Google's AdSense report card

Web advertising is booming. The latest figures indicate a quarterly revenue approaching $5 billion and all trends point to a robust growth.

Internet Advertising Trend (Uses IAB.net data)

Advertising might be larger than B2C ecommerce already. Here is a rough way of measuring that: a comparison of the revenue of Google and Yahoo! on the one hand and that of Amazon and eBay on the other (figures in thousands). Except for Q4 of last year where holiday season gives commerce an edge, Google and Yahoo win out.

It should come as no surprise to this audience that Google occupies a central place in the world of online advertising. Google is the new advertising marketplace.

Yet, there is very little objective analysis available to marketers, analysts and observers on Google's advertising system. Google's materials on its advertising system are, largely, promotional in nature. The purpose of this article, then, is to provide a report card of Google's advertising system -- giving credit where it is due while pointing out areas where Google does not do that well. 

Let's take a look at Google's report card, focusing mostly on AdSense.

Transparency
Google has built an advertising marketplace on the principle of opacity. Everybody involved is provided with a modicum of information rather than the complete picture. In doing so, the company creates an atmosphere that asks all involved to simply trust it. While Google might argue that this is needed to minimize opportunism by all involved, this is a dangerous way to run a marketplace.

Here is a top 10 list of what Google does not reveal.

1. Google does not tell advertisers where exactly their ad will get placed.
2. Google does not tell some publishers why exactly they shut them down.
3. Google does not share any network-level performance figures.
4. Google does not provide any information about how overall click rates have changed over time.
5. Google does not share any information on who clicked on the ads.
6. Google does not reveal what leads to higher placement among paid ads.
7. Google does not reveal how exactly it evaluates the quality of a text ad, i.e., the Quality Score. According to Google, the formula ”… varies depending on whether it's calculating minimum bids or assigning ad position.”  
8. Google does not tell advertisers what countries the users come from.
9. Google never tells publishers why they got paid a certain amount.
10. Google does not publish any research on ad effectiveness.

Grade: C

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