Why Businesses can’t run without Google and Facebook

Google controls many of the ways businesses access customers online making it almost impossible to run a company without buying advertising from the internet giant. As politicians increase scrutiny of large technologies companies, Google’s lock on these digital relationships is becoming a potential liability. While consumers pay nothing for most Google services, some businesses say they often can’t avoid giving more money to the company because the internet giant is the main source of answers when go online to get information.

While Facebook matches advertisers with people interested in certain topics, Google can tell what a person really wants, right as that person types their query into the search bar. Showing up at the top of search results is imperative for most companies and in recent years Google has changed its software, especially on smartphones, to make buying ads the best way to achieve that goal. It’s not possible to run a business without advertising on Google.

Nowhere is Google’s power more pervasive and potentially damaging to businesses than in the esoteric market for ‘branded keywords’. This is where businesses buy ads based on their brand names. Some businesses say that they have to buy these ads whatever the cost because rivals can bid on the keywords too. In recent years, this pressure has increased because on mobile devices Google search ads show up at the top of the results, rather than on the side of the page with desktop results. This means people are more likely to click on the ads, rather than the free, ‘organic’ links to companies’ websites.

Google has said in the past that it doesn’t break antitrust laws and that competition online is just a click away. Google also regularly stresses that it never accepts payment to be included in or to be ranked higher in organic search results and doesn’t manipulate search rankings to benefit advertisers. Beyond just branded keywords, the cost of all types of Google search ads has been rising at about 5% a year, according to Merkle, that’s well ahead of US inflation, which is running at 1.6% currently.

Many Google advertisers are happy to pay more because the company has so much data that it can target the marketing messages and generate big returns on that spending. When it comes to brand keywords, some advertisers will spend beyond what makes sense. These decisions are not as rational. That’s a question that comes up when advertisers see costs go up. People are thinking about that and testing it by stopping buying those branded keywords to see what happens. These tests usually result in a decline in traffic, both from search ads and from free, on organic results.  How big depends on the advertiser.