Google-Yahoo! Ad Pact Hurts the Little Guy

That's no longer the case, says marketing strategist Denise Shiffman, founder and principal of Venture Essentials and author of The Age of Engage. "If we can only buy ads from Google across most of the major publishing platforms, Google has a great deal of power in setting the price, rather than the market setting the price," she says. "Small business will get hurt the most, because they need their dollar to go the furthest."

Google prides itself on its auction-based pricing for ads: You pay a certain amount per keyword, shelling out more for the most popular words. In part, small businesses are being hurt by large corporations that can afford to buy up the most popular search terms. Indeed, because all pricing is done through an automated system, Google and Yahoo! have argued that neither company can set prices.

But Shiffman points out that there are other ways for Google to raise profits. "Google takes a percentage of every ad clicked on, as do all paid search vendors," she says. "At any time, Google can change that percentage and take more from advertisers. This definitely would hurt small companies, which would earn less from their ad click-throughs."

The Google automated system also makes it harder for small companies to make deals in exchange for ads, a crucial way businesses without big marketing budgets to stretch their ad dollars.

Because automated ad sales don't allow for more personalized marketing agreements, small businesses have no choice but to compete against the big guys for keywords, almost always a losing battle.

Even if the Google-Yahoo! deal doesn't go through, Google will still control the vast amount of online ads. That means small businesses have to think creatively, bidding on keywords that are less popular but which still target the right customers.

Small-business owners ought to do their homework, analyzing where ads appear and are most successful. Then refine the approach.

Whether Google ends up gouging more profits out of small businesses, online ads are a necessity for many companies. So you'd better make sure they're actually leading to sales.