Google rebuts study predicting higher ad costs

Google's chief economist, Hal Varian, said Tuesday that "flawed assumptions" and "questionable methodology" undermine a SearchIgnite study that predicted a 22 percent ad price increase from Yahoo's search-ad deal with Google. Varian took issue with several elements of the study, but led off with this one: "ad prices are not set by Yahoo or Google, but by advertisers themselves," through the search-ad keyword bidding process. Varian also said the study assumed Yahoo will show Google ads for as many searches as possible, which indeed Yahoo has said isn't its intent.