Sometimes We Just Stick Our Hand In and Move Stuff Around

Presented by

Follow us: Mastodon, TikTok, Threads, Instagram • more
Follow Tod: Mastodon, LinkedIn, TikTok, Pixelfed • more 

In This Issue:

🔍 Google admits it quietly hiked ad reserve prices, raising concerns among digital ad buyers

📲 TikTok enhances its ad metrics, offering insights into attribution data

📺 Microsoft now lets you run ads on Hulu, HBO Max, and other video sites

🔒 Meta extends its verification program to businesses for a price

🛍️ WhatsApp launches 'Flows' to allow for in-app appointment booking, etc.

💳 Luxury consumers show renewed interest in spending

📦 Amazon plans to recruit 250,000 employees for the holiday season — way more than last season

👗 H&M joins the retailers charging for online returns

 📊 Reddit releases a best-practices advertising handbook

 🛒 Amazon unveils a new cashierless (and cameraless) tech using RFID for in-store checkout

Google Exec Admits to Adjusting Ad Auction Prices to Meet Corporate Revenue Targets

The digital ad market is supposed to be somewhat self-leveling. When there’s more demand, the price goes up. Less demand, the price goes down.

What’s not supposed to happen is the platforms arbitrarily raising prices in the auction to meet their own corporate revenue targets.

But that’s exactly what Google is being accused of doing.

And the company making the accusation? Google itself.

In its anti-trust trial in the U.S., Google ad executive Jerry Dischler told the court that Google “frequently” tweaks the auctions — increasing the cost of ads and reserve pricing by as much as 5% on average and sometimes as much as 10%.

That might sound like a small bump, but for many campaigns, that’s the difference between profitability and loss.

Worse, when to asked to explain why Google did this, he said it was because they were told “to get creative so we could meet our quota.”

He also said that Google doesn’t usually tell advertisers about pricing changes like that.

Exclusive Analysis from Jyll Saskin Gales

Jyll spent six years at Google and today runs a respected Google Ads training program.

TOD: Take us through the basics here. How does the auction actually work?

JYLL: The way the Google Ads auction is supposed to work is a little different than a normal auction.

If you're bidding for something on eBay, for example:

1. You bid

2. Then, someone else bids

3. Whoever is willing to pay the most wins and gets to show an ad

But the way it works on Google, it does take into account the price, but it also takes into account quality.

If you've ever heard of quality scoring on Google ads, this is what we're talking about. Google puts together the price you're willing to pay, and the quality of your ads, and uses both of those together to determine your ad rank, whether or not you get to show an ad, and where on the page you show an ad.

The higher the quality of your ads, the less you have to pay for the privilege of getting that click on the Google search engine results page.

TOD: This happens automatically, right? Advertisers don’t sit there like you might on eBay, wait for the other bidder to bid, then you jump in and raise it by a penny.

JYLL: Yeah, it's happening in milliseconds. And it's mostly happening through smart bidding now.

If you are using a smart bidding strategy, like maximize conversions, you're not saying “I want to pay up to $2 for this keyword or up to $3 for this keyword” For every single auction you enter, Google uses millions of different signals processed by AI, of course, to determine what you should bid in every single auction to maximize your conversions.

TOD: This Google executive was talking about “reserved pricing” being the the lever here that was being moved around. What is reserved pricing in the Google ad auction.

JYLL: Reserved pricing is the minimum amount you have to pay for the privilege of showing [your ad].

Let's say you are the only [advertiser bidding] — maybe it's for your brand name, and there is no competition. You don't just pay $0.01, you'll actually pay something — a nominal fee. And so they could increase that 5% to 10% and no one would really know.

You might see this in your brand CPCs, increasing slightly, but that's one place where there isn't any other competition, you're the only one eligible for whatever reason, or maybe they’re auctions that weren't previously monetized (like searches that previously had no ads), now they are going to start showing an ad there. That would be at that reserve price, which is a minimum price and something that always has been set by Google and not dynamic, the way an auction with multiple players at work.

And the reserve pricing is what this this Google ad executive had mentioned was one of the things that Google was manipulating.

TOD: I want to quote from a Bloomberg report this morning and get your thoughts on it.

TOD: Jyll, it's hard to not look at that as Google just outright lying. Am I wrong?

JYLL: You are not wrong.

As someone who worked at Google for six years and puts a lot of trust in the Google platform, this feels like a stab in the heart, hearing that read.

Because we're basically saying: Even though we have this auction system that we've made work beautifully over the last 20 years, sometimes we just stick our hand in and move stuff around, and don't tell people about it.

And this would not affect the vast majority of advertisers on Google.

If you work in Booking Holdings [i.e., booking.com — a huge Google advertiser), or Amazon, these are the kinds of companies that I wouldn't be surprised if they're spending billions a year on Google ads.

Right now, it's pretty shocking to hear that you're a top customer, and they're pushing down your ads — which means you're either losing a lot of potential revenue, or you're then having to increase your bids further and spend more to try to get back to that top slot.

I haven't seen this aspect reported widely. But this, I believe, really cuts to the heart of broken advertiser trust with Google, which is always an issue.

This really hurts it to have them saying ‘we specifically are manipulating our auction to punish our top spenders so they don't show up on top as much.’

TOD: This was said to have happened in the spring of 2019. You worked at Google in their ads division at that time. Did you feel any kind of pressure on meeting quota in your job?

JYLL: There's always pressure to meet quota — a large percentage of compensation is dependent on hitting, or not hitting, quota.

I was an international growth consultant in large customer sales. So basically… the kind of businesses that spend millions of dollars a year on Google.

We did have sales quotas. And some of the more junior roles, your compensation from quota could be like 35 to 40% of your base salary. If it's on target, by the time I left, I believe I was at 70%. So if I hit my quota, each quarter, I make an additional 70% on my base salary.

TOD: Wow.

JYLL: It's a huge portion of compensation.

Google does try to make it fair among Googlers. So if one quarter, you know, we really missed on quota, they kind of go a little easy on you next quarter.

They try to make every Googler hit 100% on target by the end of the year.

But of course, you want to exceed quota…. The more you exceed quota at Google, the more you get this “multiplier.”

If you hit — I forget if it was 120% or 140% — of your quota, you end up getting what's called “double bonus.”

So there are absolutely incentives to do so monetary incentives. It goes into your performance reviews.

The downside, of course, is if you do really well on quota, they give you more quota next quarter, and that year on year growth, because Google really cares not just about the hard millions and billions that you're earning for the company, but also that growth, that you're getting that double digit growth out of these really large clients.

TOD: This feels like a huge story to me — one of the biggest stories so far in the year when it comes to the ad platforms. Am I overstating it? And what effect do you think this will have on the average advertiser? Will it change the trust enough for most brands to have second thoughts about advertising on Google’s platform?

JYLL: I don't think you're overstating it at all. I agree that this is huge news.

In my opinion, the piece you mentioned from the Bloomberg article about arbitrarily switching which slot people appear in — that is truly shocking, and just not the way a fair system is supposed to work.

Will this affect the vast majority of advertisers either in their advertising or their perceptions of Google? No.

We have to remember the vast majority of Google Ads advertisers are not people who sit listening to a marketing podcast, right?

TOD: What now?! (laughs)

JYLL: They're small businesses, they're sending their $10, their $100.

But I think for the larger, more sophisticated advertisers, who are of course listening to this podcast and very tuned into these sorts of things, there's always been a bit of a trust issue there — especially with more and more AI leveraging the platform.

But this is like not a platform change. It's not AI. It's not saying “Trust our smart bidding or follow recommendations.”

It's someone from Google admitting ‘we have not been playing fair with your money.’ And of all the scandals Google Ads has had over the past couple of years, that’s a really hard one to fix.

So I think people will still keep spending on Google ads. But I would not want to be working on a Google Ad Sales team right now working with large customers, especially Amazon or Booking who are mentioned in the [Bloomberg] article.

TOD: No kidding. Very interesting. We’ll watch it closely with your help. Jyll. Thank you and see you next week.

JYLL: See you then.

Jyll Saskin Gales is our Google Ads correspondent. You can learn more about her Google Ads training program at our affiliate link at b.link/gatraining 

For the record, we, like about 1000 other news organizations, reached out to Google for comment, and did not hear back by deadline.

More than 60% of Google’s corporate revenue comes from ad sales.

In the year following this alleged price manipulation, search ads earned the company more than $100 billion dollars.

TikTok Launches Attribution Analytics

A week after complaining that traditional last-click attribution doesn’t credit their platform enough, TikTok this week launched new Attribution Analytics it says will better show the connection between brand exposure and conversion.

The first feature is Performance Comparison, which will let you visualize conversions across different time windows. TikTok has said it feels a 28-day measurement period gives it more credit for successful ad campaigns.

In addition to conversion tracking, you can also see numbers from further up-funnel — like View Content, Add to Cart, and Initiate Checkout.

You’ll be able to find this inside the TikTok Ad Manager.

How to Get Your Video Ads on Hulu and HBO Max

There are changes to Microsoft’s ad platform to report as well — the company today announcing a new video ad offering on its network: Video and Connected TV (CTV) ads.

Yes, CTV ads — meaning you can upload your video ads to the Microsoft ad manager, and they’ll appear on sites like Max, Hulu, and Bloomberg TV, as well as within web players on news sites the Huffington Post, People, and the Wall Street Journal.

There are also cross-channel frequency controls, meaning you can set a maximum number of times you want to reach the same person with your ad, regardless of which video site they’re on.

The video ad space is, of course, a hot space right now — eMarketer says they expect U.S. programmatic video ad spend will grow about 30% between now and 2025.

Meta Begins Rollout of “Verified for Businesses”

Meta announced today it is expanding its paid blue checkmark program to brands. Until now, it’s only been available for individual creator accounts.

Like its verification for creators, Meta’s “Verified for Businesses” program gets you the checkmark, better placement in search results, and inclusion in a feed carousel called “Recommended Meta Verified Businesses.”

The cost is $22 per month per Facebook page or Instagram account. By comparison, that’s about $10 more than the individual creator version. It’s $35 to bundle the two together in the business package.

Paid verification is said to be coming for WhatsApp too, but prices weren’t disclosed.

I guess that’s a deal, when you compare it to X’s equivalent, which is $1000 a month, plus $50 a month for each affiliated account you also want that checkmark on.

Still, some people who have paid for verification say it’s not all it’s cracked up to be. The news web site The Information yesterday reported on one business owner who paid for verification, partly because the promise was she’d be able to get human support if she needed it. Then, her account got deleted. She wasn’t able to access support through her account because, well, it had been deleted. And she couldn’t find any of these humans that the Verified program promised.

Our own experience was also disappointing. As a test, we tried to verify our own account. First, it took our money, then it rejected our application, and never gave our money back. I think we tried to appeal through Apple, but to be honest, I’m still not sure if that worked.

Anyway, Meta Verified for Business will start rolling out in the next few weeks.

WhatsApp Gets In-App Workflow Wizards

Speaking of WhatsApp, the company today announced an upgrade to its shopping workflow with a new system called Flows.

This will let people do things like select a seat on a flight, or book a hair appointment, right within the app.

So far, Meta is not charging merchants for using Flows — apparently this will be covered by the existing costs of having conversations with customers.

They’re also adding some new payment partners for checkout in India — where WhatsApp has more than 500 million users.

In Brief

The retailer Saks reports that 58% of luxury consumers plan to spend the same or more on luxury items soon, a rise from 53% in the previous survey. This is the first increase since May of last year. read more

Amazon plans to hire 250,000 employees for the holiday season, a significant increase from last year's 150,000. The jobs offer an average hourly wage of $20.50. read more

H&M is now charging UK customers a £2 return fee for online purchases. They say it’s to help reduce costs and carbon emissions from mass returns. In-store returns and H&M members are exempt from this fee. read more

Reddit has released a new "Retailers’ Advertising Handbook" offering tips on effective Reddit marketing. The guide covers best practices for Reddit ads, targeting options, and creative strategies. read more

And finally…

Amazon is dropping the cameras from its Just Walk Out technology that lets people walk into a store, take whatever they want and leave, and have Amazon’s tech bill them after.

Until now, this has relied on dozens of cameras and sensors mounted in the ceiling, making stores look more like the set of Big Brother.

This upgraded version uses RFID tags to track your purchases as you leave the store.

This technology is mostly in testing right now, though the company says it’s fitted 150 stores with the camera version so far.

Some links in this newsletter may provide affiliate revenue to us.

This newsletter is powered by Beehiiv.