Offshore firms '˜lock out' local traders from Google ads
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Craig Sibbald, managing director of Contains Nuts, said that “lead-generating” websites registered in offshore tax havens are driving up costs for firms such as locksmiths in Edinburgh by muscling in on Google’s search results.
Google’s AdWords system allows advertisers to have their product or service appear at the top of search results by taking part in an auction process, with companies paying the US technology group when a customer clicks through to their website. However, Sibbald said problems have been building for about a year when it comes to members of the public searching for local locksmiths.
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Hide AdHe said: “What’s happening when people are making those searches is that generally about four ads appear at the top, two of which are going to ‘mirrors’ of the same site. That manipulates the auction, and according to Google’s policies you’re not supposed to be seen to be taking advantage of that.”
Sibbald said that the sites link to a “lead-generating phone number”, with the company on the receiving end sub-contracting out the work.
“They do that at a cost of charging a rate of 60 per cent to the individual locksmiths, who only make 40 per cent from the job,” he said. “If they refuse to do the work, they won’t have a business.”
The issue has “massively” driven up the costs of advertising online, said Sibbald, who estimated that each click on the advert link costs the contractor between £20 and £30 as the lead-generators – based in offshore tax havens such as the British Virgin Islands – are outbidding other players in the market to generate clicks.
Sibbald said there was also an issue when it comes to customers leaving online reviews, as they typically end up reviewing the lead-generation company, rather than the locksmith that provided the actual service.
He said: “Google is a big driver for these businesses, and this has made a big impact on their bottom line. But if they didn’t do the work, they couldn’t possibly function.”
Google said: “We have a set of policies which govern what ads we do and do not allow. Our ‘insufficient original content’ policy makes it clear that we do not allow mirroring, framing or scraping content from another source. If we discover sites that are breaking this policy we quickly take appropriate action.”