Google denies manipulating ad auctions in resurfaced SMX clip

Google denied manipulating ad auctions at SMX Advanced 2015 – eight years before admitting it actually does.

During the conference’s keynote speech, Google Ad executive Jerry Dischler told the audience:

• “Full stop, we are not manipulating search results or manipulating the ad auction in order to increase profits. That’s just not what we do.”

Fast-forward to the 2023 federal antitrust trial, Dischler completely backtracked and told Judge Amit Mehta that the search engine “frequently” changes the auctions it uses to sell search ads without telling advertisers, increasing the cost of ads and reserve pricing by as much as 10%.

Why we care. This complete U-turn will likely raise doubts over Google’s reliability at a time when its trustworthiness is already being questioned.

How the tables have turned. The SMX Advanced 2015 clip was resurfaced by Tinuiti’s VP of Research, Andy Taylor, who claims Dischler made the denial in response to a presentation he had just given. Reacting to Google’s U-turn, he told Search Engine Land:

• “It seemed pretty clear back in 2015 that [Google was manipulating ad prices]. The trends we were seeing weren’t just a result of the typical reasons Google might offer up; like shifts in competition or changes in search behavior in particular categories. Even the data points we could find from other sources also seemed to be tracking in the same direction with our own.”
• “Sadly, it wasn’t all that surprising [when Dischler denied my claims], but I knew he wasn’t being transparent. Still, it was really disappointing to have to have client conversations proving out what I saw happening while at the same time acknowledging that Google was publicly contradicting my findings.”
• “I was really glad that someone put [Dischler] under oath [at the antitrust trial], and that this issue was made crystal clear for all of the search marketers out there.”
• “I do believe Google is well within its rights to establish minimum pricing thresholds that advertisers have to pay in order to appear in its search results, but the issue over the years has been the reluctance to be transparent with how those thresholds change over time and how they directly impact advertiser performance. I hope we’ll see greater transparency from Google moving forward.”

Why has Google been tweaking search ad prices? Dischler claimed that staff were “shaking the cushions” to find ways to ensure his team met revenue targets given to Wall Street by Ruth Porat, Google’s Chief Financial Officer. In an email he sent to his team back in May 2019, he wrote:

• “If we don’t meet quota for the second quarter in a row and we miss the street’s expectations again, which is not what Ruth signalled to the street, so we will get punished pretty bad in the market.”
• “I care more about revenue than the average person but think we can all agree that for our teams trying to live in high cost areas another $100,000 in stock price loss will not be great for morale, not to mention the huge impact on our sales team.”

What has Google said? Following Dischler’s comments, a Google spokesperson told Search Engine Land:

• “Search ads costs are the result of a real-time auction where advertisers never pay more than their maximum bid. We’re constantly launching improvements designed to make ads better for both advertisers and users.”
• “Our quality improvements help eliminate irrelevant ads, improve relevance, drive greater advertiser value, and deliver high quality user experiences.”

Deep dive. Watch the SMX Advanced 2015 keynote speech to hear Dischler’s comments in full, and read our Google antitrust trial updates for all of the latest developments in this case.