I read a New York Time article by Joe Nocera entitled “Stuck in Google’s Doghouse”. It described a businessman that created an industrial product web directory. He drove traffic to his site using Google AdWords. He would bid 5 to 6 cents per click through to his site. He put Google AdSense on his site to make some money. He received around 10 cents a click for the ads. He used the difference to turn a profit.Initially this businessman spent about 75% of his revenues on AdWords. He was still earning over $100k a month in profits. Then Google started requiring a minimum bid of $1 to get AdWords to give him traffic. All of his 5 to 6 cent bids never got any more traffic because the bid was too low. Without this traffic, he could not get visitors and more importantly clicks on his AdSense ads. This guy was pretty much out of luck. And he would be out of business without a change.
The guy desperately inquired with Google as to why he got a huge AdWords price hike. He was told that his landing page had a low quality. He attempted to correct this situation. However he still had a $1 minimum bid for AdWords. Then the guy thought that perhaps his business was competing with that of another Google partner. So maybe he was getting the shaft intentionally.
Our business cried foul. He felt he was the victim of Google being a monopoly. The guy had his lawyer send the information to the Justice Department. I can feel this guy’s pain. However he probably knows that he has no case. There are plenty of other companies with programs similar to the AdWords program. This guy’s main beef is that Google will not sell him clicks for 5 to 6 cents through AdWords. There is nothing monopolistic about that. That is just business.
There is problem with this guy’s business model. He is buying ads to make money selling other ads. There is nothing illegal about that. But Google considers that ad arbitrage. You have to add some value. It may be arguable that this guys site does add some value in listing industrial business information. But the way he makes money is floating viewers to ads on his site. That is the key problem. He is dependent on Google giving him cheap click through to make more money in clicks back to Google through AdSense.
I don’t have anything personal against this guy. I hope he finds a better business model to make money. However I don’t think we should listen to people who cry monopoly when their businesses fail.
