Google will make it through the coronavirus firestorm and will be in a relatively strong position on the other side. We don't know what kinds of deals the search giant is making with its largest travel advertisers behind closed doors, but for the majority of advertisers Google's largesse is pathetic.
Daniel Yates, the founder and managing director of campsite and recreational vehicle booking site Pitchup.com in West London, UK, sounds almost incredulous when talking about Google’s announced aid to small business advertisers during the coronavirus crisis.
“Besides the fact that the advertising credits are chicken’s feed, it’s been five weeks and nobody’s got anything yet,” Yates said in a Skype interview.
His nearly 11-year-old bootstrapped company, which connects consumers with 4,500 campgrounds in 67 countries, did about $30 million in sales last year, and spent $1.4 million with Google.
Yates, who recently had to furlough around half of his 15 staffers and cut off several dozen freelancers, points out that Google’s small business support program, announced in late March, merely provides advertising credits for future business. And the credits will only start showing up in customer accounts in May, and will be rolled out over the following months.
It’s “absolute nonsense” that Google is working with advertisers to provide coronavirus relief, Yates said. “It doesn’t reconcile with reality.”
As part of a more than $800 million relief effort for small businesses, the World Health Organization, non-governmental organizations, and academic institutions, Google pledged $340 million in Google Ads credits for small businesses. For qualifying businesses, the credits might begin appearing in their accounts in May — by which time a some of these companies may have already gone out of business.
To put Google’s small business support program into perspective, consider that Google reportedly had around 4 million advertisers in 2015. Using admittedly very rough estimates, if 2.5 million small business advertisers qualify for these Google advertising credits, then that would total around $136 per advertiser. In addition to the sum being tiny for one of the largest companies in the world, these advertising credits can’t be applied toward amounts owed, but would only be applied toward future advertising, starting in May.
Although Google said its travel advertising plummeted in March, and it forecasts a difficult second quarter for advertising revenue, parent company Alphabet did notch $34 billion in net income in 2019, and $6.6 billion in the first quarter of 2020.
Yates of Pitchup argued that Google can certainly reach deeper into its pockets to help small businesses.
Google views its small business support program as a gesture, and not one geared toward bailing out small businesses.
Google declined to comment for this article, referring Skift to a spokesperson’s statement made last week when eight German travel companies called on Google to stop its advertising bill collecting. These larger companies, including GetYourGuide and Trivago, feel that Google should be doing much more for its advertisers, have a uniform policy, and not play favorites with favored partners.
Commissions Per Stay Rather Than Cost-Per Click
“Our travel partners are facing unprecedented challenges and we’re working with partners to help protect their businesses, including helping them surface their cancellation policies in our travel search products and expanding our ‘pay per stay’ pilot earlier this month to all hotel ads partners globally to shift the cancellation risk from our partners to us,” a Google spokesperson said last week.
Referring to this commission per stay program, which has advertisers only paying Google when an actual stay takes place instead of when a click happens, Nicholas Ward, president of metasearch insights platform Koddi, noted that booking volumes are way down but aren’t zero.
“In addition to precise CPC bidding for more advanced advertisers, we see commissions (per stay) as a valuable campaign feature for the near term to help advertisers get back in front of high intent travel searchers with low levels of risk,” Ward said. “Longer term, it is unlikely to drive much visibility, but with the auction suppressed and CPCs at historic lows we see it is a positive move from Google to support advertisers and support a rich result set for travelers.”
Yates of Pitchup, which has applied for UK government relief monies, agrees that some businesses might see utility in Google’s commission programs during times like now.
“I can see why Google’s commission-based strategies are preferable at volatile times,” though,” Yates said. “Eighteen months ago, we lost over $30,000 when their autobid (pay per click) strategy failed to respond to lower conversion after ad format changes. They refused to refund any of it as it wasn’t a scenario covered by their refund policy.”
Yates, a Travelocity alumnus, has publicly expressed criticism of Google in the past. In 2015, Yates started hounding Google about the fact that only big advertisers such as Booking.com and Expedia were allowed to participate in Google’s Hotel Ads program. They were advertising French camp grounds in Google Maps, and companies like Pitchup at the time were excluded. He was allowed to start participating in Hotel Ads in 2017.
Pitchup, and the eight German startups aren’t the only companies complaining about coronavirus relief efforts that haven’t been forthcoming.
The American Society of Travel Advisors has been outspoken about how the U.S. CARES Act has been slow to funnel relief moneys to travel agents.
Yates of Pitchup, meanwhile, feels that Google has deep enough pockets to provide “material” rebates, based on annual spend, and not merely future credits, for its advertising partners.
After all, Pitchup’s peak bookings usually take place in July — and much of that will be gone.
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Photo credit: Pictured is the Lakeside RV Park in Nevada. Pitchup.com founder and CEO Dan Yates thinks Google's rhetoric about working closely with small businesses during the coronavirus pandemic 'doesn't reconcile with reality." Pitchup.com