[HN Gopher] Google takes two-to-four times as much as the fees c...
___________________________________________________________________
Google takes two-to-four times as much as the fees charged by rival
ad networks
Author : cwwc
Score : 162 points
Date : 2021-10-22 14:22 UTC (8 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| sam0x17 wrote:
| I think someday the regulation of this (i.e. government forcing
| Google's fees to be no larger than X%) will be Google's downfall
| ;)
| dasKrokodil wrote:
| There are rival ad networks?
| com2kid wrote:
| Facebook ads are really popular, ~84B in revenue.
|
| I believe Microsoft still operates a large ad network.
|
| Taboola is everywhere.
|
| Amazon has a huge ad network as well, ~14B in revenue, though
| obviously limited in terms of what is advertised.
|
| Verizon Media also apparently operates a sizable ad network.
| JAlexoid wrote:
| There's quite a lot of networks.
|
| It's not a complex business to start, you know.
| celestialcheese wrote:
| Off the top of my head, googles Display Product has quite a
| few. - Magnite (Formerly, Rubicon) - Xander (Formerly,
| AppNexus) - GumGum - Index Exchange - Facebook - Sovrn - Unruly
| - Sharethrough - Triplelift - OpenX - Amazon A9 - Conversant -
| Yahoo (AKA Gemini) - Outbrain - Revcontent - Medigo
|
| That's most of the bigger players, but there are hundreds. Many
| aren't worth the time, and are spun up when one rep takes some
| budget from a large brand and does "Direct" deals and tries to
| start their own shop with "Guaranteed CPMs". It's all bullshit
| Jensson wrote:
| The publishers of this article owns a rival ad network. The
| difference between PR pieces and news is getting thinner.
|
| https://newscorp.com/2017/12/05/news-corp-launches-news-iq/
|
| (from putlake's comment above)
| franczesko wrote:
| If you have monopoly, you can set up prices anyway you want.
| Lamad123 wrote:
| Ads they show only to people who are going to buy that thing
| featured in the ad anyways, or ads they keep showing you weeks
| after you buy something!!
| criddell wrote:
| Alternate take: advertisers are willing to pay 2-4x more for
| Google ads.
| dantyti wrote:
| > The share the Alphabet Inc. subsidiary takes of each
| advertising transaction on its exchange--a marketplace for ad
| buyers and sellers--is typically two- to four-times as much as
| the fees charged by rival digital advertising exchanges
|
| If I understand this correctly, this is about auctions/exchanges
| (middlemen which have little to do with ad targeting and
| quality), not ROI, as some commenters have suggested.
|
| Correct me if I'm wrong, my adtech knowledge is limited.
| whimsicalism wrote:
| I believe that it is the exchange that does the matching to
| optimize for revenue.
| nova22033 wrote:
| So there are rival ad networks that charge way less than google?
| How does this fit with the anti-trust narrative? The customer
| clearly has choices. You're entitled to a choice...you are not
| entitled to the ad network with the most reach.
| pessimizer wrote:
| How does it fit with the pro-trust narrative? A single company
| controls most of the market, yet prices haven't fallen.
| dantyti wrote:
| might have something to do with Alphabet's subsidiaries winning
| their other subsidiary's auctions
| whimsicalism wrote:
| I agree that this is problematic - although in principle
| since they are paid by the click they would be incentivized
| to direct the bids towards the site most likely to generate a
| click.
| Retric wrote:
| No, Google receives 100% of the profit from directing
| traffic to their own properties. However, they receive
| whatever percentage their competitors chose to allocate to
| advising which can't be 100% while maintaining
| profitability.
| JAlexoid wrote:
| For an ad network it's a B2B market.
|
| You're the person seeing the ad, but you're not party to the
| transaction.
|
| Websites often run an auction at request time. The ad networks
| are actually competing, even if you get targeted by Google
| exclusively, personally.
| prepend wrote:
| I think it fits the anti-trust narrative in that they are
| charging above the "natural" price because of their market
| dominance.
|
| A bit part of US antitrust law is harm to customer. And higher
| prices is a harm to customers.
|
| I assume the argument is something like "Google is monopolizing
| search and charging higher prices as a result"
| tech_tuna wrote:
| Still their cash cow. They may have been the first company to
| build a useful internet search engine but they are also mostly an
| advertising company.
| ksec wrote:
| I am not trying to defend Google. But The headline and even the
| article completely ignores quality, value and click rate?
|
| Assuming people who dont know how ads industry works all they see
| is an article about an evil monopoly over charging.
| gerash wrote:
| WSJ takes ten times as much the subscription fees as their rivals
| kuroguro wrote:
| Reminds me of a local story about contraband cigarettes in the
| central market - the sellers had set up agreements on who cans
| sell where. By far the best spot was near the entrance since more
| traffic = more sales. The guy selling there was charging ~2x more
| and still got more sales than anyone deeper inside.
| everydaybro wrote:
| nice story
| epivosism wrote:
| This way of writing headlines can be exploited.
|
| situation: A has 0% take rate, B has 1% => "B charges infinitely
| more than A"
|
| Perhaps better in that case would be just stating the facts "A
| takes 0%, B takes 1%" or "A leaves you 100% , B leaves 99%".
|
| The point is, from a consumer pov the take rate actually doesn't
| matter as much as the opposite, the "keep rate". And just adding
| in multipliers is so easily exploitable.
|
| Not defending google, just as written the implied math has
| multiple interpretations, some okay some bad.
| mdavis6890 wrote:
| Good argument in general, but doesn't apply here. There's no
| keep rate, in the same way there's no "keep rate" when you buy
| a hamburger. It's just a fee to serve adds, and this article
| says that the fee is 2-4x with Google. There's nothing to
| "keep" in this sense.
| soared wrote:
| I can't read the article due to the pay wall, but this makes
| sense. If you own the software to buy, the software acting as the
| intermediary, and the software to sell, you'll make 3x more than
| a competitor who only owns one piece.
|
| (I don't use the products and I'm sure the names have changed,
| but dv360/dcm, whatever they call their exchange, and dfp)
|
| I'll leave the morality/legality/etc of as an exercise for the
| reader.
| kps wrote:
| > I can't read the article due to the pay wall
|
| WSJ charges two to four times as much as my local paper.
| HillRat wrote:
| Yeah, it's worth noting that, roughly speaking, advertising
| supply chains provide 51% of spend to publishers and 7% to
| agencies, which means the middle of the chain (supply/demand-
| sides, DSPs, analytics, etc.) consumes 42%, or what GOOG
| allegedly takes at the high end. Given that they represent a
| fully-integrated supply chain, this doesn't seem unreasonable,
| especially given how many competing ad networks are just bubble
| gum and duct tape.
| disgruntledphd2 wrote:
| So, if they have access to more information than their
| competitors such that they can maximise their own chances of
| winning proifitable auctions, it's problematic as its unfair
| competition.
| HillRat wrote:
| I think the issue is more around GOOG allegedly using
| illegal tactics to keep people inside their integrated
| supply chain -- e.g., trying to discourage header bidding.
| whimsicalism wrote:
| Making better decisions because you have done a better job
| collecting and analyzing info is not "unfair competition" a
| priori.
|
| I think there are much more compelling arguments around
| regulating Google.
| prepend wrote:
| It's unfair if only Google is capable of collecting the
| data.
| JAlexoid wrote:
| Capable and able are not the same. You can start
| collecting that data right now. It's also not a
| particularly complex task to collect information about
| people's habits.
|
| I'm not capable of running a mile in 4minutes, that's not
| unfair for me to loose to someone that trained hard to be
| able to run that mile in 4 minutes.
| disgruntledphd2 wrote:
| Yeah, and I _believe_ (based on past reporting) that this
| may be the case. They are essentially front-running other
| advertisers.
| doomslice wrote:
| They sometimes (often) have "last look" -- so a bunch of
| companies compete to win an auction against each other,
| and then Google gets a chance to win against the winner
| of those. This means that Google can essentially maximize
| the profit they receive if they have a better bid,
| because they know exactly how much fee they can take
| without losing. Everyone else on the other hand, has to
| compete with _lower_ fees so they can win that first
| round of the auction.
| whimsicalism wrote:
| If that's the case it is blatantly unfair. I don't think
| it is any longer though.
| liveoneggs wrote:
| don't forget about owning the consumers with -- browser
| (chrome), the platform (android/chromeOS), google analytics
| tracking data, and nest devices with microphones/cameras, and
| who knows what else they buy from 3rd parties
| putlake wrote:
| It should be noted that the WSJ is owned by News Corp, which runs
| an ad network of their own for their properties. This launch
| announcement even talks about how they combine their first party
| data about their subscribers with data from Mastercard Ad
| Intelligence to "create bespoke marketing and advertising
| solutions" : https://newscorp.com/2017/12/05/news-corp-launches-
| news-iq/
| ocdtrekkie wrote:
| While many behaviors of big tech monopolies are hard for laws
| from the Standard Oil era to wrap around, this is one of the most
| straightforward issues in monopoly law: Lack of competition and
| internal collusion between products means they can charge extreme
| and excessive markup.
|
| While it might be hard to break up any given monopoly that offers
| "free" products with existing laws, this is the avenue that is
| straightforward.
| NAR8789 wrote:
| Devil's advocate: as a consumer, google's ads seem 2-4x _higher
| quality_ than ads out of other networks.
|
| I'd be curious whether the conversion rates on the marketing side
| back up my gut instinct on the consumer side. Any marketers here
| with numbers?
| eitland wrote:
| Measured by how much I've bought by clicking on Google ads vs
| by clicking on Facebook ads, Facebook ads are better by a
| couple of orders of magnitude at least I think (I'm actually
| not sure if I ever bought something based on a Google ad).
|
| Add to this how little time I use on Facebook vs Google
| properties and how I used to love Google and despise Facebook
| it becomes even worse.
|
| Maybe Google just failed spectacularly for a decade and
| everyone else had fantastic experience but I doubt it.
| short12 wrote:
| Absolutely agreed. Facebook ads are mildly targeted (and
| terribly inaccurate) and then incredibly repetitive. But they
| are leagues ahead of Google ads which are just complete shit
|
| It's amazing their incredibly terrible advertising actually
| funds a huge breadth of services. Marketing departments
| really are that dumb I guess
| otabdeveloper4 wrote:
| Google is a monopoly, they don't have to be good.
| ribosometronome wrote:
| I've found ads on a platform like Facebook, Instagram,
| Snapchat, Youtube, etc considerably more blatant/similar to
| traditional ads compared to an ad when searching using
| Google. It's easy to miss the "Ad" text next to a top result
| on Google and click a relevant ads without realizing it.
| Meanwhile, buying artisanal chocolate at 2 am on Facebook
| feels very much like, "Ok, you got me this time Facebook
| ads!"
| partiallypro wrote:
| I don't think I've clicked on a Google ad in a long long time,
| but I get ads on Facebook and Instagram that on occasion lead
| directly to a purchase. I'd say Instagram being the most
| frequent, especially for clothing.
| kposehn wrote:
| Marketer here.
|
| Numbers: low nine-figures spent over the last 7 years or so on
| RTB display and GDN/YT
|
| Outcome:
|
| * Google on display tends to be much higher quality than most
| major DSP platforms. Incremental ROAS on Google's non-search
| ads tends to be better, with YouTube being the best performer.
|
| * When you use GDN and YouTube, you are bidding on a much more
| accurate set of behaviors and first part data _in addition_ to
| the content matching, which is second to none for large scale.
|
| * One of the better audience types Google gives you access to
| is search intent. You can target people that have exhibited
| search behavior that indicates their interest or likelihood to
| purchase what you have on offer
|
| * Despite these advantages, like any platform Google can also
| have major quality issues if you do not manage your campaigns
| well and click fraud can happen easily (thankfully in my
| experience they're decent at detecting and refunding fraudulent
| spend)
|
| Edit: I would caution people commenting here to not use their
| own behavior as examples of how an ad platform is/isn't
| effective. HN users tend to be significant outliers vs. the
| general population.
| nickff wrote:
| > _" Edit: I would caution people commenting here to not use
| their own behavior as examples of how an ad platform is/isn't
| effective. HN users tend to be significant outliers vs. the
| general population. "_
|
| Self-reported behavior is also extremely unreliable, and I
| would take all their comments with a grain of salt.
| prepend wrote:
| My experience is different and I find Google ads as
| (in)effective as other ad networks.
|
| As a consumer I certainly wouldn't think they are 2-4x as
| useful.
|
| I think their price is based on the fact that they have a near
| monopoly on search and lock-in with search on android.
| jsnell wrote:
| > I think their price is based on the fact that they have a
| near monopoly on search and lock-in with search on android.
|
| But this has nothing to do with search ads. It's about
| display advertising on 3rd party sites.
| elliekelly wrote:
| But their search monopoly is one of the ways they build
| such a robust and accurate profile of who they're serving
| each ad to.
| jsnell wrote:
| But the thesis of the GP is that their ad targeting is no
| better than the competetitors, so any price discrepancy
| must be due to foul play. Are you disagreeing with that,
| and saying that the ad targeting is actually materially
| better thanks to this data?
| reayn wrote:
| Just curious, what constitutes the "quality" of an ad for you?
| I've never really thought about ads that way; for me it was
| just whichever service can stuff their name down your throat
| the most often was the most successful.
| colechristensen wrote:
| * not a scam, virus, or other lazy attempt to manipulate me *
| not visually obnoxious * represents something that somebody
| actually wants * represents something i don't know about and
| might have interest in
|
| Some ads are legitimately quite useful, others just abusive,
| lots in between.
| MattGaiser wrote:
| Ads for actual products and services instead of fake download
| buttons and penis enlargement pills.
| vkou wrote:
| You're being downvoted, but it's true.
|
| Move away from the big-boy ad networks (The likes of
| Microsoft, Google, Facebook), and there's a long tail of
| networks that will happily run the worst ads.
| Unsurprisingly, a lot of legitimate companies aren't super-
| keen on having their ads run next to ones for fake download
| buttons and penis enlargement pills.
| milesvp wrote:
| You know it when you see it...
|
| I worked in the newspaper industry on the web side for many
| years. Remnant ads are the worst. These are the ad networks
| that you use to fill up the last of your ad spots that you
| weren't able to sell directly. They can fill volumes of ad
| spots for pennies per 1000 ad impressions. These are pure
| trash. Ignoring the common problems with actual virus
| payloads that they might try to inject, these are the most
| obnoxious, awful ads. They often have big animations with
| flashing background and jarring colors. They are full of
| click-bait titles. They are the reason people install ad
| blockers. I might not be able to tell you what a quality ad
| looks like, but I can tell you the other end of the spectrum,
| and it is pure filth.
| JAlexoid wrote:
| Most relevant ads, with least interference.
|
| Compare to most small news sites, that have top/bottom
| banners, inline ads and the curtains.... I hate the curtains!
| summerlight wrote:
| There's pretty complicated dynamic regarding ad quality
| because each participant (users, advertisers, publishers etc)
| have different goals and ad network needs to balance it.
|
| For an advertiser side, one possible, measurable metric is
| advertiser value per spending money. Value can be defined by
| advertisers pretty arbitrarily but you can think it as
| something like how much money you earn from ad conversions.
| Of course, this is _very_ hard to measure accurately, massive
| ad network like Google has some advantages though.
|
| But note that this is just one of possible metrics, there are
| hundreds of metrics ad networks want to improve and some of
| them are conflicting each other by definition. And some of
| them don't even have an objective way to measure so still
| depending on user study.
| treeman79 wrote:
| Was in adtech for awhile.
|
| Making sure clicks are real is a massive challenge with many
| ads networks. There are a lot of tools that help in sure
| spambots aren't stealing all the ad money but they also slow
| down serving of the ads and sometimes they mess up and block
| things that shouldn't.
|
| We've had campaigns where we had to allow more spambots
| simply because the client couldn't spend enough money, they
| were willing to waste more to get better reach.
|
| But most clients absolutely love the results when you have
| really good filters in place. Very low spend and good lead
| generation.
| [deleted]
| dillondoyle wrote:
| I buy political ads. Probably spent low middle double digit
| millions over last 10 years.
|
| Facebook has the best direct response ROI (e.g. a donation, a
| volunteer, a tracked conversion to voting).
|
| I used to be able to get > 100% ROI immediately but with iOS
| changes it's becoming hard to impossible. I think FB will
| become more of a brand ad and loose a lot of app install or
| direct to consumer business.
|
| Those are what most people consider relevant, for instance i
| get a ton of athletic shorts ads after I hover on one (usually
| because they use sexy images lol...).
|
| Google has great DR ROI for search, though if your website is
| already #1 is that valuable? Big brands have to pay so their
| competitor doesn't get the slot though.
|
| Google video, e.g. YouTube is very high quality and low CPMs
| compared to say Hulu and FB video 'view optimization' sucks
| like they count a 3 second scroll pass and the total complete
| watch % are absolutely tiny.
|
| If you spend big (like 10k a day i think) you can access
| google's surveys which show a good amount of recall.
|
| I've done my own surveys I built mobile survey interstitials
| and retarget people who watched video ads. Generally see a few
| point % bump in head to head voting (e.g. vote candidate X over
| Y) and actually a really high amount of recall candidate names
| with very few picking the fake spoiler. Again though with iOS
| this becomes hard/impossible.
|
| Stories ads are valuable to me I love a digital native ad that
| fits the format.
|
| Open market RTB video is mostly shit. Unless you do a kind of
| hybrid called a private marketplace deal (and a lot of other
| acronym buzz stuff) which gets you the high quality inventory
| but it's just an easier way instead of reaching out to each of
| the sites individually. Most websites are either auto spam
| content generation or layer so many auto play videos with sound
| off you're just wasting money. And they can lie in their bid
| saying it's a large size or audio on. Have to then spend $ and
| time on fraud prevention.
|
| Open market desktop display ads (banners) are scraping shit off
| the floor usually IMHO. And then open market stuff like Taboola
| or when a website puts a link farm at bottom of page are like
| rectum licking in the scale of quality, to extend this gross
| metaphor.
|
| Snap/twitter are interesting but haven't provided a ton of
| audience/value for me in my campaign audiences. Twitter is cool
| like targeting specific handles - havent done it in a while
| maybe not able to anymore with iOS idk. Snap is cool to try and
| get younger people IMHO.
|
| Mobile interstitials can be valuable. I've built fun 'playable'
| interactive ads but I don't know of any other campaign or
| political vendor who has done something that is truly mobile
| native. They mostly just have static banners.
|
| examples for game install ads they show previews that are
| playable. I like to think of interactivity that works on mobile
| to pull a voter into the ad experience. Twitter is selling
| mopub maybe? That's a higher quality network for this
| inventory.
|
| Connected TV is great (a bunch of acronyms and
| definitions/sources, but basically anything steaming to a tv).
| Though it's insanely expensive during the election because all
| the TV buyers are fighting to buck viewership trends and
| selling campaigns equivalency - which is fairly valuable.
|
| all the other corporations in the world are spending more on
| digital as broadcast TV dies but the incumbents in the
| political space have too much power and money at stake to
| follow the eyeballs. Most only spend like 15% on digital which
| is INSANE to me. A 'good' campaign i've never seen spend more
| than like 35%... IDK maybe bloomberg got to over 50% which is
| where it should be if you includ CTV.
|
| TV people usually win because historically the TV vendor is the
| main consultant of a campaign setting message and direction.
|
| Instead of a digital firm buying/owning as a whole package
| which I think makes more sense.
| elliekelly wrote:
| > a tracked conversion to voting
|
| How do you measure this with reasonable certainty?
| soared wrote:
| Most major brands use multiple dsps, as performance is easy at
| low spend volumes and gets more difficult as you spend more.
| Dsps have access to unique inventory (through direct deals,
| pmps, etc) and unique technologies. For example, many companies
| use google, a vendor for mobile, one for ctv, one for
| retargeting, etc.
| dustymcp wrote:
| This its also dependendant of the country/region which ones
| perform better.
| mikequinlan wrote:
| https://archive.ph/dZVAu
| geodel wrote:
| Meanwhile, WSJ charges same as New York Post for their services.
| mijoharas wrote:
| Hahaha! I first read this as "two to the four" as in 2^4 == 16x,
| and I was pretty surprised that they could manage to sustain that
| kind of pricing!
| gremloni wrote:
| That's like saying an 18 wheeler costs more than an economy
| sedan.
| Justsignedup wrote:
| I would like to note...
|
| Google is the big bad competitor who you're trying to out-
| compete.
|
| You can't out-compete google without going below it in price.
| Everyone is desperately trying by charging FAR less.
|
| I just want to note, it doesn't necessarily mean google is
| overcharging, but that nobody can enter a well established market
| by charging more and providing no other real value.
| phkahler wrote:
| >> Everyone is desperately trying by charging FAR less.
|
| I thought these advertisers paid per-click, so in some sense
| Google and any competitor are fungible. Do people really care
| where their ads are shown so long as people click on them? Are
| the competitors placing ads in those crappy web sites that
| encourage accidental clicks?
| mdavis6890 wrote:
| Empirically they care - they are willing to pay 2-4x as much
| per impression through Google than others. Maybe they are
| correct to do so, maybe not.
| Mikeb85 wrote:
| > Do people really care where their ads are shown so long as
| people click on them?
|
| Of course they care. They pay per click, so they want the ads
| well-targeted so they have a high conversion rate, otherwise
| it's wasted money. Some ad networks literally scam businesses
| by placing ads everywhere so they get clicked on accidentally
| but of course this does nothing for conversion.
| whimsicalism wrote:
| For off-site ad marketplaces, yes.
| prepend wrote:
| I'm not aware of any industries where competitors charge 25-50%
| of the price of their main competitor.
|
| Perhaps temporarily, but search has been stagnant for 5-10
| years.
| rvba wrote:
| Google search seems to have regressed in quality.
|
| I guess those various people need to prove that they are
| needed so they make changes for the sake of doing something..
| and quality of the product declines.
| makeitdouble wrote:
| It happens on most industries where there is a de facto
| standard. MS Windows alternatives cost way less down to 0.
| Photoshop competitors also are cheaper. Same for Word
| competitors, GoPro alternatives etc.
| throwaway2048 wrote:
| Those have one commonality, they are all software platforms
| that are practical monopolies on their space.
| sofixa wrote:
| ISPs and mobile network providers? On the French market
| Orange (the former state monopoly) is usually 25%-50% more
| expensive, with less features, slightly better coverage (for
| mobile networks) and "enterprise support" than the 3 other
| competitors. Having them as an ISP makes absolutely zero
| sense - no IPv6, IPv4 gets rotated daily, shit hardware. They
| have time limited exclusivity for some places (e.g. if they
| put down fiber in a city, they have exclusivity over the
| network for 2-3 years and then anyone can use it), but that
| really doesn't explain their market share.
| penteract wrote:
| 25%-50% more expensive means that competitors are charging
| 66%-80% of the price.
| Jensson wrote:
| > I'm not aware of any industries where competitors charge
| 25-50% of the price of their main competitor.
|
| Alternative smartphone app stores charges way less than
| 25-50% of Google or Apple. You need to compare electronic
| markets with electronic markets like this, and the big
| players tend to take out extremely high fees in those areas.
|
| Although, I agree that charging high fees in these areas is a
| problem and should be fixed, but it isn't like this sort of
| thing is uncommon.
|
| Edit: As an example, Apple takes 30% cut. A competitor taking
| 7.5% cut would cost 25% of Apples app store.
| mupuff1234 wrote:
| It's actually hard for me to think of any consumer driven
| industry where that isn't the case: cars, fashion, fitness &
| tech all have brands that come with a significant premium.
| erhk wrote:
| I wish that HN users had to disclose their potential conflict of
| interest when commenting. If google writes your paycheck or makes
| up a portion of your portfolio I want to know that when you are
| defending them online.
| MaxDPS wrote:
| At the end of the day, ROI is what matters right? If Google is
| providing that much better of a service then people will keep
| paying.
| paulpauper wrote:
| Outside of Facebook-owned websites, twitter, and Google-owned
| websites, so few alternatives. This needs to change.
| Mikeb85 wrote:
| Pretty sure advertising on a billboard in Times Square is also
| more expensive than on a highway billboard in Nebraska...
___________________________________________________________________
(page generated 2021-10-22 23:01 UTC)