinging from advertisers to ad platforms," he said. "And if advertisers tried to act collectively, they would be subject to antitrust scrutiny."

Luttrell called it "cathartic," having the ability to finally feel comfortable enough to share some of the events that for years have been swept into a corner and under a rug.

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It may seen as if the trail has opened the door, but a lot has not been talked about, Luttrell said, pointing to transparency. This highlights the comings and goings of an industry too timid to speak up.

"Years ago, I somehow became the guy that people would pull aside and tell secrets about things they heard and things we discovered through our own technology," he said. "The Google antitrust trial would not have existed if the ecosystem was more transparent."

Luttrell also founded Amino Payments, a transparency platform that followed the money through the ad supply chain. He sold Amino to IAS in 2021. The advertisers and publishers are paying a certain percent, but it's actually "squishy," he said, adding that it is troubling when the money cannot be tracked.

"We took a hard line with Google -- they would not allow us to see what they paid out to exchange partners," Luttrell said. "And that's where the wiggle-room comes in. Where games are played and the ability to hide preferred relationships with agency. One agency person told me they are hiding some of their fees in bid pricing."

He said something might have a $1 bid price, and 5% of it might be a hidden fee that goes back to an agency as a service fee. There is a massive lack of transparency throughout the supply chain.

It is a double-edged sword. If Google gets divided into smaller companies, industry insiders expect to see a rise in advertising prices and services, while performance would decline -- at least temporarily.

“Google’s revenue will decline and prices will rise, if Google is broken up,” said Matt Wasserlauf, CEO at Blockboard, a blockchain technology company that focuses on transparency. “Everyone will suffer by this initially, and then you’ll see an immediate flight to quality. Transparency will rise and marketers will require companies to show them what goes on under the hood.”

Wasserlauf believes it could take until 2025 to sort out all these nuances. But he seems to have been patient in the past as he watched the challenges unfold across the advertising supply chain for the past 20 years. One of the stories he told pointed to Procter & Gamble. P&G asked him to help build Vindico, an ad-serving company, around the same time Google acquired DoubleClick. They needed a way to check on the way Google provided its services.

Early video players typically sat alongside banner ads. “Every time a 30-second video played, DoubleClick would roll the banner many times, and charge P&G several times for the same 30-second commercial,” Wasserlauf said. “P&G knew they were getting overcharged, but couldn’t prove it and there was no way to check Google at the time, so they asked us to build Vindico for them. In 2005, we saved P&G millions of dollars.”

Wasserlauf is looking for the government to double-check Google’s practices. Watching the millions turn into billions of dollars over the years was the most difficult thing to see, he said. He points to that approximate number — $20 billion worth of Made for Advertising sites charge to major advertisers — that no one is taking into account, the number verified by the Association of National Advertisers (ANA) in 2023. Google and The Trade Desk were cited.

Google owns every piece of the supply chain, from the ad server to the demand-side platform (DSP) to the ad exchange to the supply-side platform (SSP) to the publisher to the attribution.

“My concern is now with AI, those billions will become trillions,” Wasserlauf said, adding that the easiest part of Google to break up is DoubleClick. “I see it now.”

If the government broke up Google’s ad business, Alphabet would remain at least a majority owner, some say.

When asked about Google’s claims of interoperability with other companies, Wasserlauf said Google leans on marketers and competitors, using their “leverage” to convince brands they must use all of Google’s services, including YouTube.

Blockboard works with a very large fitness chain that asked it to manage its YouTube buy, after not being satisfied with results. “We went in to collect campaign data to better understand it and Google said, no, only under one condition -- Blockboard had to disclose all its financial statements," Wasserlauf said. “That’s one example of the way Google makes it difficult to run ads across their properties without using all its products.”

This was not an isolated incident, he said.

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