By Alan Kohler, The Eureka Report
IF YOU google the phrase "Alan Kohler", the top link in the main, unpaid search results is one of my articles on smh.com.au. Next is Eureka Report. But above that, against a beige background, there are two other links – one is to Eureka Report and the other is a link to Australian Stock Report, one of our competitors.
Australian Stock Report has bought the Google phrase "Alan Kohler". Eureka Report’s link only sits above it in the section headed "sponsored links" because we have paid more for it (to Google) in the auction system known as search engine marketing (SEM).
Over to the right, in another sponsored links section for the search on the phrase "Alan Kohler", there’s a link to www.stockresource.com.au – another competitor – and under that are a couple of book sites trying to flog my books (booktopia and ebay). Ebay buys millions of keywords, and among other things competes to buy just about every author’s name.
We have also bought the phrase "Eureka Report", of course, but if you google that then six competitors’ links appear in the sponsored links section of the results. They have all bought the phrase "Eureka Report", but once again we have paid the most so we can be at the top.
I hasten to add that we are also playing this rather brutal little game: we have bought, among things, the phrases "Rivkin Report" (another newsletter) as well as "Australian Stock Report". Each of those newsletters ensures that its link is at the top of the Google sponsored links by paying the highest price.
But Australian Stock Report’s search result, for example, is crowded with 10 competitors that have also bought its name.
Thus do all of the financial newsletters compete with each other to throw money at Google.
Another way to put this is that, when it comes to subscriptions obtained via Google marketing, the newsletters probably only make a profit from renewals in the second year – in the first year virtually the whole price of a new subscription goes to the Google machine.
This is the essence of the Australian Competition and Consumer Commission’s case against Google for misleading and deceptive conduct, which caused a flurry of feather fluffing and squawking in the global internet henhouse last week.
The case began with Trading Post’s purchase of the keyword "Stickybeek", which is the name of a small Newcastle-based used car website. Search that word on Google now and there are no sponsored links at all, which means Stickybeek is getting its search engine position for free, because it’s at the top of the free results.
That’s because Trading Post gave up quietly once it was pinged. The other case cited by the ACCC in its court documents is instructive: it’s the fact that if you google the phrase "Harvey World Travel" you get a sponsored link to one of its competitors, STA Travel, and a lot of people surveyed by the ACCC did not realise that these businesses were not connected – were competitors, in fact. The ACCC, it seems, is outraged about this.
Actually this outrage is based on a misunderstanding of how search engines work. STA has not bought the phrase "Harvey World Travel" – it has bought the word "travel", which is perfectly OK. Its link appears because "travel" appears in Harvey World Travel’s name and search engines look for links to each word in a phrase as well as the whole phrase itself.
You can tell this because if you put quote marks around "Harvey World Travel" when searching it, which turns the whole phrase into a single word, no sponsored links appear at all – no sign of STA.
So the highly competitive newsletter business is definitely a better example of what the ACCC is on about.
In essence the ACCC claims two things: a business’s competitors should not be allowed to "buy" its name and muscle into its search results page; and the "sponsored links" are not sufficiently distinguished from the main, unpaid, results in the middle of the page.
The ACCC is not saying this, but I think it would accept a settlement based on the latter point, and not press on the first. In other words, Google could probably end the case with more prominent signage on its sponsored links.
But Google denies there is a problem at all, and it is supported in this by Peter Coroneos of the Internet Industry Association and just about every other geek in the country.
It says the paid ads are clearly marked "sponsored links" and the one across the top has a beige background, which further distinguishes it.
On the question of competitors buying each other’s names, Google says it does not monitor this and given the billions of searches going on every day it would be impossible to do so.
Google then shoots its own argument down by referring to its "AdWords Trademarks Complaint Procedure", which allows a business to apply to have its trademark protected from competitors buying it. Obviously if it were impossible to monitor these things, then this procedure would not work either.
In any case, the complaint procedure is only available on google.com, not google.com.au. And it’s buried deep under "about Google", then "contact us" – there are no signposts how to get there. It’s fair to say no one would find this unless they were told where it was.
And who can blame Google? Competitors bidding against each other at auction to buy their own names as well as each other’s names is no doubt a big part of the company’s revenue. Yes, but is it fair and reasonable?
The system of sponsored links is based on a 2002 ruling by the US Federal Trade Commission that basically approved it. Now the Australian regulator has asked The Hon James Leslie Allsop, judge of the Federal Court of Australia, to update this US ruling. Should be fascinating.
Alan Kohler publishes Eureka Report, an investment newsletter financially backed by Carnegie Wylie & Co. The views expressed here are Kohler’s email@example.com
Travel Trends: July 20, 2007