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Google vs AdWords Abuser

Philipp Lenssen [PersonRank 10]

Thursday, March 13, 2008
16 years ago2,121 views

Financial Post has a story on a big "search arbitrage" company which went downhill and had to lay off a lot of people (http://www.financialpost.com/magazine/story.html?id=324817). They had created a network of content sites which were showing ads. Then, they were buying AdWords for those sites. When people clicked on the AdWords, and then clicked on their own site's (Yahoo-based) ad once more, they would make money whenever the AdWords price was cheaper than the revenues from their own ads. According to Financial Post, that company, Geosign, made $100 million per year in revenue from this slightly spammy approach.

<<Meanwhile, [founder and chairman Tim Nye] began to run Geosign like his version of a California dot-com at the peak of the investing craze in the late 1990s. He brought three Segway Personal Transporters into the office. "They didn't make any sense at all given the size of our offices," says one former employee. "But we used them anyway." Wolfgang Puck gourmet coffee makers were soon introduced, free Perrier abounded and rumours circulated that staff lunches would soon be catered. A lavish Christmas party thrown at the end of 2006 saw employees head home with iPods and gift certificates worth of up to $1,000. The grand prize was a lease on a Toyota Prius. Fittingly, Nye dressed as Santa for the event. "It was amazing while it lasted," says another former employee.>>

Then Google changed its landing page etiquette for advertisers. Nye then tried to turn the company around quickly fearing he'd be exposed, and didn't give many public interviews. But it was too late:

<<The end came suddenly, well before Nye and American Capital could reposition the business – in fact they were still hiring new employees in the days leading up to the layoffs. Google had started to look more closely at companies like Geosign, which were buying keywords from Google and ad links from Yahoo! or another provider. And soon Geosign got word that Google would now begin penalizing its Web pages that had "a low landing page quality score" – that is, lots of ads and little or no original content. While Google won't comment specifically about Geosign, sources say it raised the prices it charged Geosign for keywords overnight. "When Google ‘shuts you down,' that isn't exactly what they do," explains Jupiter's Scevak. "Instead, what they do is start charging you $50 for what they were charging 10¢ for previously. They make the model financially unfeasible.">>

[Via http://Waxy.org/links/]

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