Reading Bizweek (yup, the print edition) earlier this week, I noticed this article, titled “Keywords for Ad Buyers: Pay Up.” (BTW, it’s entirely too hard to find this stuff on B’Week’s site, but that’s another issue.) In the article, Ben Elgin notes Google’s extraordinary earnings, then adds that Google has the enviable position of pricing power:
What accounted for the outsize profits? The high prices Google charges for search keywords, for one. Industrywide, they were up an average of 43.7% last year, according to search marketing firm iProspect.com Inc. And the most sought-after words have become far more dear: “background check” rose 258% in a year. On the day of the earnings announcement, Google CEO Eric E. Schmidt told analysts: “There does not seem to be price resistance” from advertisers.
But the pricing power cuts two ways. Elgin goes on to give eBay as an example, quoting CEO Meg Whitman:
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