October 24, 2008

Pay-per-click battle hots up as Google changes gambling ads policy

Search engine giant Google has overturned a long-standing global ban on advertising by online gaming companies on its sites to allow UK and EEA-based gaming companies to advertise their wares to its users in England, Scotland and Wales.

Google UK’s industry leader for entertainment & media, James Cashmore, said the decision to remove the ban, self-imposed in 2004 following a settlement with the US Department of Justice after accepting adverts from online gaming companies, followed a detailed review of its gambling advertising policy “to ensure it is as consistent as possible with local business practices.”

A spokesperson for the company added that a key driver behind the decision had been to bring this policy into line with the relaxed advertising guidelines for online gaming companies introduced under the UK Gambling Act late last year.

The revision of its AdWords policy to allow pay-per-click advertising by all UK companies registered with the Gambling Commission and all EEA companies licensed to advertise by their national regulator is predicted to provide more than £100m in additional revenues per annum for the online search giant.

Google already has between 73% and 85% of the UK paid search advertising market, and would increase its stranglehold on the global market still further if a deal to sell advertising on behalf of ailing rival Yahoo clears the hurdle of a US Department of Justice investigation into whether it would create unfair competitive conditions.

Robert Allan, online marketing manager for Ladbrokes Poker, said that the feeling from within the industry is that MSN and Yahoo will initially lose a lot of revenue as gaming companies reorganise their budgets and strategies to take into account being able to advertise on Google, with its dominant market share of around 80%.

“All gambling companies, which have a set budget for pay-to-click advertising, have now got to decide whether to take away 80% of the money currently allocated to MSN and Yahoo and spend that on Google, or retain that spend on MSN and Yahoo and ask for a substantial increase in the overall budget in accordance with Google’s market share.

"Google is also going to be comparatively more expensive than MSN and Yahoo, as more sites are going to want to appear higher up at Google, because there are so many more clients you can get from it,” he added.

As there were previously no gambling terms allowed on Google, effectively making it a brand new proposition, Allan said Ladbrokes will be keeping a close eye on its competitors over the coming weeks. “We are watching what 888 and all our competitors are doing, gauging whether or not we want to be above them in the sponsored links and finding out how much extra this will be compared to the cost per depositor,” he said.

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