Google South Africa has abused its position of dominance in the online advertising market and has used underhand methods to win a major online advertising account with the SA Yellow Pages website. [Update: Allegedly, of course.]
You can read the full press release here. In a nutshell, Entelligence was awarded the online marketing contract for SA Yellow Pages in June 2008. In effect, this means that Entelligence manages the advertising side of the Yellow Pages website. The company spends more than $100 000 with Google every 90 days and is therefore recognised by Google as a “Qualified Adwords Company”.
Late June, Entelligence met Google South Africa to discuss how the performance of Adsense ads could be improved on the Yellow Pages website. During this meeting, one can imagine that strategy was discussed. Clear actions on moving forward were agreed. Unfortunately, immediately post this meeting Google SA turned around and increased the cost per click ad on the Yellow Pages website from 60 cents to R2, and effectively started pitching for the Yellow Pages account itself.
In Entelligence’s words:
“… Google South Africa took Entelligence into their confidence, encouraged discussion around Entelligence’s strategy with respect to Yellow Pages, and allowed Entelligence to demonstrate their proprietary technology developed to manage Google AdWords specifically for Yellow Pages.”
Most worrying is the fact that Google SA has informed Entelligence that they
“will inhibit [their] ability to continue servicing Yellow Pages by refusing to renew [their] accounts held with Google and that they will prevent [them] from creating any new accounts in an attempt to service Yellow Pages”.
In effect, Google SA is seemingly looking at which Adsense accounts are most lucrative in South Africa and pitching for them directly. This may or may not be fair business practice, but to
- partake in strategic discussions with an underhand motive, and
- prevent a company from pitching for a contract by limiting the services it offers to competitors
stinks and should be strongly discouraged. Also, it shows a huge disrespect to the companies that have grown the Google Adsense culture in South Africa.
Google’s motto or mantra is “Do no evil”. In fact, on its corporate website it clearly states that it believes that “You can make money without doing evil”. This incident, however, seems to go strongly against that belief.
Here is what I am hoping: I am hoping that some fool at Google SA got excited by the prospect of landing a Yellow Pages account and did not bother to apply the “Do no evil” mantra, or to clear it with his boss. I am hoping that the shit has hit the fan at Google SA while they try to rectify the situation, and I am hoping that the Google HQ is looking at this incident through a magnifying glass and monitoring its outcome.
In the meantime, Entelligence has filed a formal complaint with the Competition Commission.
Google does a lot of things very well. But Google SA has, apparently, a lot to learn.
[Update: I have been advised, quite rightly, that this might be a slightly too one-sided article. I am, after all, working off a press release of one party. Google is staying quiet on this story for now, which is a pity.]
Well, they’re all in Greece on some team building soirée so dont expect an answer for a week or so.
Nice post. Google SA does have a lot to learn! I hope they don’t get away with this.
I hope you’re right. Please keep us informed. “Power corrupts, and absolute power corrupts absolutely”. Google is not immune to that truism.
If Google has acted in this way, then (a) it is learning a lot from the ANC in terms of how to do business in SA, and (b) I will end my support for their products and encourage others to do the same. Now, is this American arrogance or its uglier sister (South African arrogance) coming into play?
Are you sure the discussions did not reveal that Entelligence was breaking important Google Adwords rules?
I sincerely hope that Google HQ kicks some ass. I love Google – but then I loved Microsoft before the whole World-Dominance thing. Let’s hope that this is an isolated (SA) incident) and that it is corrected quickly, otherwise Google can kiss me goodbye…
Google SA has kept quiet on the matter. They haven’t said Entelligence broke any rules.
I’ve also heard that all other accounts that Entelligence runs are still running. Google only prevented Entelligence from servicing a customer they were specifically after…
I have heard from other major players in the SEM space that they have also fallen foul of Google stealing their top clients, with their same modus operandi of befriend-then-steal.
These agencies have not spoken up yet as they find themselves in fear of being locked out of the Google service, but I am sure that in due time they will.
The South African online economy is in its infancy and needs pioneers like Entelligence and the other agencies to educate and grow the market. By Google going direct to the larger advertisers, they are forcing out the pure-play SEM agencies who rely solely on South African clients.
Advertisers should realise that Google’s motive is to make as much money from advertisers as possible, whereas the role of an SEM is get as much return for their advertising spend as possible for their clients.
I hope that Google will learn to play fair with those who have done all the dog work for them. Alternatively these agencies will have to relook at their models and find alternative sources of traffic for their client-base.
Sounds like gung-ho, testosterone soaked South African business at it’s best!
What Adwords rules could Entelligence possibly have broken to justify a refusal to service all Yellow Pages accounts, preceded by a massive jump in CPC?
The fact that they messed with the CPC at all makes me worried. This is just dirty practice and undermines the whole system.
Why not just knock competitors out of natural search results while they’re at it?
Great article, Eve! Take a look at this:
ttp://www.nytimes.com/2008/09/01/business/media/01google.html?_r=1&sq=google&st=cse&adxnnl=1&oref=slogin&scp=5&adxnnlx=1220367767-MHppSMiJjGnmFE0H07Kleg
I can’t think of worse timing on Google SA’s part when Google in the US is trying to put agencies at ease that this type of thing would never happen!
Thanks for all your comments. Will definitely keep an eye on this one!
@sean
Great link. You’re right, timing could not be worse.