Search engine marketing company Clicks2Customers has raised concerns about Google creating a conflict of interest between companies that run Internet search campaigns on behalf of their clients and those doing it directly.
Jonathan Gluckman, Clicks2Customers new business development director, says: “A key question for us and the industry, as a whole, is: Does Google just advise agencies and customers using aggregated data to help develop campaigns, or are they directly involved in running campaigns?”
Google country manager Stephen Newton's response is: “Our relationship with agencies is important; we see them as partners and a lot of Google business is facilitated through them.”
Newton notes that, in addition to working with agencies, Google runs campaigns directly on behalf of clients.
“Whether working through agencies or directly with clients, our goal is to serve clients' best interests and help them achieve the best online marketing results,” he explains.
Gluckman says since Google opened its South African office two years ago, it has done good work in raising search engine marketing awareness within local companies. However, he adds that it appears to be taking on clients directly, and this will develop a conflict of interest as it becomes the market player and the market maker at the same time.
Gluckman uses the analogy of a stock exchange to explain his point. “A stock exchange is a market where one buys and sells shares, and this is done through a stock broker, not directly through the exchange.”
He says there are indications that Google is taking on clients directly, or using advertising agencies that have no search engine marketing skills in-house and running the campaigns for them.
“The whole point of search engine marketing is to conduct the campaign in the cheapest manner possible. We have a policy of ensuring our clients only pay us for the actual sales generated from those campaigns. However, the objective of Google is to maximise the ad spend and if they are running the campaigns themselves, then how does a client actually know if they are getting true value for money?”
Google's search engine revenue model is largely based on companies bidding for and then paying rates for keywords that are used most commonly in Internet search. The more commonly used a keyword is, the higher its relevance to search is, which brings down the price per click. Keywords are, therefore, central to an Internet search campaign and are jealously guarded by the agencies that conduct them.
This prompts Gluckman to ask, since Google deals directly with clients, what stops it from taking Clicks2Customers' clients' keywords and, when setting up a competitor's campaign, using those keywords and ensuring a price war with a result of diminishing returns for Clicks2Customers' clients and generating more revenue for Google?
Internet-based advertising has been growing during the global financial recession. In June, the UK for the first time saw Internet advertising overtake cinema advertising in terms of revenue.
While SA lags far behind this, mainly due to the fact that only around 10% of the population has regular Internet access, the importance of the medium as a marketing tool is growing.
Gluckman's conflict of interest point is echoed by Entelligence CEO Sean Riley, whose company is awaiting a decision by the Competition Tribunal on his allegations that Google has unfairly poached a client from it.
“Google's defence against us is that they are not dominant in the market. However, the fact is that they are,” Riley says.
Entelligence expects the competition authorities to make a final finding on the issue early next year.
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