Google provokes inflation in the AdWords network

Original author: Vinay Sahni
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Recently, Google has been intensively distributing AdWords vouchers of $ 75 and $ 100 in order to stimulate additional activity of advertisers. Over the year, I activated several such vouchers on one of the almost inactive accounts. By accidentally logging into the AdWords site, I even received an invitation to register within 48 hours with a voucher to boot.

What effect do similar coupons actually have? The answer is obvious. By giving away free money to participate in the auction system, Google has put significant pressure on AdWords prices.

Let's look at the short-term effect.
  1. We give out free money to those who spend nothing.
  2. Some of them start spending coupons. Since the money came easily, they are likely to bid at higher prices than in a normal situation, potentially lowering the position of real advertisers.
  3. Real money advertisers are forced to increase bids to maintain their position, or they will receive fewer clicks for the same money.
  4. Google is watching from the side how customer budgets burn out faster.
What in the long run? Will prices go down when the company stops giving out free vouchers? Well, in theory, it should be that way. However, since Google is actively sending out notifications when bids are lowered, I think advertisers are more likely to raise bids than lower them.

A blind auction coupled with stimulating artificial inflation seems like an absolutely brilliant strategy to me, but I highly recommend paying attention to other contextual advertising platforms before increasing your AdWords spend.

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