Dozier Internet Law and Googling

First, I'll disclose that I, as well as others associated with Dozier Internet Law , own Google stock.

On April 24 I'll be speaking at the monthly "Click Quality Council" meeting. This is a group organized by Click Forensics, the guys who you see on some of the high profile news channels discussing click and impression fraud for PPC advertising. We'll discuss some legal issues relating to PPC advertising, including recent lawsuits filed alleging trademark infringement allegedly resulting from buying keywords of competitor's trademarks to trigger PPC ads. There have been three filed among businesses in the last month alone in Federal Courts in the US. They will be going up in the casenotes on the Dozier Internet Law Federal Court Report today. But I'll reiterate right now that this is an unsettled area of law, and despite recent conference speakers clearing this as a legal tactic, the lawsuits speak for themselves. You may be right, and you may be wrong. Does your business want to incur the huge legal expense to find out?

What I find most interesting is that Google is not, of course, a party to these lawsuits. Maybe they will get involved and file briefs in the cases if they get to the merits. But they don't control or select the lawyers or facts of the cases, and if Federal Courts start recognizing this practice as trademark infringement then Google has a revenue stream it will probably lose due to legal exposure pressing the advertisers. It would be interesting to see how much revenue is attributable to these types of advertising buys. There is a good question for the analysts.

But what is not a good question, it seems to me, is the potential negative impact of click volume reduction. Any experienced advertiser (our law firm spends between $100,000 and $500,000 annually on Google PPC) knows exactly what matters, which is conversion rate and revenue per customer. So, assuming revenue per customer is a constant (which I concede is a big question in today's environment), the number of quality clicks is what counts. And as quality improves, advertisers are willing to bid more for each term. Using the Adwords interface and related analytics products, the quality of the visitors to a site is pretty simple to see even for the small, small advertiser. 

I'll admit I don't know about all of the quality initiatives Google has undertaken, but I do know that when I look at our statistics I look for the overall cost of PPC, "goals" attained, and the cost for each such goal conversion; and I don't really worry about the overall number of PPC clicks coming to the Dozier Internet Law site. In other words, I am concerned with the cost per quality lead, and the better the quality the more I am willing to pay for our ad to be presented when a keyword is entered into Google's search function. So, for those analysts trying to figure this out, call a retailer you follow, and pull some strings to get some insight into this issue. Then, instead of relying upon raw volume statistics you can draw revenue conclusions based upon the money that advertisers are willing to pay for each click. My guess is that you will find the cost is steadily increasing for each PPC clickthrough. You might also take a look at the average costs associated with keywords on the various PPC search solutions, and while the high volume Google delivers influences price to some degree, there is no explanation for the vast pricing differences between the bottom tier PPC engines and Google except the quality of the traffic. And as quality increases, price will follow.

Of course, the analysts live quarter to quarter, so the real question is how quickly prices will increase when quality increases. My experience tells me almost immediately. But, we'll see. Again, I own Google stock. And I don't know the first thing about the impact of the downturn on advertising budgets or the like. Maybe Google is going to miss their quarterly numbers badly. I doubt it will be due to a lower click volume, though.