For Your Sunday Bullshit Reading: Search Ads Are “Misdirection” Advertising

TechCrunch has a guest article today about internet advertising that sounded interesting until I got to the part about search ads as “misdirection.” At that point, I realized the author apparently knows little about search advertising — and since that’s the bulk of online advertising sold, it put into serious question anything he had to say about online advertising overall.

Unfortunately, I won’t get a refund for the time I wasted reading through his article. Even worse, it infuriated me enough to waste even more time to point out the errors in it. Normally I just try to ignore stuff that I feel is so uneducated as to not deserve the attention. But this article got a lot of visibility, and I haven’t had a rant for a while, so I’ll consider this derantification therapy.

The story is “Why Advertising Is Failing On The Internet,” written by Eric Clemons, who is “Professor of Operations and Information Management at The Wharton School of the University of Pennsylvania.”

From his title, it didn’t sound like he dealt much with online advertising. So I visited his department’s site, where I learned:

The mission of the Operations and Information Management Department is to improve the quality and productivity of enterprises by educating highly capable professionals and by discovering, developing, and validating new principles, theory, and methods. Our common approach to education and research is to blend rigor and relevance. We believe in science-based management and our work is built around models. However, we seek to reconcile theory and data, and to influence practice.

After reading that buzzword-filled paragraph a few times, I guess they try to figure out new ways to do things for companies. OK. Professor Clemons himself is listed as:

A pioneer in the systematic study of the transformational impacts of information on the strategy and practice of business, his research and teaching interests include strategic uses of information systems, information economics, and the changes enabled by information technology.

I read that and think hmm, kind of intimidating. He’s someone who must know what he’s talking about, being a professor of “information economics” and all that. Surely if he’s written a paper on internet advertising, it’s going to be backed up by a ton of data and thoughtful research.  I mean, I’m just a little old English major from UC Irvine — only a BA.

Then again, I have this “travel guide” test to use to help determine if an expert source knows what they’re talking about. Ever struggle to decide which travel book for some vacation destination might be the best one? Me, if it’s a travel series, I pull the guide for a destination I know well, like my hometown. I know my local area in an expert way — and if the travel guide suggests good stuff for my area, then I feel better about trusting it in other areas.

So with Clemens’s article, I’m reading along going hmm and maybe until I hit this segment about search advertising, which happens to be an area I have some expert knowledge in:

Misdirection, or sending customers to web locations other than the ones for which they are searching. This is Google’s business model. Monetization of misdirection frequently takes the form of charging companies for keywords and threatening to divert their customers to a competitor if they fail to pay adequately for keywords that the customer is likely to use in searches for the companies’ products; that is, misdirection works best when it is threatened rather than actually imposed, and when companies actually do pay the fees demanded for their keywords. Misdirection most frequently takes the form of diverting customers to companies that they do not wish to find, simply because the customer’s preferred company underbid. Misdirection also includes misinformation, such as telling a customer that a hotel is sold out when, indeed it is still available, if the hotel has chosen not to pay a promotional fee, and then allowing the guest to choose an alternative property. Misdirection is, regrettably, still a popular business model on the net, although for reasons I explored in an earlier TechCrunch post on Google it seems ultimately to be unsustainable. More significantly from the perspective of this post, it is not scalable; it is not possible for every website to earn its revenue from sponsored search and ultimately at least some of them will need to find an alternative revenue model.

Unbelievable. Search advertising — the biggest form of online advertising — is all about misdirection? Really? I mean earlier in his piece, Clemons went on that online advertising was dying because consumers don’t trust advertising. If that’s true, how is it with search ads that they’re so stupid? Or are Google and the other search engines so smart that they’ve been misdirecting searchers for over 10 years with search ads?

Search advertising is one of the most powerful forms of advertising precisely because it does not misdirect searchers, nor interrupt them but instead provides answers that they seek. Search engines are repositories of desire or the famed “database of intentions” as John Battelle has called them. They are proxies for asking friends for recommendations. They are trusted resources we turn to, and we are indeed smart enough to tell when our resources are just trying to misdirect us.

I want to go back and breakdown that absurd, amazing paragraph.

Misdirection, or sending customers to web locations other than the ones for which they are searching. This is Google’s business model.

If I do a search for “alaskan fishing trips,” how is it that a search ad alongside the editorial listings misdirected me? What was that “exact” thing I was supposed to get in the first place? Was it a government document? An Alaskan tourist office? One particular fishing company?

Of when I search for Wharton Business School, and I get Wharton listed at the top of the page, where was the misdirection? Hey, I see plenty of ads over there on the side targeting the term as well. I suppose you could say that’s misdirection.

Certainly some have tried to argue this when it comes to trademark targeted ads, and there remains serious issues and debate in this area. However, there are many, many queries that do not involved trademark terms. They involve generic words or questions, where it’s impossible to know exactly what a searcher “wanted.”

Even with the Wharton search, what exactly did I want when it came to that? Is it possible I wanted to know more about Wharton than just what Wharton wants to tell me? And how did Google, after presenting this information, “send” me to the location other than I wanted. Did it reach out and grab my hand and make it click on a particular listing? Was I prevented from reading information that was presented?

Monetization of misdirection frequently takes the form of charging companies for keywords and threatening to divert their customers to a competitor if they fail to pay adequately for keywords that the customer is likely to use in searches for the companies’ products; that is, misdirection works best when it is threatened rather than actually imposed, and when companies actually do pay the fees demanded for their keywords.

I have never, ever heard of a serious, evidenced-back case where Google has threatened to drop some company ranking for a generic term if they don’t buy ads. Never. We have had, over the years, various types of algorithm changes (2003 Florida Update; 2009 Vince Update) that some view as having rewarded informational sites at the expense of pushing commercial sites out of the top listings — with the idea that Google’s trying to get those commercial sites to buy ads. However, I doubt Clemons is even aware of these algorithm shifts. He’s far too simplistic in his accusations. And if he is aware, then he’s also aware that Google still sends huge, colossal amounts of traffic to commercial web sites for free — even those that do not buy search ads.

Misdirection also includes misinformation, such as telling a customer that a hotel is sold out when, indeed it is still available, if the hotel has chosen not to pay a promotional fee, and then allowing the guest to choose an alternative property. Misdirection is, regrettably, still a popular business model on the net, although for reasons I explored in an earlier TechCrunch post on Google it seems ultimately to be unsustainable.

Again, I can’t think of situations where Google has pushed a particular company over another. When you’re presenting 20 or more “destinations” on a page for any given search, which one is the favored one? And how’s Google calculating all that favoritism on a query-by-query basis, where a huge number of queries are entirely unique in a given month?

And Google specifically will find this “misdirection” unsustainable? I guess I missed his earlier article on that. So I clicked through and found it was his big “how an anti-trust case would go against Google” commentary from earlier this month.

Don’t remember? If you missed that big timesuck, it started out:

It’s important to remember that I am not an attorney, just a computer science faculty member at a major business school, with some litigation experience, and that I have had no conversations with Google or with the Department of Justice about these issues, but I believe that what follows provides some insight into thinking at the Department of Justice.

See, I read that and thought OK, you know nothing about anti-trust laws, you focus on computer science, but now you’re going to lay-out an anti-trust case about Google? And I should believe you, much less spend time reading you, because…?

But I did, and it seemed all about the idea that Google has too much of the “ad booking system” with confusing diagrams pointing out how this might be like the ticket booking systems of the past and didn’t really answer any key questions I’ve long had — which is, at what point can the government simply declare that Google’s search share is simply too large that it must somehow be less successful. Can it even do that?

Google was threatened with monopoly action if it partnered with Yahoo, as the view was it would give it too much control over the ad market. So it backed away. But if Google achieves a 90%+ share of the search market in the US, as it has already in other countries, simply through consumers choosing to use it, does it become a monopoly then? Does the government then also decide it has to what, send some searchers to other search engines, even if they don’t want to go?

I’m honestly curious about these answers, and I’d love to see more experts answer some of them. And perhaps I shouldn’t poke at Clemons for doing his anti-trust scenario without being an expert in the area, since I did my own back in 2007: After The Google Antitrust Breakup. I’m just as guilty for being speculative in that. But at least I feel like I provided a far more nuanced and educated look at Google’s actual operations than Clemons gave, hopefully because my job involves watching the company so closely.

Coming back to Google as “unsustainable,” I guess the leap Clemons is making is that Google is running a monopoly based on misdirecting consumers, and that won’t be sustained not because the government objects to misdirection but instead because Google’s monopoly will be ended.

In reality, the government did act against possible misdirection in search ads ages ago. Back in 2002, the Federal Trade Commission issued landmark guidelines to search engines saying that paid search ads should be clearly labeled and delineated from editorial results. And that’s why today, you see terminology like “Sponsored” rather than “Featured” used in ads. It’s also why those ads are shoved off to the side at Google and other major search engines or put above or below editorial listings. It’s also why some search engines like Ask keep getting bitten on the ass when they try and sneak around those guidelines.

Part of me wants to break down more of Clemons’ article, but I feel like after reading what to me are absurd, uneducated views about search ads, deconstructing the rest makes no sense. But I’ll do a few bulletpoints:

• Why is it assumed online advertising is failing at all? He cites a 5% estimated drop in spending from the first quarter of this year. Hey, look out the economic window. Many industries in the current economic climate having “only” a 5% drop are almost enjoying growth. I don’t know the offline adverting spend projection offhand, but I’m pretty sure they’re a lot worse than online. I don’t think it makes sense to look at a drop that is largely happening because of the economy overall as indicative of a systemic problem with online advertising overall. See, I even used a buzzword like systemic. In plain language, online advertising isn’t failing — the economy overall is failing.
• Charging for content gets trotted out as a solution. Well duh. People have been charging for content online for ages, and successfully so. Personal sidenote, don’t go banking on micro-payments to be the magic solution. But many sites, in my view, backed away from charging for content because the online ad revenues cranked up. Now newspapers that opened pages up to anyone to increase ad views are having to reconsider that much access. The balance will be found.
• Selling virtual things is really going to be a growth area over selling online ads? Me, I think online ads will pick up in the future. What doesn’t make a lot of sense is trying to figure out way for people to buy virtual stuff online when so many are struggling to buy real stuff they actually need.
• Search is misdirection but “social search” means you won’t get annoying ads when you’re “not searching to buy?” I wish I had the energy to dissect that entire paragraph more. I’ll just say that plenty of people are getting well served already by “unsocial search” with both editorial and paid listings, and I don’t expect that to change. There are applications to social search, but I don’t expect them to be some type of revolution that just knocks Google aside. Search 4.0: Putting Humans Back In Search and The Rise Of Help Engines: Twitter & Aardvark have more thoughts from me on that.

Overall, I recognize that TechCrunch itself isn’t saying it believes what Clemons wrote. Let me also add that I like TechCrunch and lots of the people over there. And just like TechCrunch, we have guest writers with our columns, and sometimes our columnists write things I don’t personally believe or agree with. But you do want to have a diverse set of views out there, and debate is also good.

The TechCrunch article was designed to inspire debate. I recognize that, recognize it as queued up to go out on a typically slow Sunday news cycle to get people buzzing. I just want educated debate. If we’re going to be subjected to weekend “thought stories” by any publication in the blogosphere, I desperately want more of those to be by people who demonstrate clear knowledge in their space and a reason to get the attention they receive. Clemons demonstrated none of that by calling search ads “misdirection.”

For more, see discussion on Techmeme. Also Andrew Goodman has posted his own thought, A Pleasant Friday Dinner in Academia, vs. the Horrible Sunday Hangover.