Google releases earnings today, and investors and analysts are waiting to see if the search giant’s new method of selling ad words, like “plumber” or “teapot,” will pay off. Google’s new “Enhanced Campaigns” mean advertisers bid for keywords across multiple platforms, like desktop, tablets and mobile, instead of one platform at a time.
Google says nowadays consumers use multiple devices so selling ads across several platforms at once streamlines the process. Not all advertisers are pleased with the new program, says Chris Nosko a professor of marketing at the University of Chicago’s Booth School of business.“The real concern for advertisers here is you end up bidding on lot of keywords for devices that you don’t really want to bid on,” he says, “And what that might do in the end is drive up prices for people who really do want to bid on those keywords.” That, in turn, means higher prices for everyone.
Google says advertisers can opt out of specific platforms, such as mobile if they don’t want to sell their teapots on phones.
Rick Summer, an equity analyst at Morningstar, says don’t forget, Google sells ads through auctions so the market will correct prices. “If a customer is worth a hundred dollars no advertiser over a long period of time is ever going to spend a hundred and fifty dollars to acquire that customer,” he says.
Summer says that selling ads in bundles should mean good news for Google over the long term.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.