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This create a really interesting dilemma for Google. A significant portion of Groupon's subscriber base comes from the Google Ads they are running. Now Google
by il 16y ago
This create a really interesting dilemma for Google. A significant portion of Groupon's subscriber base comes from the Google Ads they are running.
Now Google can either:
1. Ban Groupon from advertising on AdWords
2. Use the CTR and conversion data from Groupon's campaigns to learn exactly how to target ads for Google Offers.
Since they have massive amounts of data from Groupon's campaigns, it's definitely feasible for them to capture lots of their traffic. But will they really run Google Offers and Groupon ads next to each other?
- marquis 16y agoThis brings up an interesting question - what are the ethics involved in Google having exceptional access to market data in the area it competes in?
- patio11 16y agoYou mean like, say, search or cost per click advertising? Google routinely uses it's position as market maker in search and Internet advertising to gain an advantage on other participants on the Internet. Take AdWords. Many smart people, including many people on HN, think that AdWords is an auction. AdWords is not an auction. AdWords has a price discovery strategy which is partially auction-like, but the actual ad displayed will be a) from whomever Google darn pleases at b) whatever price Google darn pleases. (In addition to being best at the world at processing large amounts of information, Google isn't too shabby at PR, so they call this Quality Score and tell people that the revenue maximization strategy for the world's largest advertising firm is in people's best interest... and people believe them.) In addition to displaying explicit preferences for particular businesses and for/against particular business models, Google uses large amounts of proprietary black magic to determine minimum pricing. For example, keywords in a field known to be awash in money with no competition will not be priced at the systemwide minimum price, but will rather be priced much higher. The exact level is, again, wherever Google darn well pleases. They have teams of very smart people working on revenue maximization. I love AdWords. It's the best idea any corporation has come up with in the last twenty years, and is largely responsible for me being at my kitchen table right now instead of being miserable in my cubicle. But let's not kid ourselves: Google is not a one-off gentle giant surrounded by 499 for-profit corporations on the Fortune 500.
- yuhong 16y agoWell, it is a gentle giant compared to many other big companies out there.
- chrisaycock 16y agoGoogle can just claim #2 as a natural competitive advantage. (It's like if Apple were to build an OS-level feature that competes with an app.) Option #1, however, could get Google in trouble for anticompetitive behaviour.
- robosox 16y agoThese are exactly the kinds of questions that the "don't be evil" motto is supposed to answer. That phrase has been flung around over the years by people who get angry at Google for this-or-that, but during the time I worked there, I found that the most common internal usage of the phrase spoke directly to ethical dilemmas like this. I have a feeling they've kept that in mind while building this product.
- patrickaljord 16y agoThey'd be sued for doing 1. plus it's unlikely given that they accept Bing which is an even more direct competitor. 2. is probably illegal. Don't think it's worth it for google to put itself into so much trouble.
- chrisaycock 16y agoIs #2 really illegal? What's to stop Wal-Mart from analyzing sales receipts before deciding which store-brand product to introduce next?
- jbooth 16y agoNot exactly equivalent.. Wal-mart's a distribution channel, Google's more of a marketing channel. Although it gets fuzzy.
- greendestiny 16y agoI doubt it, but maybe if they did explicitly use Groupon's data directly from their campaign. If they just look at searches and clicks then all that data is surely theirs to use.
- gojomo 16y agoIf it's illegal, I suspect it's only indirectly so, by some roundabout after-the-fact fair-trade-practice or antitrust analysis, based on Google's dominance of search advertising. Which means: very arguable and not much of an up-front deterrent for a motivated competitor. In their privacy policies – which concern 'personal information' with far more legal sensitivity than aggregate ad/transactional data – Google pretty much grants themselves carte blanche to "combine the information you submit under your account with information from other Google services or third parties in order to provide you with a better experience and to improve the quality of our services" and/or "Provide, maintain, protect, and improve our services (including advertising services) and develop new services".
- elvirs 16y agoit is phony practice though it will be really hard to prove that certain decisions made by Google were based on analysis of AdWords data from Groupon campaigns.
- bradly 16y ago> Now Google can either: 1. Ban Groupon from advertising on AdWords 2. Use the CTR and conversion data from Groupon's campaigns to learn exactly how to target ads for Google Offers. Umm.. Are those really Google's only choices?
- jessriedel 16y agoI think he means that Google can either ban or not ban Groupon from AdWords. If the latter, than #2 becomes possible.
- taylorbuley 16y agoI see Groupon ads all day. Any guesses on how they might rank in terms of overall AdWords accounts?
- il 16y agoAccording to our data they're in the top 10 largest AdWords advertisers, at least by reach.
- rokhayakebe 16y agoWhat about slapping that on their homepage or search result page?
- cristinacordova 16y agoGoogle has never banned advertisers they compete with. You'll see ads for Bing, Yahoo etc. in Google Search all the time.
- patio11 16y agoGoogle is the world's largest affiliate and the world's largest search arbitrageur, and they ban affiliates and search arbitrageurs all day long. This is so that they capture a larger portion of advertising spend and do not leak it people who they believe do not add value. (Google is an affiliate: they do cost-per-action advertising on behalf of customers. Google is a search arbitrageur: they have a large source of searches which they can acquire cheaply, a large number of pages with content which is not quite responsive to user needs, and advertisers who are willing to pay for targeted traffic. The difference between Google and other search arbitrageurs is that typically the arbitrageur outsources the search engine and owns the content, where google owns the search engine and outsources the content to its AdSense partners.)
- ntoshev 16y agoYou can redefine anybody's business to look like he is competing with anyone else. The point is, those Bing and Yahoo ads still run on Google, so maybe there is some other reason for banning some affiliates, eh?
- jongraehl 16y agoKey difference: Google's "search arbitrage" is consensual (explicitly requested or permitted by all parties, assuming robots.txt is honored).