Despite the “moon shots” under development by its Alphabet decision, the Google organization still makes its living through advertising. According to its most recent earnings report, Google grew 8.3% this quarter, largely driven by search ads. However, the company is looking to mobile for new sources of ad revenue, and that’s not working quite as well (yet). According to the Wall Street Journal,
The search for new ad revenue comes with a downside: Users are seeing more ads, but advertisers are paying less for them. While ad clicks increased 36% in the quarter over a year ago, advertisers’ prices for those ads fell 15%. Both figures were the highest in at least three years.
The gap between the prevalence of ads and their prices was previously driven by the increasing share of mobile searches, because advertisers pay less for mobile-search ads than desktop ones. In the fourth quarter, the company attributed the gap to the growing share of YouTube ads, which generally earn less than ads shown above Google search results.
Google has also tried to preserve its reputation by culling out bad ads. Google said it blocked 1.7 billion bad ads in 2016, twice as many as in the previous year. That’s a pretty shocking comment on the state of ad fraud in our industry.
Ads that are misleading, inappropriate, promote misleading products or trick users into installing harmful software are generally deemed “bad,” Google said. The company also blacklisted ads that were once considered acceptable in 2015.
Payday loans that carry an annual interest rate higher than 36%, for example, were banned from appearing as Google search ads last year. The company was applauded for its move, as the measure was expected to cost Google millions in revenue. Yet digital loan sharks quickly adapted to Google’s newfound rule, as many loan companies now offer payday loans with an APR as high as 35.99%.
And there’s a new genre of “bad” ad called “tabloid cloakers.” Tabloid cloakers are misleading ads that feature “news” on their surface, but when clicked lead the reader to an unrelated selling message:
One example the company shared was about an ad showing Ellen DeGeneres and aliens. However, consumers who click on ads like this are taken to a site selling weight loss products, for example.
Google said it suspended 1,300 accounts for tabloid cloaking last year. In one sweep, the company took down 22 accounts that were responsible for displaying 20 million cloaker ads over a one-week period.
Can you imagine being Google and having to keep up with all these insidious trends? And that’s before the company gets to dealing with fake news sites. We’re still a long way from a clean supply chain.