by Tom Foremski for SiliconValleyWatcher.com

Most of my readers understood that I posed a hypothetical scenario in my recent entry about a potential flaw in Google’s business model. I asked how Google would react if someone said there was a $100m prize hidden behind a text ad link? A kind of treasure link, if you will. But, at least one person thought the scenario was real. NO, it’s not. Not yet.

Jason at Marketing Shift has caught the wrong end of the stick and I spotted it early this morning. I left a comment on his blog but he hasn’t changed his post.

Thursday, February 03, 2005

Crack Google AdWords Get 100 Million Dollars

So some billionaire has offered $100 million to the first person that can crack the Google AdWords algorithm... sounds a bit fishy to me and I'd like an explanation of the story. Sounds more like a viral marketing campaign to me but I guess that's whey viral campaigns work, you never know.

My comment to Jason:

Jason, it is a hypothetical scenario that asks if Google Adwords or any other click-for-performance ad network could handle such a thing.

There is no algorithm to crack. Just, what would happen if lots of people started clicking on any text ad link they see, hoping it could be the winning one?

Those clicks would drain the ad budgets set by advertisers and they would not renew until it stopped because it would not help them sell anything. And rumors of new treasure hunts would likely arise every now and again.

- - - - - - - - -

Also, I had this exchange with a Googler who wrote to Silicon Valley Watcher:

In response to your article at: http://www.siliconvalleywatcher.com/mt/archives/2005/02/is_this_a_googl.php



As pretty much everybody except Tom Foremski knows, advertisers set a maximum budget per day. When this budget is reached, Google stops displaying the ads for the day.



It takes all of five minutes to verify.

--

Cedric

From: Tom Foremski

Yes Cedric, but, what if swarms of people are clicking away at Google text ad links every day, wherever they happen to see them, hoping they hit the lucky win? This is not necessarily a one-day event. Customers would not refill their ad budgets until the click swarms stop. And then new rumors of treasure-links would likely sweep through every now and then... It's not just a Google problem--it would affect Yahoo, Kanoodle, Industry Brains and many others too.

From: Cedric

Okay, now *this* is a legitimate concern.



The answer is that the price of the click-through will adjust itself automatically. If people are getting less value for their click-through, they will be willing to pay less when they bid and it will show into the auctions.



This is why the system works well: Google is not setting the price for the keywords, users are.

--

Cédric

From: Tom Foremski

The system will adjust, yes, but Google’s revenues would plunge. Or at least it would have to serve up vast numbers of text ads so that at least some would get through to real “clickers.” It might not be able to publish enough pages to do that.

I posed it as a hypothetical question wondering if this is a flaw in the text ad model, which is shared by many companies, Google being the largest. And that's why I wanted my readers to check my reasoning .

-Tom

dk1150