How your donation for a refugee ends up in Google's till

Update: Following a response from Refugee Council, I decided to do further research on this issue. I jumped to conclusions at a few points. As a result, the picture I painted, combined with the example I gave, does not hold up. An update to this article will follow after my research.

For example, I write that as a condition of getting a Google AdGrant, Refugee Council Netherlands first had to invest $19,900 in Google Adsense. After publication, I learned that refugee work did indeed have to invest $19,900, but that this was done with another Grant from Google and not with their own money. So in the case of Refugee Council Netherlands, the conclusion I drew that donation money would go to Google is incorrect. For this I apologize

As I was doing a quick Google search this morning, I noticed how many (Google) ads were passing by from charities doing something for refugees. I thought to myself, this can't be free. Later I would learn that I was partly wrong in this.

When you want to advertise on Google, you create a campaign. Here you specify, among other things, the target group for your ad and a number of keywords with which your ad will be visible. The price you pay as an advertiser depends on a number of factors. One of those factors is the number of advertisers who want to advertise under the same keywords and characteristics as you. The final price you will pay is determined through a auction. Whoever bids the most is the first to be seen. To help you a little in this, Google provides a guide price.

I was curious about what the charities actually had to pay per click on their ad, so I decided to create my own AdSense campaign with Google under the keyword "refugee.

Google advised me to bid €2.22 per click. In other words, for everyone who comes to my website through my google ad, I pay about that amount. Because of my past experience with AdSense for various projects, I thought this was a high price. For comparison, I looked for another word that I know there are many companies advertising it 'Pokémon'.

For an ad with "Pokémon," I would pay about €0.27 per visitor that Google redirects to my website. Without thinking about it very long, in hindsight I draw the too-simple conclusion and attribute the high price of a refugee ad to the high demand from advertisers with the word 'refugee'. And I post the following Tweet.

There is a real war going on between refugee organizations. At least now you know where your donations and tax dollars are going.... pic.twitter.com/FXhGv80bRY

- Michel Baljet (@michelbaljet) Sept. 26, 2016

Pretty soon thereafter I get, quite rightly, several responses from the press spokesman for refugee work (one of the organizations that also advertise at Google), including this response.

Free ad credit is made available to nonprofit organizations that meet certain criteria. See Google Ad Grants: https://www.google.co.uk/intl/nl/grants/ 

And indeed, if you meet a few conditions then you already have a good chance of getting $10,000 ad budget at Google under the Grants project, meet some more conditions then you can even get up to $40,000 per month in ad credit, Google GrantsPro. The spokesperson for refugee work, Martijn van der Linden, pointed me to their 2014 annual report, it indeed states that they may advertise up to $40,000 per month through the Google GrantsPro project. This does mean that refugee work is subject to a number of terms has had to meet, and one of those condition is that in the 6 months they have to spend $9,900 per month for a minimum of 2 months on ads with Google.

A good investment at first glance, invest a minimum of $19,800 in exchange for free advertising credit worth up to $480,000 per year. Or is it?

1. Not everyone is awarded an Ad Grant; you must meet a number of conditions to be awarded one.
2. If you want to go for the Ad Grant Pro you have to have at least $19,800 invested in Google, many smaller charities can't allocate that money for it or can't justify it under their budget, the larger companies are left.
3. Because some large companies in the same sector (in this case refugee work) suddenly have a huge advertising budget for Google AdSense, the price per click goes up tremendously, in this case to €2.22. For the large companies with free Google money no problem, but for the small companies without free Google money it is. Those now have to pay much more per visitor than before.
4. From both large companies and small businesses, advertising and marketing is part of the budget, a budget that in the case of charities comes mainly from income from grants, gifts and donations.

The way I look at it, that $40,000 free advertising money is not worth $40,000 from the outset because the price per click rises so dramatically as several large companies have to invest their $40,000 per month under the same keywords. Today that $40,000 buys you about 16,000 extra visitors per month (assuming €2.22 per click). If I may compare that to Pokémon for a moment, with that, $40,000 (assuming €0.23 cents per click) buys me about 135,000 additional visitors. 16,000 additional visitors would cost me about €3680 in the case of Pokémon, but I can't make the comparison that simple.

In addition, it becomes almost impossible for the small organization to advertise in a decent place anymore, because how do you box up against the big names with bigger free budgets.

And what sense does it actually make for the big names, because if you can assume that they normally already have a bigger budget for marketing than the small company, now they all have an even much bigger budget for marketing. But in terms of ranking position within Google, it basically doesn't matter because all the big companies with the same big budget have gotten a little bit bigger, but then again that's my simple logic.

I see Google as the big winner here with their sweet looking charity project. Each big business brings in minus $19,800, the small businesses pay 10x more for their CPC, and all it ends up costing Google is some overhead and free virtual power. And the $19,800 that charities have to spend with Google within two months, those are ultimately rock-hard dollars paid in part by donors and grants with the idea that they would be spent on refugee aid but ultimately don't bring in much more than a few extra website visitors.  

And now when I look at Warchild's website and read their slogan 'For €6 a month you help a child growing up in war. Together we take the war out of a child Donate now' I can't help but think, 'yes that, or for €6 get 3 extra visitors to your website via Google AdSense'. But then again that's just my simple thought.

(The entire conversation at Twitter can be found here)