User:Universalblogger/One new idea that could kill google

September 28, 2005 editorial

Search engines don’t have any competition. Traditional media like newspapers and television reduce their ad rates to compete with their competitor newspapers and televisions. And as a result, their margins are always around the standard 10% mark. But, in the case of search advertising, advertisers bid for ads. The business model is different. Methods for pricing of ads are different. Google’s profit margins in their web search engine excluding other new services may be as high as 50%. But, Google need not reduce their ad rates. Advertisers will continue to pay the current ad rates even if their Adwords program returns a profit margin of 80%. Because of this kind of business model, the one who benefits the most is the website where the ads are placed. Search engines are the only winners. But, something can be done here. We need a new model or system where search engines pay a part (a certain percent) of their revenue back to their advertisers. For example, a search engine, if it has a net profit margin of 40%, can give assurance that they will return 20% of the money paid by the advertisers back to them. That is, advertisers can bid as usual, but all advertisers should get a fixed percent of the amount paid to search engines back from the search engines. This give back can be fixed monthly or fixed dynamically, or, there are many options. If this is done, the process of bidding will happen as usual and at the same time, the advertisers will see some competition. As it is a well known fact that the profit margins of search engines are only going to rise in the future, this will help advertisers a lot. And, maybe, we may see the profit margins of search engines decline if such a system is introduced. Are any of the search engines interested in doing this?