6 ms·
It's absolutely extortion, but it's cheaper for Expedia to buy than a competitor due to Google's auction rules. Essentially, the bid to be #1 is discounted by
by cldellow 7y ago
It's absolutely extortion, but it's cheaper for Expedia to buy than a competitor due to Google's auction rules.
Essentially, the bid to be #1 is discounted by the click-through rate. If 90% of people who search "expedia.com" will click an ad for Expedia, and only 10% of people who search "expedia.com" will click an ad for travelsite.com, travelsite.com has to pay 10x what Expedia does to make up for the lost revenue.
- perl4ever 7y agoDevil's advocate - isn't this a neat way of automatically being anti-incumbent and pro-competition?
- cldellow 7y ago? I don't follow the mechanism you're thinking of here.
- tempestn 7y agoIt might be if it were more transparent. So many people are mislead by these "ads" on branded search keywords though, it really is extortionate.
- _jal 7y agoIt is a tax on customers. Incumbents can generally afford to pay more than upstarts, and of course will just pass that cost on.
- hoorayimhelping 7y agoNo. It's a currently non-illegal way to extort businesses.
- FTFYcent 7y agoWait, I'm confused. Are you saying that Expedia pays Google less when people click on the ad vs when they click on something else?
- cldellow 7y agoNo, I'm saying Expedia pays less for ads for expedia.com than ExpediaCompetitor pays for ads for expediacompetitor.com. This gives Expedia an advantage when purchasing ads on the search term "expedia.com". Of course, Expedia would probably prefer not to purchase ads on "expedia.com" at all.