Adwords advertisers have been had two reactions to Google’s quality score — beat it, run for the hills, or crank up the spending.

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.

5 thoughts on “Is “Quality Score” a creative approach to Shill Bidding?

  1. Interesting thoughts on the quality score. You’re absolutely right though. It is so subjective and without any concrete recommendations that profits could be artificially boosted by simply jacking up minimum bids.

    A visible quality score column is currently being beta tested that will allow Adwords users to see exactly what their quality score is. This will take a lot of the mystery out of the equation.

    I’m anticipating the Yahoo Panama rollout with mixed emotions. On one hand, I might get more clicks and pay the same or even less than what I am now – but the possibility exists that I’m charged my maximum CPC. Who knows what to expect at this point, I’ll guess we’ll just have to wait and see and watch maximum bids with caution.

  2. Pingback: Yahoo Search Marketing Attempt Flies High, Crashes and Burns » Web Marketing News

  3. I tried Adwords Ads. Did not do well even with KW & Optimization. I feel some bogus ads are
    making us down. Some company from USA called me to ensure they could make my ads more profitable with targeted ads with very high bid of USD35 ofr KW. Is it true?
    Any good comments/advices appreciated.
    Regards, Dr. Altaf

  4. [b]Shill Bidding on eBay: A Case Study[/b]

    Shill Bidding on eBay: A Case Study

    For anyone who buys on eBay, a detailed case study of another instance of blatant shill bidding and the abuse of eBay’s proxy bidding system—all exacerbated by eBay’s introduction of “hidden bidders”—and a detailed comment on eBay’s disingenuous attitude thereto, at http://www.auctionbytes.com/forum/phpBB/viewtopic.php?t=24033

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