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Quality Score: The House Always Wins

Published: August 28, 2008

Author: David Rodnitzky

When Google announced “improvements” to Quality Score last week, the news was met with skepticism from search marketers. Andy Beal at Marketing Pilgrim summed it up best when he wrote:

This is my translation:
“A more accurate Quality Score” – more revenue for Google.
“Keywords no longer marked ‘inactive for search” – more revenue for Google.
‘First page bid’ will replace ‘minimum bid’ – more revenue for Google.

My reaction was no different. The part that annoyed me the most was the continual reference to “user feedback” as rationale for the changes, to wit:

Along the way, we’ve also received much helpful feedback from both users and advertisers. . . . Today, we’d like to let you know of further improvements we’ll introduce in the coming weeks — based, in part, on this feedback. . . Based on your feedback, we learned that knowing your minimum bid wasn’t always helpful in getting the ad placement you wanted . . . we’ll release these Quality Score changes to a very small segment of advertisers within the next day or two, so that we can gather feedback before launching to all our advertisers

DMConfidential.com had a similar conclusion, noting “Unlike other companies, though, when Google discusses better performance, they do so leaving out how they might benefit, as though the impetus for the change came only out of their concern for the advertisers and the users.”
Somehow I suspect that Google is being a bit selective about which feedback they are listening to and which they are not (like from the overwhelming majority of AdWords users who think Quality Score is horrible).
Beyond the Facade
The real problem with Quality Score – regardless of what ‘improvements’ Google makes to it – is that it is completely one-sided and almost totally opaque. After every Quality Score update, advertisers hold their breath and hope that their accounts on Google won’t be either priced out of profitably or out-right canceled. The end result, however, is always the same: more money for Google.
It strikes me that the Google-Advertiser relationship at this point is not unlike the relationship a casino has to its gamblers. Casinos are experts at making you feel like a ‘winner’ the moment you walk in the door. From the pulsating lights, colorful patterns and bustle of people, to the free drinks, cheap buffet, comp rooms, beautiful cocktail waitresses, and glamorous shows, a normal person can feel like a VIP in a casino.
Google does the same thing. The free t-shirts (and refrigerators if you spend enough), the bubbly young AdWords reps, free Webinars on how to improve your business, free tools like Website Optimizer and Google Analytics, and even the ‘credit adjustments’ when Google finds click fraud – all are designed to make advertisers feel special. And yes, when they make changes to Quality Score, it’s ‘based on your feedback’ – see, the advertiser is in control here!
Of course, in our heart of hearts, we know that the casinos and Google don’t particularly care about us – they care about our money. The free drinks only flow if you are gambling, and once you’ve maxed out your ATM limit, all those perks suddenly disappear. And of course, the casinos have the right to kick anyone out at any time for any reason. If you’ve read Bringing Down the House, you know that if you make too much money in a casino – even if you do it legally – the casino can ban you for life without cause. To put it another way, casinos ultimately only want you if you are a loser (which in their world, is a winner).
Google is no different. Google can use Quality Score to kick any advertiser off the system at any time for any reason. As with the casinos, no explanation is required or given, other than a vague nod to ‘quality.’ And what’s interesting about Quality Score is that the advertisers most impacted by it are the ‘winners’ – the people who have figured out how to make loads and loads of money on AdWords, either through arbitrage, or lead gen, or something else. Google is really acting the same way a casino does – if you get too good at winning, Google kicks you out.
Why Google Out-Casinos a Casino
What’s really fascinating about the Google and casino comparison is that there are actually two significant advantages Google has over the casinos. First, Google has no competition. Anyone who wants to buy search engine advertisements really has no choice but to use Google (since Google controls around 70% of the market). Google can kick advertisers around as much as it wants, and the advertisers have no choice but to grin and bear it.
Compare that to a casino in Las Vegas. There are dozens of options for consumers – if The Mirage treats you poorly, you can just get up and go next door. You can even gamble online if you want to, excluding physical casinos entirely. Competition forces casinos to consider the interests of their customers, or at least to balance the drive for profit with customer retention. Google has no such limitation.
Secondly, casinos are heavily regulated. Casinos must post the average payout of their slot machines, there are strict gambling rules for every game in the house, and multiple commissions at a city, state, and federal level monitoring their behavior. Casinos can’t change the game midway through (imagine if you made a 5 to 1 bet on a horse and during the race the casino reduced the odds to 2 to 1 because your house was winning), and casinos can’t discriminate against customers (imagine a casino that put up a big sign in the entrance that said “No African Americans Allowed”).
Google is almost entirely unregulated. Google changes the game at will and whenever they want. They can discriminate against specific advertisers or entire classes of advertisers at their sole discretion.
2 + 2 = 5
In sum, Google has totalitarian-like control over their revenue. They control who advertises and how much they pay. If Google says that two plus two equals five, advertisers can only agree. Unlike other industries where dominant market share is regulated by anti-trust laws, Google has thus far escaped any scrutiny by federal agencies. Enjoy the free buffet friends while it’s open, Google might take your plate away at any time.

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