Boutique digital agency claims US giant tried to steal its client
Alleges AdWords account tampered with, suspended without reason
GOOGLE Inc is investigating a complaint from a small Kuala Lumpur-based digital advertising agency which is alleging that the US tech giant’s employees in Malaysia and Singapore had tampered with its AdWords account and gone behind its back to directly deal with its client.
Google Malaysia did not respond to a host of questions from Digital News Asia (DNA) as at press time, but a Google spokesman said the company is investigating the allegations.
Last week, DNA received correspondence and documentation between the agency and various Google employees, with the agency requesting an explanation why a Singapore-based executive had gone directly to its client, a government-linked company (GLC).
Google has not clarified with DNA whether this executive is with the Singapore subsidiary or Google Asia Pacific Pte Ltd, its regional headquarters which is based in the island-republic.
Previously, agency accounts for Asia Pacific were handled out of Google Ireland Ltd, but these have since been transitioned to Google Asia Pacific.
Worse, just after this Singapore-based executive began engaging with the client directly, the agency’s AdWords account was suspended because of an alleged payment issue – despite the fact that the account still had credits accruing to it.
Within hours of the account being suspended, the Singapore-based executive emailed the GLC advising the client that its agency’s account had been suspended, and urging it to deal directly with Google instead, saying that resolving the agency issue would be a long, drawn-out affair.
However, the account was almost immediately activated after the agency complained to Google and pointed out that its account still had credits, and that it in fact, it had overpaid.
The tale does not end there. The GLC client got dragged into the picture when it found out that its AdWords campaign had also been modified, without its or its agency’s knowledge, to be ‘Optimised’ at CPC (cost per click) rates that were 80% higher than what the agency had set for the client.
The modified AdWords campaign was still linked to the agency’s credit card, which meant that it would have been footing the bill, the agency alleges.
Finally, the agency is also alleging that on the day it reached out to Google Malaysia senior executives and the Google legal team, someone had accessed its account and deleted the history.
The agency’s repeated emails to Google Malaysia executives and to the company’s corporate headquarters requesting an explanation were ignored for some time.
In countries like Malaysia, where Google’s presence is largely sales-oriented, much of the local subsidiary’s activities centre on programmes like AdWords.
In December 2012, Google Malaysia launched an SME partner programme to connect small and medium enterprises (SMEs) with AdWords providers.
In April 2014, it even launched a Bahasa Malaysia (Malay language) version of the platform to increase its reach. At the time, Google said it had 150 AdWords partners in Malaysia.
The company also holds a multitude of seminars, workshops and other such programmes for both its AdWords partners and their clients.
Indeed, Google is no longer a search or online services company, but an online advertising giant.
About US$59 billion of its US$66 billion revenue in 2014 came from advertising, and the bulk of that from its Google AdWords service, which places ads in close proximity to its search results or on partner websites.
But while the Mountain View, California-based company’s net profit keeps increasing and it remains a Wall Street darling perhaps second only to Apple Inc, its operating margins (operating income divided by revenue) have been on a downtrend.
Its profits have been going up, from US$8.5 billion in 2010, to US$9.74 billion (2011), US$10.7 billion (2012), US$12.9 billion (2013), and US$14.4 billion (2014). In the same time-frame however, its operating margins have eroded from 35% in 2010, to 31% (2011), 30% (2012), 27.7% (2013) and 25% in 2014.
In its 2014 financial report, the company said it generated 89% of its revenue from its advertisers, but cautioned that it was facing increasing competition from Criteo, AppNexus, and Facebook, as well lower margins from mobile devices and new advertising formats.
The need to increase margins by dealing directly with clients, especially large ones such as the Malaysian GLC, can be seen by further warnings from Google in its financial report: “The margin on revenues we generate from our Google Network Members is significantly less than the margin on revenues we generate from advertising on Google websites.
“Also, the margin on the sale of digital content and apps, advertising revenues from mobile devices and newer advertising formats are generally less than the margin on revenues we generate from advertising on our websites on traditional formats.
“Additionally, the margin we earn on revenues generated from our Google Network Members could decrease in the future if we pay an even larger percentage of advertising fees to our Google Network Members,” it said in its filing.
Elsewhere, it said, “We generate a significant portion of our revenues from advertising, and a reduction in spending by or loss of advertisers could seriously harm our business.”
Google also noted that search queries are increasingly being undertaken via apps tailored to particular devices or social media platforms.
To download a copy of Google’s 2014 financial report, click here.
In 2012, Google had to apologise to Kenyan-based online business listings provider Mocality when it found out that Google employees had attempted to undermine its business by lying to its customers and improperly mining its data.
“We were mortified to learn that a team of people working on a Google project improperly used Mocality's data and misrepresented our relationship with Mocality to encourage customers to create new websites,” said Nelson Mattos (pic), then Google’s vice president for product and engineering, Europe and emerging markets, PC World reported.
As for Google going behind its partnering agencies’ backs to deal directly with clients, DNA spoke to a few agencies in Malaysia in preparing this report. However, while a few related similar anecdotes, none wanted to go on the record, and most such incidents were second- or third-hand experiences.
Other agencies elsewhere have also complained on various blogs or forums, but none have gone on the record, given any real details, or pursued further action.
However, the senior executive of a regional digital agency did give DNA some information, saying that his company experienced something similar to this recent incident, sometime last year.
In servicing an Asian multinational technology company’s local campaign, it too found its account suspended for non-payment – it had received ongoing reminders to make payment, despite having already done so.
In fact, the regional agency paid twice, just to be sure, but when the account was suspended, the Google subsidiary where the multinational client was headquartered went to the client without informing the agency, and suggested it work directly with Google instead.
When asked why his agency did not complain or escalate the issue, and why it continued to work with Google, the regional agency executive said, “90% of the search market belongs to Google – if I don’t work with them, I would be killing myself!” – Additional reporting by Goh Thean Eu
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