Google Treasure-Black Box

Image via CrunchBase

There were quite a few posts  the last couple of days about the Google Yahoo deal. The powers against the deal (a.k.a Microsoft) organized many advertisers to talk loudly about their fear that such a deal will bring with it price fixing from Google side.

But as Danny Sullivan from Ad Age and Marshal Sponder wrote, Google is already fixing prices from day one.
Google has two very big black boxes under its belt.
The first one is the quality score algorithm that determines which ad will appear for each search and also how much the advertiser will pay for it.
Although they give some general guidelines about how this quality score is calculated, Google never really told the world how it is really done.
The second black box is the revenue share Google gives the publisher. As a publisher you have no idea how much of the advertising money is going to your pocket and how much into Google. There is a big chance that even if Google will change this number, you will never really know.
This fact combined with the huge number of publishers and advertisers using their services, gives Google great flexibility in its operations. When times are bad, they can always just add 0.01 cents to their part of the rev share and keep show wall street the growth they need.

With that in mind, you can start to understand why if the deal with Yahoo will take place, Google will have full control over the future of Yahoo. With small tweeks they can control exactly how much money Yahoo will make, how much ads they should give them, and how much money will advertisers will have to pay for these ads.

So is this deal really that bad for the advertisers, the publishers and the market? Maybe… And maybe not. It’s all in the hands of Google two black boxes.