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Google is helping small businesses by providing Ad credits? Of all things a small business may need, Google thinks Ads are the solution? The response to this

Google is helping small businesses by providing Ad credits? Of all things a small business may need, Google thinks Ads are the solution? The response to this crisis has my cynicism and disdain for our system growing every day.

ocdtrekkie 7y ago
If all you have is a hammer... Realistically, apart from G Suite access for remote work, they don't actually have much to offer. That being said, Google ad spend is a huge chunk of marketing budgets, so it probably will help the overall bottom line of these businesses a fair bit.
- izacus 7y ago
  And GSuite limits for several services have already been lifted to Enterprise levels for all accounts in the previous week.
  - ocdtrekkie 7y ago
    Indeed. That's been pretty common industry-wide for online collaboration and conferencing tools.
hueving 7y ago
Yep, ad money has suddenly dried up and auction prices have plummeted so might as well give away the ad credits to inflate the auction prices allowing both a higher tax deduction and better looking performance.
- ryanmercer 7y ago
  You're being downvoted but it wouldn't surprise me if this was discussed while they were coming up with this. While I highly doubt it is their main motivation, I'm sure they've acknowledged it as a benefit.
- adrianmonk 7y ago
  The "might as well give away the ad credits" part makes sense to me, but the part about inflating prices and getting a higher tax deduction doesn't make sense. I'm not an accountant by any means, but I don't see how there even would be a deduction here. From what I could quickly dig up, even if you donate your services to a nonprofit, you can only deduct your costs, not the price you'd normally charge a paying customer. And of course this isn't even a nonprofit; it's just a freebie to a business. So while cutting supply might create higher auction prices for paying customers (than you'd otherwise have), the grants themselves don't seem like they'd do anything advantageous for taxes. Of course, there are expenses with serving ads that they can take out after revenue to reduce how much profit they'll be taxed on, but I'm not sure there are many expenses coming from this giveaway. Seems they would have incurred most of the expense without doing the giveaway because they've already got the computer hardware up and running to serve ads. This is just a way to try to get some value out of the expense that you're going to pay anyway.
compiler-guy 7y ago
Yes, when the time comes, (but only when the time comes), small business are going to need to tell their customers that they are back and available. Ad spend is a major expense for small businesses like restaurants and small boutiques, and not having that expense will be a big help to getting these companies operating again. But Google is doing a lot more beyond that: "A $200 million investment fund that will support NGOs and financial institutions around the world to help provide small businesses with access to capital.... This is in addition to the $15 million in cash grants Google.org is already providing to nonprofits to help bridge these gaps for SMBs." "Direct financial support and expertise to help increase the production capacity for personal protective equipment (PPE) and lifesaving medical devices. We’re working with our longtime supplier and partner Magid Glove & Safety..."
- treyfitty 7y ago
  There’s something called the advertisers dilemma (akin to the prisoners dilemma) for a reason- game theory suggests advertising has become de facto necessary only because other parties do it. In other words, small businesses would choose NOT to advertise if they all cooperated and chose not to. And I owned a restaurant. Restaurants, by and large, do not advertise on Google Search. If they do, it’s a small fraction of their ad spend. There are many ways to get the message across, like actually being good and having a connection with recurring customers.
  - 3pt14159 7y ago
    So many things in the economy have turned into arms races. Property prices, advertising spending, education spending, status symbols. If we could somehow get out of it we'd have fewer $100m pieces of artwork and a lot more housing and free time.
  - summerlight 7y ago
    > There are many ways to get the message across, like actually being good and having a connection with recurring customers. The situation is pretty novel since there are significantly less options for offline interaction available this time. I don't think local businesses can cover most of the loss only with recurring customers this time.
rsweeney21 7y ago
I pay for Google ads to generate leads for my business. We've seen a drop in conversion rate, but we're still generating leads which we really need right now to continue to operate. The problem is that the cost per lead just went up dramatically. These ad credits will solve that problem for us and allow us to continue to generate leads. This is exactly the kind of help my business needs right now.
- orasis 7y ago
  If they hadn't injected this credit you would see your CPMs decline and you'd be able to generate a better margin. Now your ad dollars have to compete with all of this free money until it runs out. You and I will receive no benefit from this.
- tradertef 7y ago
  Yes, but it is a zero-sum game. When you get leads, someone else is loosing. So, this does not help economy and does not help all small businesses equally. It only helps Google as it is free advertisement for them.
throwaway_USD 7y ago
>Google thinks Ads are the solution? No, they see their Ad sales declining, so they are trying to stimulate their own business with this act. "Grants" to new customers so they hopefully become buying customers in the future; loans (nothing like becoming a lender in this economy); and of course grants/loans will just bid up ad prices on existing customers. Not to mention all the major business just highjacked $5.75T from the taxpayers so they will have nothing better to do than waste that on ad buys.
- rsweeney21 7y ago
  The grants are for existing customers, not new customers.
  - throwaway_USD 7y ago
    You seem to be referencing: >$340 million in Google Ads credits available to all SMBs with active accounts over the past year. Credit notifications will appear in their Google Ads accounts and can be used at any point until the end of 2020 across our advertising platforms. We hope it will help to alleviate some of the cost of staying in touch with their customers. And you seem to be overlooking/ignoring: >Google offers every employee annually to $10,000 from $7,500. That means our employees can now give $20,000 to organizations in their communities, in addition to the $50 million Google.org has already donated. $20,000 x 100,000 employees = $2B in discretionary credits (not dedicated to new customers, but certainly does not exclude them)
- compiler-guy 7y ago
  Grants are only going to customers with an active account in the previous year. So this does not drive new customers to the platform. If anything, it makes adwords less attractive, because new customers without grants would be competing against old customers with grants.
onlyrealcuzzo 7y ago
Any accountants here? Isn't this just an accounting trick? They're going to lose revenue. But can't they now issue this "grant", and then pretend they aren't losing revenue -- they're just issuing a grant? Or is that not how it works? I don't know, but would like to know.
- judge2020 7y ago
  They're still losing revenue in that, when these ad credits are spent, they're not receiving any actual money from advertisements that would have shown up in place of these free ads.
  - treyfitty 7y ago
    I’m not an accountant, but I do know that gift cards should be recognized as revenue at the time of services rendered, not at the time of a sale of a gift card. Are grants similar in that a “gift card” is being granted and the revenue can be realized at a later date?
    - onlyrealcuzzo 7y ago
      I'm not an accountant, but I believe that's revenue recognition. I sell you a $10 gift card today. I can't recognize the revenue until you spend the $10. However, if I know you're going to spend $10 less at my business this year, I can GIVE you a $10 gift card. Then, hopefully, you'll come to my business as usual. When you spend the $10, I can record that as revenue, and then I can record a $10 expense for the cost of sale. Top line doesn't change. I think. But I'm not an accountant. I don't know.
  - onlyrealcuzzo 7y ago
    Technically, yes. My question is if this is an accounting trick to mask that. If people spend $10 grant money, I believe you can record $10 revenue and $10 expenses. Top line is artificially $10 higher. Bottom line is unchanged. Again -- this is how I think it works. But I don't know.
partiallypro 7y ago
They should be giving agencies free ad credits then, because a lot of small/medium sized businesses outsource their ad work to agencies...so this doesn't accomplish all that much imo.
duxup 7y ago
It's what they have to offer... I understand G-suite has had some adjustments regarding limits and such. I can't fault them for some effort even if it is hardly front line virus fighting. They're just not in that position. I think your cynicism is just cynicism.

ocdtrekkie 7y ago

If all you have is a hammer... Realistically, apart from G Suite access for remote work, they don't actually have much to offer. That being said, Google ad spend is a huge chunk of marketing budgets, so it probably will help the overall bottom line of these businesses a fair bit.

izacus 7y ago
And GSuite limits for several services have already been lifted to Enterprise levels for all accounts in the previous week.
- ocdtrekkie 7y ago
  Indeed. That's been pretty common industry-wide for online collaboration and conferencing tools.

hueving 7y ago

Yep, ad money has suddenly dried up and auction prices have plummeted so might as well give away the ad credits to inflate the auction prices allowing both a higher tax deduction and better looking performance.

ryanmercer 7y ago
You're being downvoted but it wouldn't surprise me if this was discussed while they were coming up with this. While I highly doubt it is their main motivation, I'm sure they've acknowledged it as a benefit.
adrianmonk 7y ago
The "might as well give away the ad credits" part makes sense to me, but the part about inflating prices and getting a higher tax deduction doesn't make sense. I'm not an accountant by any means, but I don't see how there even would be a deduction here. From what I could quickly dig up, even if you donate your services to a nonprofit, you can only deduct your costs, not the price you'd normally charge a paying customer. And of course this isn't even a nonprofit; it's just a freebie to a business. So while cutting supply might create higher auction prices for paying customers (than you'd otherwise have), the grants themselves don't seem like they'd do anything advantageous for taxes. Of course, there are expenses with serving ads that they can take out after revenue to reduce how much profit they'll be taxed on, but I'm not sure there are many expenses coming from this giveaway. Seems they would have incurred most of the expense without doing the giveaway because they've already got the computer hardware up and running to serve ads. This is just a way to try to get some value out of the expense that you're going to pay anyway.

compiler-guy 7y ago

Yes, when the time comes, (but only when the time comes), small business are going to need to tell their customers that they are back and available. Ad spend is a major expense for small businesses like restaurants and small boutiques, and not having that expense will be a big help to getting these companies operating again. But Google is doing a lot more beyond that: "A $200 million investment fund that will support NGOs and financial institutions around the world to help provide small businesses with access to capital.... This is in addition to the $15 million in cash grants Google.org is already providing to nonprofits to help bridge these gaps for SMBs." "Direct financial support and expertise to help increase the production capacity for personal protective equipment (PPE) and lifesaving medical devices. We’re working with our longtime supplier and partner Magid Glove & Safety..."

treyfitty 7y ago
There’s something called the advertisers dilemma (akin to the prisoners dilemma) for a reason- game theory suggests advertising has become de facto necessary only because other parties do it. In other words, small businesses would choose NOT to advertise if they all cooperated and chose not to. And I owned a restaurant. Restaurants, by and large, do not advertise on Google Search. If they do, it’s a small fraction of their ad spend. There are many ways to get the message across, like actually being good and having a connection with recurring customers.
- 3pt14159 7y ago
  So many things in the economy have turned into arms races. Property prices, advertising spending, education spending, status symbols. If we could somehow get out of it we'd have fewer $100m pieces of artwork and a lot more housing and free time.
- summerlight 7y ago
  > There are many ways to get the message across, like actually being good and having a connection with recurring customers. The situation is pretty novel since there are significantly less options for offline interaction available this time. I don't think local businesses can cover most of the loss only with recurring customers this time.

rsweeney21 7y ago

I pay for Google ads to generate leads for my business. We've seen a drop in conversion rate, but we're still generating leads which we really need right now to continue to operate. The problem is that the cost per lead just went up dramatically. These ad credits will solve that problem for us and allow us to continue to generate leads. This is exactly the kind of help my business needs right now.

orasis 7y ago
If they hadn't injected this credit you would see your CPMs decline and you'd be able to generate a better margin. Now your ad dollars have to compete with all of this free money until it runs out. You and I will receive no benefit from this.
tradertef 7y ago
Yes, but it is a zero-sum game. When you get leads, someone else is loosing. So, this does not help economy and does not help all small businesses equally. It only helps Google as it is free advertisement for them.

throwaway_USD 7y ago

>Google thinks Ads are the solution? No, they see their Ad sales declining, so they are trying to stimulate their own business with this act. "Grants" to new customers so they hopefully become buying customers in the future; loans (nothing like becoming a lender in this economy); and of course grants/loans will just bid up ad prices on existing customers. Not to mention all the major business just highjacked $5.75T from the taxpayers so they will have nothing better to do than waste that on ad buys.

rsweeney21 7y ago
The grants are for existing customers, not new customers.
- throwaway_USD 7y ago
  You seem to be referencing: >$340 million in Google Ads credits available to all SMBs with active accounts over the past year. Credit notifications will appear in their Google Ads accounts and can be used at any point until the end of 2020 across our advertising platforms. We hope it will help to alleviate some of the cost of staying in touch with their customers. And you seem to be overlooking/ignoring: >Google offers every employee annually to $10,000 from $7,500. That means our employees can now give $20,000 to organizations in their communities, in addition to the $50 million Google.org has already donated. $20,000 x 100,000 employees = $2B in discretionary credits (not dedicated to new customers, but certainly does not exclude them)
compiler-guy 7y ago
Grants are only going to customers with an active account in the previous year. So this does not drive new customers to the platform. If anything, it makes adwords less attractive, because new customers without grants would be competing against old customers with grants.

onlyrealcuzzo 7y ago

Any accountants here? Isn't this just an accounting trick? They're going to lose revenue. But can't they now issue this "grant", and then pretend they aren't losing revenue -- they're just issuing a grant? Or is that not how it works? I don't know, but would like to know.

judge2020 7y ago
They're still losing revenue in that, when these ad credits are spent, they're not receiving any actual money from advertisements that would have shown up in place of these free ads.
- treyfitty 7y ago
  I’m not an accountant, but I do know that gift cards should be recognized as revenue at the time of services rendered, not at the time of a sale of a gift card. Are grants similar in that a “gift card” is being granted and the revenue can be realized at a later date?
  - onlyrealcuzzo 7y ago
    I'm not an accountant, but I believe that's revenue recognition. I sell you a $10 gift card today. I can't recognize the revenue until you spend the $10. However, if I know you're going to spend $10 less at my business this year, I can GIVE you a $10 gift card. Then, hopefully, you'll come to my business as usual. When you spend the $10, I can record that as revenue, and then I can record a $10 expense for the cost of sale. Top line doesn't change. I think. But I'm not an accountant. I don't know.
- onlyrealcuzzo 7y ago
  Technically, yes. My question is if this is an accounting trick to mask that. If people spend $10 grant money, I believe you can record $10 revenue and $10 expenses. Top line is artificially $10 higher. Bottom line is unchanged. Again -- this is how I think it works. But I don't know.

partiallypro 7y ago

They should be giving agencies free ad credits then, because a lot of small/medium sized businesses outsource their ad work to agencies...so this doesn't accomplish all that much imo.

duxup 7y ago

It's what they have to offer... I understand G-suite has had some adjustments regarding limits and such. I can't fault them for some effort even if it is hardly front line virus fighting. They're just not in that position. I think your cynicism is just cynicism.