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Google ad costs, not its alleged monopoly, irks businesses

Inside Telecom Staff

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Google ad costs

NEW YORK (AP) — When asked about Google, Bryan Clayton voices a familiar lament among small business owners.

“You keep getting squeezed further and further down the search results page,” says Clayton, CEO of GreenPal, a company that operates an app to help homeowners find lawn care. “As a startup, you don’t have a million-dollar advertising budget.”

The Justice Department sued Google on Oct. 20 for anticompetitive behavior, saying the company’s dominance in online search and advertising harms rivals and consumers.

Owners such as Clayton have a different beef. What’s unfair about Google, they say, is the way it gives the greatest prominence in search results to the companies that spend the most on advertising.

Companies covet the top spots in Google search results — the first page of rankings, and the top of subsequent pages. But if too many companies vie for one of these spots, the cost can jump out of reach for a small business, just like the price for prime time TV commercials.

Google controls about 90% of global internet searches. The Justice Department sued Google Tuesday, alleging it uses monopoly power in search to squelch competition. Business owners’ concerns about the cost of advertising aren’t directly related to the government’s lawsuit, although the company’s dominance of the search market has been alleged to be a factor in driving up the price to buy ads in its vast digital marketing network.

But even if prices were lower than they are now, larger companies with more money to spend, in theory, could always outbid smaller businesses vying for the prime advertising spots on Google.

Businesses have two main ways of trying to get their listings high in Google rankings. One is to buy an ad that’s seen at the top of the search result pages; the cost for the ads depends on how often a computer user clicks on the ad and how much a company is willing to pay per click. The more a company can pay, the more likely it will get a prized spot in search results. Google has different types of ads, and whether an ad appears locally or nationally can also affect pricing. So can the time of day an ad appears.

There’s also what’s called paid search, where companies bid on keywords to get a higher ranking. For example, a sporting goods store might bid on words like “baseball” and “hockey” in hopes of landing higher in search results and being more easily seen by customers looking for equipment for those sports. The problem businesses face is they can be outbid by companies with deeper pockets. So the sporting goods store that can only afford to pay $2 a word can lose out to stores able to pay $10.

Mark Aselstine has spent as much as $30,000 a year on Google advertising, but he’s not sure his wine gift basket company will be able to afford Google ads this holiday season. He expects an already competitive time of year to be even more intense as more wine retailers seek customers over the internet due to the coronavirus outbreak and use Google advertising to make themselves more visible.

“I don’t think we’ll run a single Google ad this year. I suspect it will be well out of our price range,” says Aselstine, owner of Uncorked Ventures, based in El Cerrito, California.

If Aselstine can’t afford Google, he has alternatives. Microsoft’s Bing search engine, cheaper but not as popular among computer users, is one. Aselstine can also increase his use of Google’s unpaid search. Like the paid version, he’d seek to use keywords in his ads that prospective customers are likely to search for; depending on the words he chooses, he might get a good ranking, although it will still fall below ads and paid listings.

R.J. Huebert, who buys Google ads on behalf of the law firms, manufacturers and a credit union that are his clients, also sees prices going up because of the competition among advertisers, but the owner of HBT Digital Consulting says, “I think it’s the cost of doing business.”

Huebert, whose company is based in Pittsburgh, sees Google as an important tool for small businesses because of its reach. And when people begin a search on Google, they’re already interested in a product or service; they have what’s known as high intent, a high likelihood that they’re going to make a purchase. And they’re more likely to buy than someone who happens on an ad as they scroll through Facebook.

Aselstine says he’ll advertise on Facebook and Instagram if he can’t afford Google, although he’s likely to get more sales from people who search on Google.

“Those people are more ready to buy that day,” he says.

Clayton, the GreenPal CEO, spends about $100,000 a year on Google advertising. That’s a big number for a small company — GreenPal has 23 employees —but Clayton lists giants Angie’s List and HomeAdviser among his competitors that have much bigger advertising budgets. GreenPal, based in Nashville, Tennessee, and serving homeowners in most of the states, spends about $3 or $4 per click for ads.

But, Clayton says, “it’s getting harder to advertise — the price keeps going up and up.”

Tommy Fang tried Google to advertise his year-old market research company, but the cost far outweighed the business he hoped it would bring in.

“We ran a couple of ads and the economics just didn’t work out for us,” says Fang, co-founder of New York-based Eureka Surveys. The company runs a website where people can take part in surveys.

Fang is looking at other possibilities, such as the advertising Apple sells for mobile devices. However, Fang’s business, which involves finding participants for corporate surveys, is focused on PCs, where he says people prefer to answer survey questions.

Yet some small businesses don’t flinch at the higher prices. Advertising on Google makes sense even for some of Huebert’s law firm clients who often spend between $8 and $12 a click and as much as $35 because they can make the money back from a single case.

But “it you’re selling $5 socks, it doesn’t make sense to pay $35,” he says.

By JOYCE M. ROSENBERG AP Business Writer

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Iran, pressured by blackouts and pollution, targets Bitcoin

Inside Telecom Staff

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Iran, pressured by blackouts and pollution, targets Bitcoin

Iran’s capital and major cities plunged into darkness in recent weeks as rolling outages left millions without electricity for hours. Traffic lights died. Offices went dark. Online classes stopped.

With toxic smog blanketing Tehran skies and the country buckling under the pandemic and other mounting crises, social media has been rife with speculation. Soon, fingers pointed at an unlikely culprit: Bitcoin.

Within days, as frustration spread among residents, the government launched a wide-ranging crackdown on Bitcoin processing centers, which require immense amounts of electricity to power their specialized computers and to keep them cool — a burden on Iran’s power grid.

Authorities shuttered 1,600 centers across the country, including, for the first time, those legally authorized to operate. As the latest in a series of conflicting government moves, the clampdown stirred confusion in the crypto industry — and suspicion that Bitcoin had become a useful scapegoat for the nation’s deeper-rooted problems.

Since former President Donald Trump unilaterally withdrew in 2018 from Tehran’s nuclear accord with world powers and re-imposed sanctions on Iran, cryptocurrency has surged in popularity in the Islamic Republic.

For Iran, anonymous online transactions made in cryptocurrencies allow individuals and companies to bypass banking sanctions that have crippled the economy. Bitcoin offers an alternative to cash printed by sovereign governments and central banks — and in the case of Iran and other countries under sanctions like Venezuela, a more stable place to park money than the local currency.

“Iranians understand the value of such a borderless network much more than others because we can’t access any kind of global payment networks,” said Ziya Sadr, a Tehran-based Bitcoin expert. “Bitcoin shines here.”

Iran’s generously subsidized electricity has put the country on the crypto-mining map, given the operation’s enormous electricity consumption. Electricity goes for around 4 cents per kilowatt-hour in Iran, compared to an average of 13 cents in the United States.

Iran is among the top 10 countries with the most Bitcoin mining capacity in the world — 450 megawatts a day. The U.S. network has a daily capacity of more than 1,100 megawatts.

On Tehran’s outskirts and across Iran’s south and northwest, windowless warehouses hum with heavy industrial machinery and rows of computers that crunch highly complex algorithms to verify transactions. The transactions, called blocks, are then added to a public record, known as the blockchain.

“Miners” adding a new block to the blockchain collect fees in bitcoins, a key advantage amid the country’s currency collapse. Iran’s rial, which had been trading at 32,000 to the dollar at the time of the 2015 nuclear deal, has tumbled to around 240,000 to the dollar these days.

Iran’s government has sent mixed messages about Bitcoin. On one hand, it wants to capitalize on the soaring popularity of digital currency and sees value in legitimizing transactions that fly under Washington’s radar. It authorized 24 Bitcoin processing centers that consume an estimated 300 megawatts of energy a day, attracted tech-savvy Chinese entrepreneurs to tax-free zones in the country’s south and permitted imports of computers for mining.

Amir Nazemi, deputy minister of telecommunications and information, declared last week that cryptocurrency “can be helpful” as Iran struggles to cope with sanctions on its oil sector.

On the other hand, the government worries about limiting how much money is sent abroad and controlling money laundering, drug sales and internet criminal groups.

Iranian cryptocurrency miners have been known to use ransomware in sophisticated cyber attacks, such as in 2018 when two Iranian men were indicted in connection with a vast cyber assault on the city of Atlanta. On Thursday, British cybersecurity firm Sophos reported it found evidence tying crypto-miners in Iran’s southern city of Shiraz to malware that was secretly seizing control of thousands of Microsoft servers.

Iran is now going after unauthorized Bitcoin farms with frequent police raids. Those who gain authorization to process cryptocurrency are subject to electricity tariffs, which miners complain discourage investment.

“Activities in the field are not feasible because of electricity tariffs,” said Mohammad Reza Sharafi, head of the country’s Cryptocurrency Farms Association. Despite the government giving permits to 1,000 investors, only a couple dozen server farms are active, he added, because tariffs mean Bitcoin farms pay five times as much for electricity as steel mills and other industries that consume far more power.

Now, miners say, the government’s decision to close down major Bitcoin farms operating legally seems designed to deflect concerns about the country’s repeated blackouts.

As Tehran went dark last week, a video showing industrial computers whirring away at a massive Chinese cryptocurrency farm spread online like wildfire, prompting outrage about Bitcoin’s outsized thirst for electricity. Within days, the government closed that plant despite its authorization to operate.

“The priority is with households, commercial, hospitals and sensitive places,” said Mostfa Rajabi Mashhadi, spokesman of Iran’s electricity supply department, noting that illegal farms sucked up daily some 260 megawatts of electricity.

Although Bitcoin mining strains the power grid, experts say it’s not the real reason behind Iran’s electricity outages and dangerous air pollution. The telecommunications ministry estimates that Bitcoin consumes less than 2% of Iran’s total energy production.

“Bitcoin was an easy victim here,” said Kaveh Madani, a former deputy head of Iran’s Department of Environment, adding that “decades of mismanagement” have left a growing gap between Iran’s energy supply and demand.

Bitcoin “mining’s energy footprint is not insignificant but these problems are not created overnight,” he said. “They simply need one trigger to spiral out of control.”

A sharp drop in supply or spike in demand, like this winter when more people are staying home because of the coronavirus pandemic, can upset the balance of a grid that draws mostly from natural gas. Authorities reported that households have increased their heating gas usage by 8% this year, which Tehran’s electric supply company said led to “limitations in feeding the country’s power plants and a lack of electricity.”

Sanctions targeting Iran’s aging oil and gas industry have compounded the challenges, leaving Iran unable to sell its products abroad, including its low-quality, high-sulfur fuel oil known as mazut. If the hazardous oil isn’t sold or shipped it must be swiftly burned — and it is, in 20% of the country’s power plants, according to environmental official Mohammad Mehdi Mirzai. The smoldering fuel blackens the skies, particularly when the weather cools and wind carries emissions from nearby refineries and industrial sites into Tehran.

During the power blackouts, thick layers of pollution coated mountain peaks and hovered over cities, with readings of dangerous fine particulate pollution spiking to over 200 micrograms per cubic meter, a level considered “dangerously” unhealthy.

As the government publicized its clampdown on Bitcoin farms, miners balked at all the blame over their energy guzzling. Many warned that despite its potential to become a cryptocurrency utopia, Iran would continue to fall behind.

“These moves harm the country,” said Omid Alavi, a cryptocurrency consultant. “Many neighboring nations are attracting foreign investors.”


TEHRAN, Iran (AP) — By NASSER KARIMI and ISABEL DEBRE

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Biden names Jessica Rosenworcel as acting FCC chief

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Biden names Jessica Rosenworcel as acting FCC chief

Newly sworn-in President Joe Biden named on Friday longtime Federal Communications Commissioner Jessica Rosenworel to head the agency.

Rosenworcel brings with her over two decades of communications policy work, including a term at the FCC that began in 2012 running to 2021, during which public policy had gone back and forth on such key issues as Section 230, the digital divide, and net neutrality.

She replaces outgoing Republican FCC chair Ajit Pai, whose latest decision defined broadband within a narrow range. Rosenworcel has previously expressed her favor of a much broader range of upload and download speeds.

Prior to joining the FCC, Rosenworcel practiced communications law, and in 1999. She joined the Wireline Competition Bureau of the FCC, and by 2003, she began working for former Commissioner Michael Copps.

Switching to Capitol Hill, in 2007, Rosenworcel served as Senior Communications Counsel to the Senate Committee on Commerce, Science, and Transportation.

She has well forged relationships with the progressive wing of the Democratic Party and brings with her a strong set of position on the issues, which with the new Democratic Party majority at the agency will help set the tone of the debate.

During her tenure at the FCC, Rosenworcel has been a forceful advocate for increasing broadband access and restoring net neutrality, which was repealed during the last administration.

At question is not only consumer access, but the issue of regulating internet providers such as utilities with implied rate setting; though if providers are placed under their former Title II category, it is expected some latitude on rates would continue, while providing a level playing field for users.

On the larger scope of the above and range of other top issues, Rosenworcel noted to ICT publication Protocol:

“We know technology has reshaped everything in modern life. There’s no part of our civic or commercial lives that has been untouched by it. Some of those innovations obviously improve our lives and they lift our standard of living, but we’ve got other problems that we have not fully grappled with associated with those new technologies, like competition, like privacy, like security” she said.

With former Chair Pai’s departure, and the resignation of Republican Mike O’Reilly, there remains room for a new commissioner at the FCC for the Biden administration to fill.

The FCC will now have a 3-2 voting balance in favor of the Democrats, paving the way for marked policy changes.

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Amazon offers assist with US COVID-19 vaccine distribution

Inside Telecom Staff

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Amazon is offering its colossal operations network and advanced technologies to assist President Joe Biden in his vow to get 100 million COVID-19 vaccinations to Americans in his first 100 days in office.

“We are prepared to leverage our operations, information technology, and communications capabilities and expertise to assist your administration’s vaccination efforts,” wrote the CEO of Amazon’s Worldwide Consumer division, Dave Clark, in a letter to Biden. “Our scale allows us to make a meaningful impact immediately in the fight against COVID-19, and we stand ready to assist you in this effort.”

Amazon said that it has already arranged a licensed third-party occupational health care provider to give vaccines on-site at its facilities for its employees when they become available.

Amazon has more than 800,000 employees in the United States, Clark wrote, most of whom essential workers who cannot work from home and should be vaccinated as soon as possible.

Biden will sign 10 pandemic-related executive orders on Thursday, his second day in office, but the administration says efforts to supercharge the rollout of vaccines have been hampered by lack of cooperation from the Trump administration during the transition. They say they don’t have a complete understanding of the previous administration’s actions on vaccine distribution.

Biden is also depending on Congress to provide $1.9 trillion for economic relief and COVID-19 response. There are a litany of complaints from states that say they are not getting enough vaccine even as they are being asked to vaccinate a broader swath of Americans.

According to data through January 20 from Johns Hopkins University, the seven-day rolling average for daily new deaths in the U.S. rose over the past two weeks from 2,677.3 on January 6 to 3,054.1 on Wednesday. More than 400,000 people in the U.S. have died from COVID-19.

SEATTLE (AP) — By The Associated Press

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