Double Whammy for Google Ads customers

If times weren’t hard enough for businesses in the current global climate, this week saw them face a double hit from Google. The company whose ad services many use as a consistent online sales driver, decided it was going to make two separate announcements which would directly impact their ability to do so profitably.

Google is facing some critical challenges to it’s approaches around data privacy, tax model, and monetisation of web content, at a global level.  And some cracks are starting to show in it’s usually poker-faced approach to challenge.  One of this week’s changes is in direct response to legislative changes affecting its ads business, and both appear to be aimed at maintaining profit margins at the detriment to its advertisers.

Google introduces tax on UK advertisers

In 2019, the UK Government introduced the Digital Services Tax.  Aimed at increasing the tax revenue generated from large technology businesses who largely skirt tax laws through manipulation of their office locations, the tax is hoping to at hundreds of millions to the UK coffers. At 2% of revenue however it still represents a great deal for the tech giants as opposed to paying the same taxable rate as other UK businesses.

Google however seems to have decided this is too much of a burden on their £1.6Bn UK revenues and has announced they will be passing this cost on to their advertisers. As of November 1st 2020 UK advertisers will see a new 2% fee on their Google Ads invoice.

No great shakes to smaller advertisers you might think, a few pounds shouldn’t make much difference. Maybe more of an issue for those spending big who have seen their costs continually rise over the past 5 years and now face paying thousands more each month for the privilege.

Bye, bye keyword data

In a second hit to advertisers after informing them of the new tax, Google struck a more immediate blow. In an update to their search terms report page, they announced they would only be providing data for search terms ‘that a significant number of users searched for’.

What they mean by ‘significant’ is not clear, but its implications are. Long tail keywords with a small number of monthly visits, regardless of their conversion rate or value to you, will no longer be available to be reported on in the search term report. Immediately.

There is some debate about the reasoning behind this decision by Google. Some professionals have suggested it is a move to push more people towards a more automated approach relying on Google’s tools. Another suggestion is that it is to prevent businesses from blocking out irrelevant clicks driven by Google’s match types.

Typically when looking at changes to Google Ads I refer back their limited options when it comes to increasing revenue through search ads which I have written about before. Through this lens this change is a move to increase auction intensity on long tail keywords. Advertisers will only see performance data for mid to upper funnel search terms. By including cheaper clicks, and some long tail conversions into the data the likely outcome is an increased bid.  And by not providing the ability to negative out the search terms, their will also naturally be more advertisers on less relevant search terms.

The only real option for retrieving the data is if a 3rd party tool can recover it through referrer information.  Other than that, advertisers face having less data to work with.

So not a great week all round for Google Ads customers. More cost, less information doesn’t make for a great combination.

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