Google's $155 Billion Backlog: The Real Cost of Advertising

Growing Ecommerce – The Retail Growth Podcast

Q3 earnings are in, and the consolidation is real. Hosts Mike Ryan and Chris dive into the gravity-defying numbers, confirming that Google's core ad revenue is up a strong 12.6% year-over-year (YoY), and their massive Cloud backlog sits at $155 billion USD.

Chris states that Google is not the "bee-headed chicken" but remains the dominant "American eagle". The focus then shifts to Amazon, which has truly become a services business (Cloud and Ads), with its retail component no longer the core driver of its wealth.

But the big story isn't the growth—it's the crisis. Mike and Chris reveal a dangerous surge in ad costs: CPCs in PMAX and Shopping are up an alarming 30% year-to-date (since week one of the year), with Shopping CPCs specifically soaring by 36% YoY. Chris warns that this kind of inflation is a "real threat" to Google's business model because it is "forcing especially small and middle businesses out" of the auction.

They discuss whether a competitor like OpenAI could challenge Google by offering "massively discounted CPCs" to eat into market share. Finally, Mike introduces the free smec Market Observer tool that helps online retailers benchmark their CPCs and check competition levels from giants like Amazon and Temu.

About smec (Smarter Ecommerce):

At smec - Smarter Ecommerce, we specialize in transforming business goals into optimized ad campaigns. With over 16 years of experience in Google & Microsoft Ads, our intelligent software and expert services help retailers achieve superior results.

We're committed to giving you the tools and insights needed to stay ahead in the ever-evolving world of digital advertising.

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Chapters

1. Google's $155 Billion Backlog: The Real Cost of Advertising (00:00:00)

2. Q3 Earnings: The Consolidation of Power (00:00:34)

3. Google's Ad Revenue and Cloud Backlog (The $155 Billion Stat) (00:01:56)

4. Amazon is now a Services Business (The 50% Wealth Mark) (00:04:59)

5. The CPC Crisis: Why CPCs are up 30% year-to-date (00:10:48)

6. The Threat to Small Business: Are retailers being priced out? (00:12:14)

7. Shopping vs. PMAX: Why Shopping CPCs are accelerating faster (36% YoY) (00:13:47)

8. Could OpenAI's "Massively Discounted CPCs" challenge Google? (00:16:56)

9. The Solution: Introducing the smec’s free Google Ads Benchmarks (00:19:32)

10. smec’s Google Ads Benchmark Data: Benchmarking CPCs and Competition from Amazon/Temu (00:21:10)