An AdWords Experiment Shows Why at Google, the House Always Wins

[mandy]

..my friendly reader, who makes his living from this stuff, has a theory. He believes the Google AdWords algorithm tries to do many things and one of those is to encourage advertisers to pay more for words. By modifying something that in turn modifies the results, Google is effectively encouraging advertisers to change their behavior.

So increasing the amount per word DID increase sales, though not enough to justify the additional cost. Google's revenue per word, of course, went up by 10X. But dropping the price by more than half was greeted by a huge decrease in clicks-through that could only have resulted from some unknown resultant change in GOOGLE's behavior, given that all other variables were constant.

If that's indeed what's happening, it isn't illegal and to some might not even be unethical (I guess) but it feels just a little bit EVIL.

full article: http://www.pbs.org/cringely/pulpit/pulpit20050922.html

[Bidera]

Many webmasters have been suspecting this for some time, but no proof is forthcoming.

It does smack of evilness. Whenever we encounter such behaviour with Adwords we just stop for a couple of days and prices go back to normal.