How Google profits from Grant Kit Scam schemes

Google, the de facto web-emperor and tech stock darling of Wall Street, profits from federal grant kit scams by selling advertising space to scamholes that are knowingly trying to rip people off. While I have no idea about the actual amount, my guess is that by allowing itself to do so Google adds thousands of dollars per day (hour?) to its advertising revenue. They're making serious money by letting ripper-offers use the Google Adwords system as part of their baiting kit.

We'll get to the details.

As mentioned in previous posts, grant kit scams sites have mushroomed in the last couple of months. There are a couple of reasons for this:

• A deteriorating economy [good for doom and gloom marketing tactics]
  
• An enormous increase of people looking for alternative sources of income due to job loss or uncertainty about where things are going with the economy [excellent potential victims for scamming]
• The Obama Administration's messages of 'change' and 'hope' [nice vehicle for 'mood marketing' tactics]
  
• The $700 billion stimulus package as initiated by the Obama Administration [good for piggyback 'what's in it for you?' marketing tactics]
  
• The federal bailout program [also good for piggyback 'what's in it for you?' marketing tactics]

This 'great opportunity' has led to a large increase in affiliate marketers trying to cash in on the situation. By the looks of it, many of them are making an obscene amount of money by promoting these scams. As mentioned before, whenever an affiliate marketer drives a visitor to a scamhole's site and a sale is made, (s)he gets paid an amount of money, probably around the $20 to $30 mark.

Often these affiliate marketers set up 'landing page' or 'entry' sites, that usually consist of a single page. Such landing pages are typically sprinkled with visual and motivational elements, calls to action and 'testimonials' referencing all of the marketing tactics mentioned above.

The goal? Make sure a visitor clicks through to the next level, the actual scamhole's site, and makes a purchase. Ca-ching!

But how do you get visitors to find and visit your site if it can take months and months of work to get a decent position in the search results of search engines like Google, Yahoo and Live Search?

Advertising to the rescue! In today's e-conomy, there's one sure way to drive traffic to your site, and that would be the contextual advertising way. As you may know, Google is one of the major players in the contextual advertising market.

We've all seen the 'Ads by Google' when we visit a site, or when we do a search in Google. The system through which a company or individual can create and distribute their ads is called Google Adwords.

Anyone can open a Google Adwords account and create ads to be displayed as contextual ads (i.e. ads that match the overall topic of the page or site they're displayed on). But you have to pay for it. Every time your ad is shown and someone clicks on it, you pay an amount which is determined by several factors. You can set a maximum placement bid price which influences the positioning of the ads - the more you pay, the higher up the ads will show.

Example of premium paid ads on Google

Ads that show up at the top of the search results (as opposed to in the right hand column of the Google Search Results page) are premium positions - these go to the highest bidders and when there are several competitors vying for these positions the cost per click can easily reach several dollars.

In other words, if I create a Google Adwords ad and bid for and get placed in the top position, it will cost me $2 (example). If 100 people click on my ad each day, it costs me $200. Now if you are going to spend that kind of money per day - and I have no doubt there's people that spend multiples of this for their scam ad campaigns - you have to be damn sure that your marketing efforts yield a decent return on investment. Considering the fact that there's so many Adwords advertisers spending their money on pay per click ads I can only assume that it does pay off nicely.

Google has a keyword tool that allows anyone to do some basic keyword research. With it you can determine what specific search words and phrases people use when searching for something via Google. Based on the keyword tool results you can then target your advertising campaign to display ads triggered by these words and phrases.

Take a look at the top results (sorted by estimated average cost per click) for the keyword set [grant, free grant, grant check]:

Google keyword tool results for [grant, free grant, grant check]

You may have to click on the image to see a larger version, but as you can see there's a lot of 'advertiser competition' for specific search terms related to [free] grants, and the estimated cost per click averages around $2.

So $2 a time, someone is set up to get scammed.

In my opinion, Google is the money-driven enabler here. Google should not tolerate scamholes like this abusing the Adwords contextual advertising system for their scamming practices. Google should set up a team that actively researches and pursues these kinds of advertisers [hint@Google: I am currently unemployed]. I know, I know, Google has lots of other things to worry about such as a 50% drop in stock price, whether or not to serve gourmet food to its employees, what the next Web 2.0 winner will be, etc., etc.

Oh, and about whether you can make money without doing evil (seriously).

Well Google I'll tell you what is evil. See this blog, and this post in particular.

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