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Price Fixing? Google Already Does It

  • Ad Age, Monday, September 29, 2008 2:30 PM
One of the primary concerns that advertisers have voiced about the posed Google-Yahoo search deal is that Google will be able to "fix" bid prices for search terms across the board -- and users will have no real alternative for their paid search traffic. But Danny Sullivan argues that Big G has been fixing paid search prices for years.

"How can that be, given that it's an auction model?" Sullivan says. "In an auction, the highest price wins. Since AdWords began, Google's never sold to the highest bidder." The winner is calculated through a mix of factors, including bid price and the ever-elusive Quality Score. And because Google alone determines Quality Scores in a somewhat opaque manner, Sullivan says that the giant is essentially manipulating all the prices already.

"Let's be clear: Quality scores mean advertisers with ads deemed 'good' pay less," he says. "But the bottom line is that Google is interfering in the auction in ways only it knows."

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