The Market Can Never Get Too Efficient

Yahoo! announced they are launching their new Panama platform. In response, Google quietly announced they are launching a free multivariable testing program which ties in with AdWords. Each additional functionality Google can add to their ad system further solifies their market knowledge and their position as the default ad platform. If they are the default ad platform that advertisers turn to, it will mean that their ads will sell closer to their fair market prices and Google will be able to afford more distribution, both of which in turn will attract more advertisers and may price many types of ad noise out of the market. The efficiency and market position feeds into itself.

Published: October 18, 2006

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Comments

October 18, 2006 - 11:14pm

Yahoo's new features are essentially all things Adwords had Yahoo didn't. The new Adwords tool however looks impressive.

October 19, 2006 - 1:28am

Aaron, thank you for pointing out the Google Website Optimizer. I guess my AdWords account team really didn't think that this would be useful, but it certainly looks valuable to me.

October 19, 2006 - 2:08am

Efficient markets kinda suck, though.

Google et al. are SOO far from efficient that it should still be fun for a long time.

October 19, 2006 - 3:55pm

I signed up. Hopefully, I get picked to try it.

October 19, 2006 - 4:20pm

I see a fault in your logic: the more that Google become the default ad platform, the larger the percentage they will take, which means that 3rd party sites which use Adsense will get paid less, and advertisers will end up paying more.

A more efficient market will happen if Yahoo! (or MSN or someone else) manages to provide effective competition to google, this will mean that Google will have to cut their margins, meaning more money to 3rd party sites, and cheaper ads for advertisers.

the only person to gain from Google becoming the default SEM solution is Google- everyone else loses.

Jamie
October 20, 2006 - 1:00am

Pretty cool tool if you don't have the ability to do that on your own. But, isn't anyone just a little bit nervous about giving GOOG another key piece of your data?

October 20, 2006 - 2:19am

Hi Gareth
The efficiency I was speaking of was the efficiency with which Google could extract profit from the network. And their stock is up about $30 a share today :)

November 2, 2006 - 12:49pm

Google's Website Optimizer is, in a word, awesome. We've been using it for a few days now and I have nothing bad to say about it. Even wrote a little review on the el blogo. Good stuff :-)

lucia
October 24, 2006 - 1:14am

From what I've heard on the new Yahoo PPC one cannot see anymore what others are bidding, therefore one cannot choose a position anymore by choosing a bidding price. This (like Google PPC/Adwords) might increase the bid pricing, therefore our PPC costs and Yahoo profits. If true this would mean "good news" for Yahoo, "bad news" for advertisers... What do you think Aaron???

October 24, 2006 - 9:18pm

Many times I disscussed about this issue. I think the market will just grow and grow. We and our kids (if they do internet marketing) don't have to worry about that.

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