I want you to imagine in your mind's eye, one of those old fashioned auctions. But there's some variables here. The auctioneer, instead of being an impartial third party, is actually the person that makes money from anything that you bid on or buy. So that's big change. Number one, big change. Number two, the auctioneer. Within the confines of this little dream environment we've built is omniscient, is effectively God. The auctioneer can see everybody willing to bid on. Everything that's available for bid, the auctioneer can see what those people are willing to pay. Even has permission to increase those bids. If the auctioneer thinks that whatever it is he's auctioning is of value to that person, and he can see how much money those people are going to make on the resale of whatever it is that they're auctioning. So he has complete and total. Visibility into all the available inventory. Everybody who wants that inventory, what those people are willing to pay and what they make long term. That's Google Ads. Google Ads is I. A fixed auction. Here's where things get crazier. Okay? So it's supposed to be an auction, and the auction is supposed to be based of the competitive landscape, right? The number of people bidding, and it's not a direct auction. Google in its documentation at one point said that it was based off of the Victory Auction Model, which says that the highest bidder wins the bid, but pays the second highest bidders price. But it's non-linear because you're not just being gauged off of money, which is actually brilliant by Google, by the way. it's you're being gauged. Your auction is a combination of how much you're willing to bid, but also how relevant you are, the context of the search, et cetera. And that's why the more relevant you are, the higher you'll pay in. The less, or the higher, higher you will rank and the list you'll pay, which is how we get people to trust our ads. All of that aside, because you're in an auction environment, it stands to reason that you would be subjected to the organic ecosystem that is the economy of that auction. So if it's a very competitive auction, you're going to pay more. Fine. Got it. And, and that's the way it works. By the way. More competitive the more you pay. But what if it gets less competitive? Doesn't it stand to reason that in a less competitive market, in a less competitive auction, you would pay less money? No it doesn't. Google has something called add rank thresholds. Google sets a minimum bid, which is effectively the reserve price that needs to be met before an ad can be shown. And this is variable across every key phrase, every placement in the entire Google ecosystem. the ad ranked threshold, if you're trying to buy blue light blocking glasses might be different than the ad rank threshold if you're, trying to sell vacation homes. What's crazy though is, Ad ranked thresholds are calculated dynamically in real time based on a myriad of opaque factors. So Google doesn't tell you how they calculate ad rank thresholds, but they do give us hints. One of the hints, this is exact quote from Google's documentation, the value advertisers place on users engagement with their ads, Google admits outright. That they're pricing this inventory, not according to the organic ecosystem. That would be an auction, which says that there's no competition, there's effectively no price, you know, and obviously they'd have to have a minimum, but you think that minimum would be ubiquitous across the entire network, but no Instead, Google goes, I'm gonna price my inventory based of. What I think it's worth to you. So no matter whether or not there's an auction here, oh, you're a personal injury attorney. I happen to know that personal injury attorneys will pay a whole lot for this, and I don't care that there's nobody bidding on this in your area. I'm gonna charge you a whole boatload of money anyway, which is, I think I'm not a law man. But isn't that like the literal definition of price fixing? why have we not all been together farmer with pitchfork style? rewind. First of all, you need to know that Google gets to have its cake and eat it too. When traffic is competitive, it charges you based off of competition. When there's no competition, it charges you based on the value of the traffic, and Google's the best ecosystem in the whole wide world in order to determine the value of the traffic. Here's why this is important, Google is moving from a search-based. The crown jewel of Google Ads is moving from search space, generative ai, and it's gonna happen no matter what, it's inevitable. In those instances, the auction. Becomes more blind to us because the likelihood of our ads appearing alongside other competitor ads slim significantly with the generative AI results. You're going to be given a answer, not a collection of options, which means with ads, you're gonna be given an ad, not a collection of options. This is the way that Bing's AI driven chat works right now, so it's not conjecture. And if that happens, then you don't get to see how competitive the auction is. So how do we reverse engineer the integrity of the auction? And the answer is you don't. You just trust Google and you pay whatever they ask you to pay. I'm depressed now. You're probably depressed too. I'm sorry I did this to you. I didn't realize this was gonna go so dark so quickly. But those are, that's ad ranked thresholds. Go look at Google's documentation on ad ranked thresholds. By the way, I include a link in the description of this video. It's unbelievable. Like just come right out and say it like, yeah, we charge you based on what we think this is worth, not based off Imagine any other auction doing that. Imagine like the stock market, the commodities like, oh, I know that I have an excess of corn and I know nobody wants this corn. I also know that you're starving to death and you need what are we doing? This isn't capitalism. Anyway, that's all I got. Like, comment, subscribe. I'd love to hear your thoughts in the comments. By the way, I'd love to hear, if you think I'm crazy, I'd love to hear what you think of these videos. Like, do you want more stuff like this? Lot of stuff like this. Lemme know what you want. I'll do it. Peace.