“Why This House Will Always Win” - Google U-Turn On Gambling

Google recently(ish) re-opened its doors to the online gambling world.

The move is somewhat of a u-turn but one that was widely expected by some in the industry.

Google Gambling Ban - Background

To give some context to the story, in 2007, Google UK imposed a ban (following the lead from the US) on all paid, gambling related ads. The move was originally made globally in what seemed like Google trying to align itself with growing criticism of the industry and be seen to preserve the integrity of its service to its user base.

16 months later - the SERPs are already littered again with gambling advertisers - google “online poker” and see for yourself!

Google Gambling Ban - Why The U-Turn?

The cynical among us (myself included) will say: Profits, Profits, Profits.

Google recently released this official statement:

“Google AdWords allows online gambling advertisements to target Great Britain (England, Scotland, or Wales) as long as the advertiser is registered with the Gambling Commission and provides a valid operating license number.

Advertisers based outside the UK and within the European Economic Area who wish to target online gambling ads to England, Scotland, or Wales must be licensed to advertise online gambling in their respective country.”

James Cashmore, Google’s industry head also commented:

“Dennis Woodside (Google VP and MD for UK, Benelux & Ireland) and the team have been reviewing policies both from a legal and user need point of view at a local level,” he said. “I definately think that local markets will make more decisions in the future”

The above could be interpreted differently however.

The UK’s economy problems have been well publicised and the entire FTSE has seen much of its value written off in the past couple of months.

So could the above statement of “local markets will make more decisions in future” allude to this fact?

To ensure that Google’s forecasts for the UK market remain strong and healthy when at a time when the rest of the nation is gripped in a ‘recession’, the search giant lets one of the biggest spending online industries back into its world…coincidence??

Who Benefits From Google’s Gambling Ban U-Turn?

Google of course!

But besides Google, who else can benefit from the lifted ban?

• (Very) arguably you could say that the user benefits from having circa 10 additional choices whenever they search for something gambling related (assuming it is not a really, really longtail term).
• Gambling advertisers of course stand to benefit. Despite the amount of competition gambling PPC will incur, search volumes have remained strong in the current credit crunch. This incremental volume will no doubt be of benefit to many gambling based companies.
• Smaller niche gamling advertisers also stand to benefit to some degree. Although they will not have the deep pockets of the likes of Party Gaming and 888, if they mine the longtail well enough (and there are still a healthy volume of searches in the tail of this industry), they should be able to positively grow their volume of players.

Who Does Not Benefit?

Firstly, Yahoo and MSN stand to lose.

As soon as the gates of Google were completely closed in 2007, the gambling world flocked to Yahoo and MSN. Despite the volume of searches being significantly less, the demand was far outstripped by the supply of advertisers waiting for any search.

The result of this was healthy, inflated CPCs across two of the lower tier, premier engines.

The impact of Google’s move however will see gambling advertisers decide that they can no longer run Yahoo and MSN at a higher CPA than its volume is worth. Greater efficiencies will be sought on these engines, with more budget moved into Google as it is proven to drive more volume.

The Display Market also stands to lose potentially. Despite gambling companies having to rely on Yahoo and MSN more in the past, they also flooded into the display advertising market (even more than they were originally). They again were probably allowing for CPAs higher than ideal, mainly because they knew volume had to come from somewhere.

Again, expect gambling advertisers to become more ruthless with their display advertising campaigns. Publishers, who may have been carried slightly with previously above targeted CPAs, are likely to be binned.

Lastly, affiliates could either win or lose. SEO affiliates now have to content with 10 other advertisers on the large volume driving, head terms. This is bound to impact their volume sooner or later.

However, having mentioned above that some spend may be pulled from the likes of MSN and Yahoo, could this present an opportunity to affiliates. Less competition on certain terms = more gains to be made!

What Next?

Typically, the first 10 days saw spiked bids where the novelty value of being back on Google was high. Bids have started plateuing out, much like they did when Google opened trademarked bidding.

However, gambling was and will remain a highly competitive industry, up there with finance. Demand is there and so is supply - gambling advertisers know the lifetime value of their players!

In the short and medium term, Google rakes in the chips and keeps their profits growing and growing. The knock on effect this may have on the SEO gambling industry and indeed other industries remains to be seen.

One thing is for certain though:

Google Will Always Win. You Can Go ‘All In’ On That Fact!

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