People commonly turn to Google to search for services, information, or products, prompting businesses like garage door repair companies to utilize Google’s ads service to grow their business. This article examines how Google capitalizes on advertisers, the resulting consequences on consumers and the cost of garage door repair and installation services.
CPC Price Inflation
CPC inflation, short for cost-per-click inflation, refers to the increasing cost advertisers pay for each user interaction. This cost is influenced by advertisers’ willingness to pay and other factors. Over time, CPC may rise due to an increased number of bidders as they are willing to pay more for greater visibility.
For example, advertising costs on Google for garage door repair companies have surged by 75% to 200% in recent years. This increase can be attributed to heightened competition in an already super-competitive market, and Google deliberately raising advertising costs for both garage door repair companies and advertisers to boost its earnings.
Google Search Losing its Credibility
According to Google, they price their online ads based on auctions between bidders. The company claims that there are various factors that manage the ad’s auction and how ads appear in search results, including the quality of the ads, relevance, and budget. Nonetheless, Google’s reliability may sometimes be questionable.
Publishers and advertisers have filed lawsuits against Google after years of being misled about the processes and pricing of its ad auctions. The unredacted lawsuit revealed secret programs created to increase ad prices for some advertisers and reduce sales for others. An antitrust lawsuit filed by Texas Attorney General Ken Paxton provides insights into how Google allegedly misled advertisers by manipulating auctions, causing increased advertising costs. The company has also been criticized for failing to effectively regulate its Maps platform, allowing scammers to deceive consumers by listing fake garage door repair companies.
The misleading practices of Google are affecting various industries, including the garage door repair and installation sector, resulting in increased repair costs for garage doors and price inflation across the board. Despite the common expectation that increased competition would lead to lower prices, Google has had the opposite effect on the industry.
How Increased Advertising Costs Affecting Consumers
Let’s consider a hypothetical case of a garage door company, ABC, that utilizes Google Ads to promote their garage door repair services. The company advertises a spring repair service for $300. For each interaction with their ads by a Google user, garage door company ABC pays anywhere from 20% to 40% of $300 per interaction, which amounts to $60 to $120.
Upon subtracting the advertising costs, material expenses for the repair project, the cost of dispatching a garage door service technician, and technician compensation, we discover that garage door company ABC’s return on investment is extremely low, and the business fails to generate significant returns.
But wait, there’s more! Some users may interact with the company’s ad multiple times before deciding to hire them, while others may interact with the ad but not proceed with hiring them for the required repairs. Consequently, Google online ads often prove unprofitable and may result in losses for the company. This has prompted garage door repair companies to substantially increase prices for their services and make the practice of bait-and-switch more common in the industry, aiming to secure service calls from consumers who use Google Ads.
Wolf in Sheep’s Clothing
As tech giants like Google invest millions in federal lobbying efforts to keep regulatory bodies at bay, unsuspecting advertisers and garage door repair companies fall victim to the cunning tactics of the search engine. Ultimately, those who hire companies through Google Ads should brace themselves for inflated garage door repair bills and lose their shirts along the way.
