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Stricter Rules and Regulations In Online Advertising Affect Google And Facebook

01 May, 2017

The world is surely being digitized.

From transactions to socializing, digital is the word that the world is bending to.

Global revenue from advertisements are growing exponentially, creating jobs and employment for artistic, creative individuals who have found ingenious ways to gain user attention and generate traffic. This trend has created wonders for Google (including YouTube) as it is the largest recipient of this global advertisement revenue, with Facebook being stuck in a distant second place.
You may be surprised to learn that Facebook, despite all it’s reach and social graces, receiving only about one third of the revenue received by Google!

Over 77% of Google’s ad revenue is generated from their own websites, thanks to their humungous AdWords platform which covers almost all services used by Google.
To gain the top spot on Google’s Search, companies (and people) bid for the spots – obviously, the higher the bid the higher the spot. And it’s really no surprise that bidders at the bottom of the pile won’t even have their ads displayed due to their dwindling position on the list.

Google operates on a cost per click basis, with the advertisers paying Google anywhere form a few cents to USD 50 per click depending upon the nature and importance of the advertisement.

That’s not all though. Google has another ace tangled up in their web of user-inducement.

Capitalisng on the digital revolution and cementing their earning opportunity, Google AdSense also allows placement of advertisements within blogs and other websites.

Facebook also earns revenue in a similar (but not same) way. While most of Facebook’s revenue is generated from website and mobile advertising, in contrast to AdWords, Facebook advertisers can target users based on information like age, gender and geographic locations to custom tailor their advertisements.
Due to the nature of Facebook’s website, the average session tends to last much longer than the typical Google search, so information collected from Facebook is a better representation of consumer habits.

Given how majority of the developed and developing world, is tuning onto YouTube and Facebook, rather than their TV screens and print media, it is likely that advertisements would be more prevalent in the online sphere rather than the offline content.

But all’s not rosy.

Given that content has generated traffic in some cases where the proponents have resorted to hate-spreading and filth to get views or reads, advertisements placed on those very articles or videos have created enormous wealth for the content providers.

This has called for stricter rules and regulations.
Earlier, the policy had a very narrow range, addressing speech that was threatening against defined groups including religious and ethnic groups, LGBT groups and individuals.
The policy has now been expanded to include more groups like immigrants and refugees and it also applies to discriminatory pages which weren’t covered before.

Google has therefore revised its policy on hate speech and online racism.

This regulation has deterred advertisers from lucrative but malicious content, both on websites and YouTube as Google now allows companies to choose what kind of content, they’d like to advertise upon. For those who choose to not advertise on content that might be ‘mildly offensive’ or ‘politically volatile’, will reduce considerable revenues for the content providers and in the long run, will reduce viewership.

We’d written about the cause of this entire change in approach, earlier. You can read that here and here.

All said and done, Google and Facebook will retain their positions at the top even if they take a marginal hit in their earnings in the present term, yet this change is good and necessary.