"Gauging Google's Gaffes"

Essay by robdado2University, Master'sA+, April 2006

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This reading of Business Week article, "Gauging Google's Gaffes", leads me to believe that a practice associated with successful business is honesty. But sometimes honesty isn't well received, especially when large details are left out. As analysts dissected the company's leaked financial forecasts, they also chastised Google for repeatedly confusing investors. Google also advised investors to disregard its internal forecasts, which were briefly posted last week on the company's Web site. Besides forecasting its revenue, Google indicated its robust profit margins might weaken this year as more its rivals try to lure away some of its advertising partners.

Google is learning this the hard way. "On March 8th, Google used a vaguely worded blog on its site to disclose a settlement of as much as $90 million in a case concerning click fraud. That came days after the company said the case was without merit and told investors the impact of click fraud on advertisers is immaterial."

(Helm) While $90 million is a drop in the bucket compared with Google's total annual revenues, there are those who argue this is still pretty material information, given the high profile nature of this company and the emergence of click fraud as a high-profile subject.

The author's research led him to conclude that Google had some growing up to do to shape its image. Click fraud, the practice can wildly skew statistics on the popularity of an ad, drain marketing budgets, and enrich the scam artists behind it. Google says it does an effective job of stopping the practice, but it didn't share with advertisers or investors exactly how it does it, or how much money it is spending on the problem. CEO Eric Schmidt thought the cost associated with click fraud "immaterial."

Their business and personal wealth was built on everyday...