In The Media
An Advertising Slot Machine?
SVM Mac Magazine, France, December 2006, Page 38
The good thing about being an author is that it gives you
the opportunity of meeting all kinds of people who have many
interesting things to tell. Whenever you cover a subject the
interviewees may come up with a totally unexpected story,
more than once even more interesting than the central subject.
I had this experience recently and what it follows looked
really suitable for this chronicle. Mario Fantoni, a marketing
man, offers an apparently revolutionary system that allows
optimizing advertising - the Taguchi Method. This Italo-American
businessman had a really curious experience with AdWords,
that consists of, as you probably know, the commercial ad
strips placed on the right of the search results page of Google.
Fantoni was paying for the keywords related to his industry
and started to see that he was requested more and more money
month after month. "I paid one dollar to be on the first
position, however, on the following week, I was on the second
Soon after he discovered he had to pay even more to be on
the top, almost five times more than at the beginning. Surprised,
he started to test the system deeply. Then he realized that
no matter what he did his position would be changing all the
time. "I had never seen this before…"
By curiosity, Fantoni gathered a lot of information and gave
it to Dr. Taguchi, creator of the mathematical method named
after him. After some days this engineer reached an astonishing
verdict: according to him, Google was using the famous theory
of games of John Forbes Nash Jr., Noble Prize in Economics
in1994. This theory refers to the search of an equilibrium
point. If a gambling house gives a lot of money to its players,
it will end up losing lots of it. If, on the other hand, does
not give away enough, people will stop betting money. Nash
equation would help meeting the famous equilibrium point.
In order to know more, Fantoni decided to visit another specialist
in games theory in Florida and presented the same numbers
to him, not explaining what the thing was about. After three
days, the specialist gave Fantoni an answer: "This is
Chance or coincidence? In any case, at Google we can justify
such order fluctuation in a more pragmatic way that invokes
1) The price one is willing to pay at an exact moment. As
it deals with bids, the best bid may vary at any minute.
2) The "pertinence." As a Google representative
explained to Fantoni: "Because your competitors have
more clicks than you do, we have lowered your position."
How does this explains the second position? Due to the fact
that the algorithm used by Google for both the results of
its search mechanism and for the AdWords positioning is based
in popularity. It rewards with the first position those who
have more links, more notoriety.
Fantoni came to the conclusion that the system works out according
to a basic rule: It maximizes Google profits according to
a method that would not be different than the one used by
the lotteries and gambling places.
I reminded Fantoni that Google had a motto: "Don't do
evil", and he answered, in an Italian way: "C'mon….what
kind of evil would you do to people with a search engine?"