A Google program announced with big fanfare three months ago to help businesses survive the coronavirus pandemic is being criticized for the inconsistent amounts of aid it has provided to recipients and its limited financial impact.
The tech giant’s plan, pitched as a way to support struggling ad customers, was to give $340 million in ad credits to small and medium-sized businesses. The company said it wanted to “alleviate some of the cost” of advertising during the pandemic, to help businesses survive the downturn.
But ad agencies that mange the ad budgets for other businesses say that Google’s program, while welcome, hasn’t made much of a difference. The maximum credit that Google is giving advertisers—$1,000—is insignificant when considering that many of them spend hundreds of thousands of dollars with Google annually.
“There was a lot of excitement about it,” Alex Melen, co-CEO and CFO of digital ad agency SmartSites, said about Google’s initial announcement of the program, and before it disclosed the $1,000 maximum award. “And then it was like don’t get too excited. I don’t think $1,000 is going to save anyone.”
For example, Pauline Jakober, CEO of digital ad agency Group Twenty Seven, said one of her clients, a law firm, spent $310,000 last year on Google ads. The law firm ended up receiving a credit of $750, or only about 25% of what it spends on Google ads daily. “The thought was nice, but the execution and what people are getting is interesting,” Jakober said. “That’s a lot of money they’ve given Google in one year, so we were a little shocked.”
Google declined to make Philip Schindler, who oversees Google’s ad business, available for an interview. In a statement, Mary Ellen Coe, who oversees Google’s global ads business for small and medium-sized companies, said: “The COVID-19 crisis has deeply impacted small businesses globally and we designed our [small and medium business] ad credit to reach our small business customers broadly with a gesture of support. We hope this will help to defray some of the cost of re-engaging with their customers at a time that is right for them.”
Google declined to disclose details about how allocates the credits other than they will all be handed out by early July. But five ad agencies that work with Google provided Fortune with glimpse into how the program has been managed.
Those agencies said that the program, announced March 27, got off to a slow start, with only a few of their clients receiving any credits by early June. But starting on June 18, credits for thousands of advertisers started appearing in their online ad accounts.
Clients received credits of $100, $300, $750, or $1,000. Google said the amount would be based on how much the advertisers spent on ads in 2019 and the country in which they were located, but what they received didn’t seem to square with that policy.
Clients with Group Twenty Seven that had spent $100,000 to $586,000 with Google, received $750 in ad credits each. At digital marketing firm Scorpion, however, some clients that only spent $150,000 received more—$1,000.
At JEMSU, another marketing agency, a client that had spent nearly $456,000 on Google ads in 2019 and another that spent $43,000 both received a $750 credit. Meanwhile, clients of SmartSites that spent $10,000 to $100,000 on Google ads last year received the same amount.
“It’s a mystery,” Group Twenty Seven’s Jakober said. “I don’t know what kind of algorithm they’re giving different people to siphon off the money.”
Asked about the inconsistencies, Google said that they’re rare and likely caused by foreign exchange rates. However, most clients working with the five agencies that spoke to Fortune are based in the U.S..
While the ad agencies doubted the ad credits would do much to help recipients avoid financial duress, some clients will likely benefit more than others, they said. For example, one of Scorpion’s clients, which only spends around $400 monthly on Google ads, received a $100 credit. That translates into about 25% of an entire month’s spending on ads.
“It’s not a significant value in the grand scheme of things,” said Daylen Farkas, a vice president at Scorpion, “but I think every bit counts nowadays.”
Google’s ad credit program was part of its larger $800 million coronavirus relief package that, in addition to advertisers, is meant to help a broad swath of recipients. The company said it has allotted $250 million in ad grants to more than 100 government agencies and health groups so they can provide people with information about the pandemic. More than 785 million people have seen those ads, Google said.
Among the recipients was the World Health Organization, which received $30 million in ad grants. So far, the organization has used $13 million of that amount.
Additionally, Google allotted another $200 million to help provide small business loans. So far, the company said it has arranged for $125 million in loans, plus another $45 million announced later, to be distributed by the Opportunity Finance Network, a network of private financial institutions that lend to disadvantaged businesses.
Five financial institutions have already received $15.5 million in loans. More are expected to be announced every month over the next year. A similar $75 million loan program is planned for overseas, using a different partner.
Meanwhile, Google is giving $20 million in credits to researchers and academic institutions to cover the cost of using Google’s cloud data centers. Harvard Global Health Institute, Google’s partner for handing out some of the credits, said it has doled out nearly $7 million so far.
And finally, Google, in partnership with the CDC Foundation, the philanthropic arm of the Centers for Disease Control and Prevention, and safety equipment supplier Magid Glove, shipped more than 3 million masks to 25 health organizations in 14 states and territories.
Original source: https://fortune.com/2020/06/28/google-ad-credits-coronavirus-relief-update-covid-19/
