Google’s dominance today is unquestionable. The word Google has become a verb.
But, that has not stopped several dominant forces to work against it. Interestingly, there is no one challenger that has emerged to fight against it, however, a collective set of forces are coming at Google all at the same time.
Key Observations About the Revenue Engine for Google
it is no secret that the revenue engine for google is advertising. It has been that way for a LONG time, but now it’s slowly shifting to “Other Sources”
I took a basic set of numbers from the last two years from public filings AND publicly available information about the growing number of online users.
Here is the chart for your quick reference:
Here are quick observations with reference to 2014:
1. The Gorilla of the revenue sources continues to be Ad revenues from Google Websites growing at 20.48% from year 2013
2. The slowest growth rate (6.51%) is the revenue from Network sites
3. The highest growth rate (43.4%) is from “Other Sources”
4. Online users at the end of 2014 stand at 2,925.249,355 and has grown 7.85% from 2013
5. Dollar per online users grew by 11.7% for Google websites but dropped by 1.24% for the network sites. Interestingly, the dollar per online user grew by 32.96% for “Other Sources.”
6. Overall the growth of dollar per online users was around 10%
If we remove the “Other Sources” from the picture for a while Y-O-Y growth does not look as good as it could be.
The various reasons for that is the focus of this article.
The Problem With the Key Driver of Revenues: Intent Expression Engine
Think about it. If the ad revenues from Google websites (mainly Google Search) continues to be the dominant force, there must be something magical about it. Well, it is magical, but it’s also common sense now. The magic happens to be that, today, Google still happens to be the place where people express their intent. It is the ultimate “intent expression engine,” Advertisers love it because they can creatively intercept the users at the point of intent expression and get them to their various offers.
In fact, this is so good that various advertisers continue to bid against each other on how much more they are willing to pay Google to get ahead of others to make this interception.
It seems to work as a WIN-win-win. The big WIN is for Google as advertisers fight to pay more than others to get in front of the line. The consumer and the advertiser win too in this game.
So, what’s the problem?
The key issue is that less people are using Google to express their intent. The alternative options available to express the intent and those are the collective forces acting against Google’s Dominance.
The Collective Forces
Here are the various forces (not a complete list by any means)
1. Social Networks
There are many globally, but for discussion purposes, I picked a few:
The Facebook Family (Facebook and WhatsApp to start with) is taking the lions share where people express their intent (apart from sharing other stuff, of course)
I have seen people posting questions and receiving responses almost instantly on Twitter.
LinkedIn discussion groups are filled with people asking and getting answers for their questions.
Quora is a human-powered Q&A engine focused on trivial to deep questions.
People have only 24 hours in a day. Time spent elsewhere is time NOT spent on Google properties.
2. Internal Knowledge Networks
Rise of amazing tools like Slack or Salesforce Chatter instantly gives you access to the internal or group knowledge networks. Rather than going to Google, one can simply post the question (intent to know) on the network and receive more thoughtful answers from members of their tribe.
3. Specialty apps
Specialty apps are taking a share of the intent expression engine in a big way as parametric searches are superbly build-in within the app interface. Here are some examples:
Yummly is an interesting recipe aggregator if you are looking for recipes
Spring is a shopping app that customizes what you see when you shop
120 Sports will give you access to expert commentary on trending sports topics
Yelp lets you find and see reviews of restaurants wherever you are
I can go on and on…
Every time someone expresses their “intent” on one of the apps, that is one search less for Google.
4. Learning Destinations
In this fast moving world, people have to learn at a rapid pace just to stay in the game. Curated knowledge of any kind is pure gold.
Learning portals like Khan Academy, Udemy, Lynda.com (now part of LinkedIn) is taking away a ton of traffic where people express their learning intent and once they find something they need, they spend a lot more time consuming that curated content.
Our own startup, Audvisor has an “eyes free, hands free” approach to curated content from invited experts. It’s like “Pandora for expert advice,” helping you probably make the most of time that was previously not fully leveraged (commuting, workouts, waiting, dressing up etc.) to learn and grow. In this case, if you express your intent as “Help me advance my career,” all you have to do is to push a button, lean back and learn from worldwide set of experts.
5. Radical Innovations
Radical innovations like Amazon Echo aim to intercept the intent of the users even before they reach for a computer. They are home or office companions that are available at your beck and call, answering questions from you or anyone around you bypassing the need to go to Google.
What is impressive about Google is that it continues to maintain its dominance in spite of all the collective forces working against it. Hats off to them. Now, time to wait and see how this all plays out.
PS: Two more articles you might be interested in are below
1. What to do When Your Core is Growing Fast, but NOT Fast Enough (About LinkedIn)
2. The $17K Watch and the Art of Deflection (About Apple)