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Comment by londons_explore | Hacker News Reader

At the end of the day, Google can set the price however they like for ads on Google Search.

Previously they ran an auction. Now they have a very complex price-setting algorithm that has elements of an auction within it, but also secret factors which push bids up or down.

But they're well within their rights to just roll a dice.

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I'm kinda surprised they don't have some human/AI combination that estimates how much profit you are earning from Google Ads, and charge most of that.

The whole idea of having a price for each individual impression seems outdated - what businesses care about is "how much did we pay Google this month, and how many widgets did we sell, and was it worth it or should we advertise elsewhere?". Therefore, why bother with the middle man - just make an algorithm to predict exactly how much the business thinks the ads are worth.

They do have this, you can choose to bid for a target conversion cost (I want to pay at most $x per conversion). In general I find all of this pretty silly as a Google employee.. I don't think you can distill the complexity of any change down to one article. Say for example that Google did just raise how much advertisers paid per click across the board, why would that lead to billions of dollars in profit? I would bet that the majority of advertisers on Google already spend their whole budget, so that would mean that now they would just be getting less clicks and conversions per dollar of budget spend. Logically they would then move some of this budget to other advertising channels such as Facebook. Charging more per impression always has second order effects, but who cares about that on hackernews

Of course - pricing is a maximization game.

But thats why modelling businesses has such a large opportunity. Some businesses will be prepared to pay more if you send them more conversions... Others have a fixed budget. Some use many platforms, and certain things might persuade them to move more budget to you. Some might be persuaded by "tricks" like handing out airmiles, vouchers or free stuff to the marketing team in return for ad spend.

All of those things require a higher level strategy than just doing everything per-impression.

Replace Google with 'a monopoly' and there's the problem. The monopolist can and will set prices as high as they can

Seriously, nobody has a right to any particular algorithm or outcome. Google can rank ads first if they contain the word "orangutan" if that suits them. Buyers should be looking at their ROI, not expecting the ad platform to optimize every aspect of it.

Ok, then do they need to be truthful about anything?

How about giving themselves credit for extra clicks based on the value of the word? (With the defense they are doing it for you!)

What about if they switch to a click tracking system that uses statistics (so they can use the defense that the method is just inaccurate and they aren't lying), which just happens to over counts clicks?

How about charging you based on very erroneously projected traffic (one further than the step above, basically projecting the future very genrously in their favor) and not actual traffic?

What about if they enable the same third parties to both participate in an ad exchange as a seller and a buyer, with real time bid information, such that they can place phantom bids to up advertisers spend, just like HFT dark pools?

I could go on, every thing is all good, right? No guarantees?

Which ways is it ok if they misrepresent, overcount, badly estimate, fail to deliver, bill based on future estimates, and otherwise enable third parties to steal from you are ok?

> But they're well within their rights to just roll a dice.

Who said anything about rights? What does it even mean for a company to have rights?

If Google is allowed to arbitrarily set the price of their ads, and they are, then any legal pricing scheme (i.e. not running afoul of discrimination or price gouging laws) ought to be fine as long as they're lying to you about it or making false claims.

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