Posted April 22, 2008 9:53 pm by with 9 comments

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According to a federal class action lawsuit filed Tuesday April 22nd by Kabateck Brown Kellner, LLP in U.S. District Court, Google is deceiving its customers into paying for ads they do not want.

Brian Kabateck is the lead counsel on the case. He recently won a multi-million dollar settlement from Yahoo! and earlier a $90 million settlement from Google on behalf of advertisers victimized by click fraud.

According to a release from the firm, Kabateck stated:

“This debunks Google’s carefully cultivated image. Google is hurting its customers on two fronts. Google is not only taking money out of customers’ pockets, it’s derailing their advertising strategies as well.”

The suit is largely based on the fact that novice advertisers do not often turn off the “content network” on their AdWords campaigns by putting a “0” in the box for the third party sites. This leaves a portion of their spend available to publishers on the AdSense program. Ads that run on third party, non-search sites, tend to be viewed as less effective in terms of CTR (click through rate) and ROI.

Kabateck views this practice as deceptive, and one that is draining Google advertisers of their online budgets.

“People go to Google hoping that some of its magic will rub off on them,” Kabateck added. “Instead, Google’s sleight of hand deception is making their money disappear.”

I have heard complaints such as these from several business owners that have had an experience such as that of the plaintiff, David Almeida, a Massachusetts-based private investigator who enrolled in Google AdWords in November 2006. The issue is often discovered by advertisers when they see reports of low CTR.

The idea that Google would knowingly deceive advertisers seems a bit far fetched to me, well not that they would deceive, but that they did deceive.

Although I agree that they may have missed the boat on a usability flaw, which is something all of us are guilty of from time to time, I do not see what the giant of the online space has to gain by intentionally leading advertisers to third party publishers. In fact, such ad delivery means that Google has to give up a share of the advertising revenue earned. The company would probably prefer the ads be served on their own search network, where they can take in 100% of the revenue.

Third party publishers using AdSense often offer low cost “clicks” for advertisers. If Google made the third party sites more difficult to opt in to would that foster accusations that the company was deceptively leading advertisers to higher cost ad deliver options?

If you are a marketer working with pay per click budgets for clients you may want to pay special attention to cases such as this. If the U.S. District Court finds Google liable of the deception Kabateck Brown Kellner accuses them of, then does the same apply to SEM companies that may have been negligent when creating customer accounts and left the “content network” on?

It is an interesting question at the least.

As search marketers we often covet titles such as Google Qualified and Yahoo! Ambassador, but we never question whether these brand associations could cost us in terms of litigation.

I would hope the lesson brought home by legal battles such as the Almeida case, are that although available to the masses, well constructed search marketing campaigns are something best left to those with a working knowledge of the process. Although tools and information exist on the web to educate an individual a thousand times over, advertisers should remember that AdWords and other PPC solutions are every bit a complex concept as traditional marketing outlets, and thus for the best results they should most likely get professionals involved.

  • I’m very surprised that this hasn’t come up sooner. One of the first pieces of advice that you hear about AdWords is that you should immediately turn off content ads and search partners. Unless you’re specifically optimizing for them, the results are not likely to be good (for most people)…and Google has to know that.

    Of course, Yahoo! and Microsoft have been guilty of the same kinds of things. When Microsoft started their content ads, they automatically opted existing advertisers into the program and you had to rush in and turn it off.

  • Buyer Beware should be the slogan here! Yes, turning off content ads and search partners is advised, but surely the big G has to have a system to ensure that the ignorant or the inefficient do not get ripped off. Should be an interesting battle. I hope that this does not get settled out of court.

    Nicole’s last blog post..Need a New Computer?

  • Another example of the desire for money exceeding the interest to truly do good by customers. Hopefully a precedent can be set by this case.

  • I suspect you have not staked out the popular viewpoint here, Andy, but I agree with you. I think it’s become fashionable to pile on all sorts of evil motives on the “don’t be evil” company. I think we need to keep Hanlon’s Razor in mind more often: “Never attribute to malice that which can be adequately explained by stupidity.” As Google gets larger, expect more and more errors to occur that conspiracists can judge harshly. It’s more likely, in my opinion, that companies make mistakes. Let’s see whether Google addresses this problem by changing its interface. If it doesn’t, then we can begin speculating as to motives.

  • LH

    Actually, to think it was not based on a monetary decision is naive. Clearly Google has a need to funnel ads into the content network, and that they have to share the revenue is not a problem. They are actually gaining revenue they would not otherwise have if not for AdSense.

    Try as they might (the e-mail I regularly receive trying to get me to turn on content ads), Google will not convince people the content network is worthwhile till they clean-up the sites allowed into the AdSense program.

  • I wonder if this will have any effect on the system?

  • Hmm… I thought Google was evil when they did not allow advertisers to bid separately on their content network but they solved this a few years ago.

    Now the content network performs beautifully for us. You just have to optimize the bids separately but it can do wonders to an online campaign.

    However, Google has a few other tricks on how they suck money out of your pocket. I talk about them at

    Mike’s last blog post..Simple vs Complex

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  • Have recently been tasked with dealing with customer’s adwords campaigns, and something else has come to light….regular discrepancies between the CPC clicks and the analytics data….always skewed in Google’s favour. Am still waiting for them to reply to our email query regarding our accounts…