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Comment by mattparlane | Hacker News Reader

To me, the problem is that all this kid really did is hike up the bid price of competitive keywords, therefore earning more money for Google. I have the same issue with them giving away money for trials, or giving thousands to non-profits.

It's gaming their own system from within -- if someone is given money to splurge on Adwords, they will pour it into really competitive keywords without really caring about the return, jacking up the price for those who are paying real money.

It might sound altruistic, but there is a pretty real benefit for Google.

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If my experience at a nonprofit is a guide they'll actually call endless meetings to talk about the AdWords and then never get around to using them.

Meaning, the nonprofit will call for meeting with adwords and never actually use them?

No, they'll call meetings internally to discuss how to use the AdWords and never decide anything or act on it.

There's so many things wrong with what you said.

A) It's not true that people "splurge" it on adwords. Adwords gives you a finite amount, so you have an interest in being as efficient as possible, at least if you care about your cause. Also, the effect on bid pressure is greater if you bid the same as the nr 1 bidder than if you "splurge it" by bidding $100/click, see D)

B) trials are like £75. Once you spend it, it's gone. You can't get more. It's not gonna bankrupt your the competitors.

C) Non-profits can't "pour it into really competitive keywords". They're limited in what they can do, they can't go bid on life insurance with google's money. They're also limited to a maximum bid of $2/click.

D) Regarding jacking up the price being a real benefit for google... This one is more complicated but you can't be sure without looking at the numbers. Because on the one hand you increase competition, but on the other google only get actual revenue from N-1 ad slots.

You're just guessing.

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