Google's Stake in Search Engine Optimization

Performics Could Hurt Google

But there are other reasons why holding on to Performics could be bad for Google, and they have to do with perceived potential conflicts of interest that could spook Google advertising clients.

For example, Performics is supposed to help its clients get the highest return on investment (ROI) from their paid search campaigns by recommending they spend what's necessary -- and not more -- in order to get their desired results. But Google's business is to sell as much advertising as possible, said Scott Buresh, CEO and owner of SEO/SEM firm Medium Blue.

Closed Loop's Loveday also foresees Performics clients worrying whether Performics will now have an incentive to increase their spending on Google advertising for the benefit of its parent company. "Now, the reality is that Google has the dominant [search advertising] platform and in most cases Google probably should get most of a client's search campaign budget, but there's definitely an appearance of a conflict of interest," Loveday said.

U.S. companies spent about $10.2 billion in search advertising in 2007, and Google grabbed 79 percent of that pie, followed, distantly, by Yahoo with 12 percent and Microsoft with 6 percent. Search was the most popular ad format last year in the U.S., accounting for 40 percent of the overall online ad spending, according to IDC.

Ron Rule, lead developer for Web analytics company iWebTrack warns that with DoubleClick in general, Google now has access to significantly more data about users' behavior and ad campaigns, creating a potential for abuse. Advertisers can protect themselves by measuring their ad campaigns' effectiveness with independent Web analytics companies like iWebTrack, he said via e-mail.

"The merger effectively gives Google more pricing power and without proper unbiased analytics, large amounts of money can be wasted very quickly on [pay per click search advertising] campaigns, which Goggle and competitors like Yahoo are glad to take," Rule said.

Search Results Problems

fThe Performics ownership also puts Google in a delicate and difficult situation regarding its claim that its search results aren't influenced by commercial considerations, Buresh said. With Performics, Google is now in the business of taking money from clients in exchange for helping them rank better in search-engine results, he said. While Performics will not sell paid inclusion into Google search results, it does offer fee-based SEO services, he said.

"Google has maintained consistently that there's no amount of money you can spend with them [in paid search] that will help your site in the organic rankings, that they maintain a Chinese Wall between the two," Buresh said. "Now that it owns an organic optimization company, you're paying Google for better placement in search results."

In addition, Performics does provide paid inclusion services -- something Google has sworn never to do -- into search engines that engage in this practice, in which a company pays a search engine to include its Web site in its index. This puts Google and its new Performics division in a serious philosophical conflict, as search industry expert Danny Sullivan argued in his Search Engine Land blog recently.

"Google was the lone hold-out against paid inclusion at the time [2004] and often used this as a marketing point to help promote itself. Not only was it used for marketing, but Google's cofounders strongly believed the practice was wrong. That's why in the letter from the founders that formed part of the IPO filing, they called it out several times," Sullivan wrote.

For all these reasons, a consensus exists among SEO and SEM firms that Google should divest itself of Performics, but reached for comment, Google remained noncommittal, providing this prepared statement:

"We intend to spend the next several months assessing all of DoubleClick's products and services including those offered by Performics. In the near term, we intend to operate Performics as a stand-alone business unit consistent with its past practices. Upon the completion of our integration planning with respect to Performics, we will be in a better position to announce our future plans for this business."

For Loveday, the situation is clear: "I don't understand how it serves Google's interest to maintain Performics."