With Google’s announcement today of profits nearly tripling over the past year, raking in $1.03 billion in the last quarter alone, cynical ad buyers have to be wondering if the playing field is being artificially skewed solely to boost short term profits.
A technique regularly used on eBay, in auction houses, at car auctions, and so on, is shill bidding. Shill bidding occurs when someone with an interest in the sale bids simply to inflate the price. Crowd psychology makes this technique quite effective.
Wouldn’t it be nice if Google and Yahoo could use shill bidding to hyper-inflate their profits? The problem is its illegal. However, with a completely opaque bid system, why not?
The answer — why break the law when you don’t have to? While Google’s quality score has a noble purpose, the lack of straightforwardness leaves me wondering. Would they improve their user experience if it killed their revenue and margins?
Yahoo is about to jump on board too. On February 5th Yahoo is rolling out its new ranking system which factors in “bid amount and ad quality.” Despite a 61% profit crash, you might want to consider buying their stock.