Every year, Google’s well-oiled digital ad machine generates tens of billions of dollars in revenue, making the search giant the biggest single recipient of digital ad spend.
While Google is still best known for its search engine, which has been the linchpin of its business, the number of products the company offers has grown substantially over the years. It and companies it owns sell everything from smartphones and speakers to thermostats and Wi-Fi routers.
To highlight some of the products it is behind, Google even built a Made by Google microsite.
But Google’s marketing of its growing product portfolio isn’t limited to the microsite. According to a Wall Street Journal analysis conducted by online marketing intelligence firm SEMrush, “ads for products sold by Google and its sister companies appeared in the most prominent spot in 91% of 25,000 recent searches related to such items. In 43% of the searches, the top two ads both were for Google-related products.”
Yes, Google has become a prolific Google advertiser.
On December 1, SEMrush looked at 1,000 searches for each of 25 terms related to products Google and its affiliated companies sell. According to The Wall Street Journal, “SEMrush ran the searches Dec. 1 on a desktop computer, blocking past web-surfing history that could influence results.”
The results were hard to ignore:
Google searches for “phones” virtually always began with three consecutive ads for Google’s Pixel phones. All 1,000 searches for “laptops” started with a Chromebook ad. “Watches” began with an Android smartwatch ad 98% of the time. And “smoke detector” led with back-to-back ads for internet-connected alarms made by Nest, a company owned by Google parent Alphabet. In all instances, the stores these ads pointed to were also owned by Alphabet.
When The Wall Street Journal presented its findings to Google on December 15, “many of the ads disappeared, including nearly all from Google’s online store.” When another analysis was conducted on December 22, Google-related ads were back in the top ad spot 19% of the time. The Wall Street Journal says Google would not comment on this “disparity.”
According to SEMrush, in the fiscal year ended May 2016, Google was bidding on 2.7 million search terms a month, making it the third largest advertiser by term volume behind retailers Amazon and Target.
Google claims that it has “consciously and carefully designed” its advertising to ensure that it does not impact other advertisers, but it’s hard to square that claim with the data and anecdotal reports from advertisers like software firm Bitrix, which says that between January 2015 and August 2016, the percentage of searches for CRM software its ads appeared in dropped from 24% to 14% despite the fact that it was spending 26% more.
A Google spokesman told The Wall Street Journal that increased competition from other companies like Microsoft and Salesforce were responsible, but Bitrix doesn’t seem to buy that explanation and it’s not hard to understand why: by August 2016, Google ads promoting Google’s cloud services were present in 70% of the CRM-related searches.
Not a new issue, but a new situation
Discussion around the potential conflicts inherent in Google using Google to advertise its own products and services is not new. Google tried to address the perceived conflicts in 2006, for example.
What has changed since then, of course, is that Google has a lot more products and services to advertise, so expect this issue to be the source of more controversy and perhaps even regulatory scrutiny.
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