It has been reported that Google has had to issue refunds to a number of advertisers, after the advertisements they placed with the company were run on website with invalid traffic.
In the online advertising market, the advertiser pays more the more traffic the website its advertisement is placed on generates.
The advertisements in question were bought using Google’s DoubleClick Bid Manager over a number of months in 2017.
The company has agreed to refund the “platform fee” alone, which apparently represents between 7 and 10% of the advertisers total spend.
Google has defended this policy, arguing that it doesn’t control the rest of the money spent. This raises the question of whether it would be possible for Google to guarantee to those purchasing advertising from the company that those advertisements will not be run on websites with such fraudulent traffic. Could there be an algorithm which would assess whether a website’s traffic was genuine, or fraudulently generated by “bots”, and prevent advertisements placed through Google’s services from running on websites where the traffic could not be guaranteed as authentic?
If this is possible, why hasn’t Google introduced this innovation? Surely it would increase the market value of its service if advertisers felt reassured they were paying for genuine views, rather than fake traffic?
Could it be that market concentration in the digital advertising sector has left Google with little incentive to improve its product?
Further to this, could the relatively small amount allegedly refunded by Google indicate that the company also has decreasing incentive to offer good customer service?
Who else are the advertisers going to take their business to?
Those interested in the impact of increasing concentration in the tech sector should consider attending our upcoming seminar on competition and regulatory policy.
Please contact Tim Cowen if you have any questions about the above.