follow awadallah at http://twitter.com

October 21, 2005

Wall Street is buying the Google Growth Lie.

Posted in Category: Work — amr @ 8:30 pm | link | | comment (0)
Share

The revenue increase Google saw yesterday is not natural growth, and frankly I am totally surprised at how Wall Street re-acted. I am even more puzzled that Eric Schmidt said that he also was surprised at how well Google did in this typically slow advertising quarter.

Well, I know, and he knows, that the revenue increase is primarily due to two things that Google launched in Q3:

1. Three sponsored results above the web results (instead of their historical 2). I blogged about this here:

http://blog.360.yahoo.com/blog-zwwMZhwwdrSyXD8-?p=121

2. Variable-Term-Pricing (VTP). This is a very evil (but clever) change that Google made last Quarter. Instead of letting keyword pricing be a free market and allow the bidders to decide the CPCs, they now are pricing their inventory, and enforcing a minimum-bid to participate in the market for each individual keyword (if you do not pay that minimum, they will not even show your ad). You can read about that one here:

http://www.pbs.org/cringely/pulpit/pulpit20050922.html

Specially the quote:

“It’s like Vegas,” said my friend. “They want you to lose. Try to game the system and they cut off one of your legs.”

That said, unless Google launches any new tricks in Q4 (and I did not see any yet), I expect their Q4 growth to be inline with the overall market (i.e. more natural than super-natural). For now, let them celebrate, but come January, I predict a big disappointment (unless they launch any new tricks, e.g. show sponsored ads at bottom of results page, show up to 4 ads above the web-results, increase the min-bids for keywords, etc)
– amr

Share

• • •

No Comments »

No comments yet.

Comments RSS

Leave a comment

Powered by: WordPress • Шаблон: ADMIN-BG • 29 queries. 0.296 seconds.