Many businesses rely on the built-in conversion metrics provided by platforms like Google Ads to assess their campaign success. However, recent revelations from antitrust trials and our own research at Order Legend suggest that these metrics might be leading you astray, pushing you to spend more without delivering real value. This post delves into how Google’s manipulation of ad auctions could be inflating your costs while keeping you in the dark about the true effectiveness of your campaigns.
The Hidden Mechanics of Google’s Ad Pricing
The Department of Justice (DOJ) recently exposed the inner workings of Google’s ad pricing strategies during a high-profile antitrust trial. The DOJ’s findings indicate that Google has been using its monopoly power to manipulate ad auctions, increasing costs for advertisers without necessarily improving ad placement or performance.
One of the key tactics uncovered is known as "Project Momiji", which was quietly rolled out in 2017. This project involved artificially inflating the bids of runner-up advertisers in auctions, leading to a 15% increase in costs for those who "won" the bid. Essentially, even when you think you’re securing a prime advertising spot, you might be paying significantly more than necessary due to Google’s behind-the-scenes adjustments (Digital Information World) (MarTech).
Squashing and RGSP: More Than Just Buzzwords
Another technique, termed “squashing,” involves increasing an advertiser’s lifetime value based on predicted click-through rates (pCTR). This approach effectively raises the price against the highest bidder, forcing them to pay more than they should have in a fair auction. Similarly, the Randomized Generalized Second-Price (RGSP) mechanism introduced in 2019 allows Google to subtly hike prices in small increments over time, without necessarily delivering higher-quality traffic to advertisers (MarTech).
Our Research Insights: How Google's Algorithms Impact Your Costs
Our research at Order Legend aligns with these findings, uncovering that Google’s algorithmic adjustments often lead to arbitrary increases in CPC without any improvement in ad performance. For instance, in multiple case studies spanning several years, we observed that increasing ad spend would lead to a noticeable spike in CPC, even when the ad’s search impression share remained unchanged. This means businesses are paying more for the same positioning—effectively being charged extra for no added value.
Moreover, we found that when advertisers use automated bidding strategies like Target ROAS (Return on Ad Spend) or Target CPA (Cost Per Acquisition), Google’s system interprets this as a signal of satisfaction and further inflates CPCs. This creates a vicious cycle where the more successful your campaign appears, the more you’re compelled to spend, often without any corresponding increase in conversions or sales.
The Role of Conversion Tracking in CPC Manipulation
Our research also highlighted a critical aspect of Google’s strategy: the reliance on conversion tracking data to justify price increases. Google’s algorithms closely monitor conversion metrics, and when these metrics suggest that an ad is performing well, CPCs are often increased under the assumption that the advertiser will be willing to pay more. This tactic essentially penalizes businesses for their success, making it increasingly difficult to scale campaigns efficiently without encountering rapidly diminishing returns.
Breaking Google’s Grip: How Order Legend Works Differently
At Order Legend, we operate outside of Google’s established playbook. Our app takes a radically different approach by reporting orders to Google through offline conversions and only disclosing our revenue (commission) rather than your revenue. This strategic move trains Google’s algorithms to operate as though we’re working with razor-thin margins. As a result, Google is forced to deliver high-intent inventory at low costs, accessing ad spaces that would typically be ignored or underutilized.
Additionally, Order Legend does not rely on Google’s native tracking scripts, which adds an extra layer of privacy and control over how we manage your campaigns. This unique approach ensures that while others are bidding aggressively on the same ad inventory, often inflating costs, we bid smart and cheap. We capture valuable, incremental revenue opportunities that Google might otherwise overlook.
Why You Shouldn’t Let Google Call the Shots
By leveraging Order Legend, you can take back control:
- ROAS, Budget, Campaign Targets & Tracking Privacy: We keep your sensitive data private, preventing Google from using it against you.
- Incremental Revenue: Our approach focuses on generating new revenue that wouldn’t exist without our unique bidding strategies.
- Zero-Upfront Costs: You only pay when we deliver results, making our service risk-free.
- A Fixed ROAS on Orders Generated: Enjoy predictable returns on your advertising investment.
Ready to break free from Google’s constraints and make your ad spend truly work for you? Install Order Legend and start maximizing your advertising budget without playing into Google’s hands. Get started with Order Legend here.
