Google, as a search engine as well as an advertising hub, was supposed to reimburse media companies for much more than they were worth, at least in Google’s eyes. But a new law struck by the Australian government forced them into much more spending, putting their profit margins in the region at risk.
After an ultimatum made by Melanie Silva, the managing director of Google in Australia, deals have been slowly coming in from media companies.
No matter how we look at it, Google is the lifeblood of advertising in Australia. No media company would even consider cutting Google off from their partner’s list as it would damage them 100 times more than it would damage Google.
Remember, the search engine giant is an international company, so losing a few clients in one specific geolocation is not as big a deal as they may display it as.
Google knew all too well that it had the means to strike deals with the media, this outrage over the political situation was simply insurance for any future shenanigans from lawmakers.
It’s not only that media companies can’t afford to lose Google, but the Australian government itself as well. The amount of revenue that Google rakes in for the Australian economy and supports circulation cannot be discarded so easily.
Furthermore, it would be a death sentence to small businesses, the backbone of every economy, as we’ve heard economics experts say on repeat (many of them Australian).
The biggest hit would be directed to freelancers or individual professionals with their own websites. These websites are their gateway to new clients not only locally but globally as well. Losing Google as a platform would absolutely gut their revenue.
As reported by ABC, some small business owners receive nearly 90% of their customers from Google Searches. Now imagine when you’re making $10,000 a month, and suddenly you’re down to $1,000 with all the remaining costs and bills you have to pay. But let’s take a closer look at the biggest hits.
This may be a bit surprising. What does the financial industry have to do with Google? Well, it’s more like the advertising part of the financial industry rather than its operational part.
You see, several sectors in finance are heavily restricted in where they can advertise and who they can advertise to.
For example, the trading sector, which is considered to be quite risky, is banned from TV commercials, billboards, and in some cases, even Google ads themselves. The only real break they can usually find is social media (with errors here as well) and YouTube. But guess who owns YouTube? That’s right, Google does.
But how does this sector advertise then? Affiliate marketing. Companies partner up with individual bloggers to promote their products, after which the bloggers work on ranking their pages higher in Google searches to deliver traffic to partner financial companies. This is usually done through content marketing and educational pieces.
For example, it’s quite common to see a guide to trading without deposit or trading as a beginner post. This is mostly because people search for these queries. Therefore, the financial companies want their brand to appear as the first option.
With the odds stacked against them by Google, it’s much more cost-effective to have a random blogger do it for a modest fee.
Much like in the United States, the Australian youth has mostly resorted to the gig economy in a way to subsidize their regular income and have enough to get by.
Most of this sector is dominated by bloggers and people who use Google as either a tool to provide service or as a tool to receive clients on a daily basis.
Losing out on this particular aspect of their revenue could be absolutely devastating. As mentioned before in the article, for many freelancers and small business owners, Google could add up to 90% of their revenue in total.
Of course, after the ultimatum, Google has been signing deals left, right, and center. Multiple media outlets have already agreed on lowering their rates to suit Google’s needs, while many others are still in talks with the tech giant.
As already mentioned, Google knows how valuable it is to the local economy and the government. It will do everything in its power to maximize the value it can generate from each market. However, Google’s antics are not necessarily unjustified here as well. It’s a company, and it’s trying to minimize costs without the expense of the value it provides to its users.
Overall, it’s likely that this whole thing will blow over until the end of Q1 of 2021.
Image courtesy of Google/YouTube Screenshot
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