A New Decade Finds Google Under Assault

In an earlier post, I referred to the prior decade as the "Google Decade".  For digital marketers, the big story last decade was paid search and organic SEO.  Google grew search market share every quarter and expanded their AdWords program to many sites and countries.  They also established a culture of innovation that resulted in numerous new products such as Content (display ads), Earth, Print, TV, Gmail, Analytics, Apps, etc.  Despite this new product rollout, Google still derives the vast majority of their revenue from AdWords, leaving them vulnerable to changing user behaviors and other advertising options.  After dominating the last decade and proving a great ability to innovate and execute, Google finds itself being attacked from all sides.  The recent news and announcements from Apple, Facebook and Microsoft tell the story.

  • iPhone - despite their closed approach, single carrier strategy and Google's aggressive Android push, the iPhone continues to gobble up smartphone market share.  For the quarter ending March 28, Apple sold 8.75 million iPhones, representing 131% unit growth year over year.  Users don't search as much on their iPhones as they do on their desktop or laptop PCs. iPhone customers, instead, depend on Apps to find and enjoy digital information and content. Apple's App ecosystem and superior user experience are key to the success of the iPhone.
  • iPad - 500,000 units have shipped in the first week or so.  This new device type, which runs on the mobile, iPhone OS, is changing the game in terms of how we consume and interact with digital media.
  • iAd - introduced on April 8, this program greatly benefits developers, publishers and advertisers. All iAds will be hosted and served by Apple. More about this can be found here and here.  
  • iTravel - on April 21, Apple filed a patent for iTravel - their travel-centric App for the iPhone and iPad. Apple is getting into the travel transaction (full user experience) business according to the filing.  This is consistent with their iAd strategy to allow advertisers to reach iPhone and iPad users without making them leave the App to respond to or buy from the iAd.
  • Implication for Google:  For the first time, Apple is now in the digital advertising business and they have the mobile OS and platform to grow their advertising market share at Google's expense.
  • 400 million active users - also, it was announced on March 19 that Facebook eclipsed Google and became the largest website in terms of page views.
  • Social Plug-ins - last week, Facebook announced their new distributed "Like" program which will significantly grow their rich user data and provide earned media value for commercial websites of all types.  This valuable profile data will yield greater advertising value (ROI) and quickly grow Facebook into a digital advertising powerhouse.
  • New Graph API and platform - this simpler platform is designed to add value for developers, users and commercial websites.  This should result in more "social graph" data for advertisers to target.
  • Implication for Google: Facebook is innovating quickly and solidifying itself as an extremely large and valuable advertising platform where precise targeting can occur - sounds similar to how we described Google 5 or 6 years ago.
  • Yahoo Search Partnership - this deal will allow the #2 and #3 player to join forces to battle Google.
  • Bing launch and share growth - for the first time in memory, a search engine besides Google gained search market share.  Microsoft has shown a great ability to innovate with Bing.
  • Facebook Partnership - last week, Facebook and Microsoft announced their social collaboration through the Docs.com launch.  This site, which leverages Office, cloud computing and Facebook,  enables users to create and share Microsoft office documents with their Facebook friends.  
  • Implication for Google:  Microsoft has a war chest of cash and is spending it to gain market share in Search and cloud-based Apps - two strategic markets for Google.
Google is firing back:
  • Android mobile OS and Nexus One phone - launched on multiple carriers with numerous headset models including Google's Nexus One phone.  Early results suggest these phones are selling and allowing Google to gain smartphone market share, at the expense of RIM and Palm.  Android phones make "searching" the web a lot easier than iPhones.
  • Bazaarvoice partnership - Last week, an interesting partnership between Google and Bazaarvoice was announced.  Bazaarvoice provides private label user review technology to many major manufacturers and online retailers.  Google will index these reviews and aggregate user scores and include them in search results and sponsored search ads.  This exciting integration of earned media with paid media and search results will be interesting to watch.
  • ITA acquisition - just a rumor, but the strategic thinking behind this potential travel acquisition shows that Google is now willing to risk their AdWords revenue and compete with some of their largest advertisers (Expedia, Orbitz, etc.) in order to dis-intermediate the travel supply chain and bring more efficiency to the travel market.
What's your take on my analysis?  Will Google withstand this attack and continue to grow at the levels we've all become accustomed to?  Please comment below and keep the conversation going.

    Apple's iAds - Further Analysis and Predictions

    After I wrote my last blog post about Apple's iAd mobile advertising program, I came across a link to Steve Jobs' 10 minute iAd introduction. I have to admit, I was blown away with the presentation and, while it confirmed many of my thoughts expressed in my last post, it also helped me crystallize the following implications and predictions for app developers/publishers, brand marketers and direct-response, transaction-based advertisers.

    iAd Value for App Developers & Content Publishers
    • New revenue stream for existing their apps through the 60/40 ad media revenue share with Apple.
    • New source of business for developers through a new iAd development service.
    • A better advertising channel to market their own Apps.
    • Development tools that are "very easy" to use, according to Mr. Jobs.
    • Simple & easy process - Apple sells and serves all iAds.
    iAd Value for Brand Marketers
    • Superior digital creative - iAds offer more interactivity than TV ads & more emotion than Display ads.
    • Better user experience - according to the presentation, navigating an iAd is "very simple".
    • Innovation value - brands can ride the "cool" and "innovative" halo from Apple.
    iAd Value for Direct Response & E-commerce Advertisers
    • This lies with Apple's growing option value.  I predict Apple will launch iStore which connects to merchant and travel back-ends via APIs and allow the user to transact via iTunes, just as they do currently with songs, movies, books and apps. Jobs mentioned a "shopping list" for Target - what does he mean?  Is this a new form of shopping cart that Apple is working on?
    • When will Apple launch iWord - a DR ad solution tied to App Store inquiry targeting?
    Net, net...the winners: Apple, developers and publishers, brand marketers.  And, the losers: Google, Microsoft, Adobe.  

    Do you agree?  Please share your comments.

    Search Fragmentation is Coming - Be Prepared to Capitalize.

    This week, a Google representative declared "in three years time, desktops will be irrelevant".  In December, Morgan Stanley stated "more users will likely connect to the Internet via mobile devices than desktop PCs within five years".   According to Compete.com Facebook now has more users than Yahoo.  This rapid increase in mobile and social screen time is changing user behavior and creating new types of searches - apps, friends,  music, photos, etc.  These changes will fragment new search queries away from Google and other universal search engines.  Google will continue to dominate desktop-based searching, but new smartphone and social searching will fragment to a host of players including Apple, Google and new companies.  These new entrants, including Twitter, have an opportunity to adopt Google-like PPC ad model to complement search behavior on their services. Some will simply copy Google and design an even better mouse-trap and APIs for ad/bid mgmt. Digital marketers need to follow these trends, begin testing and measuring new models and start gaining insights, revenue, profit and, most importantly, a marketing competitive advantage.

    On this blog, I've labeled the last decade "The Google Decade".  Despite predictions of vertical search and resultant search fragmentation, it never materialized. In 2005, I remember search pundits predicting huge growth for vertical travel search. We have seen the emergence of meta-search sites like Kayak, but have also seen failures such as Yahoo's Farechase.  Vertical search never came to pass as Google added incremental features to their popular search service and creating Universal Search - local, images, blogs, maps, real-time Tweets (recently), etc.  For practical matters, Google's ground-breaking business, AdWords, only faced one competitor during the decade - Yahoo's Overture.  It's nice to be a fast-follower.  But, Google really focused on user experience and having the best search experience before they even added a revenue model through AdWords.  This is precisely the strategy of Facebook, Twitter and others.

    Google and Apple are in an epic battle for smartphone market share that will continue through this decade.  Google hasn't faced competition like this since the early days with Overture.  Based on this chart, both Android (Google mobile OS) and Apple are gaining smartphone market share and, most probably, will win.  As I spoke about in my January post, Apple is focused on a new user experience and Internet navigation model that is not centered around Google search. Also, Google's launch into Social through Buzz has been challenging and could contribute to a loss of trust and Google's looming privacy bubble this decade.  So, will these trends and new user behaviors lead to the search fragmentation others have been predicting years ago?

    Let's look at some predictions of things to come, how this will affect the way we search for things and how advertisers can capitalize on these changes.  
    • Apple iWords - In a recent blog post, I wrote about the proliferation of mobile Apps.  I posited that on Apple smartphones, we are being trained to navigate the web through apps and Apple's App Store.  In fact, the screen area dedicated to search in a fraction of what you see on a typical PC browser.  Just like Google trained us to use Search to navigate the Net through a PC, Apple is training us to use their storefronts. Apple's PPC solution will tie relevant search ads to app searches. I am sure their are plenty of App developers and businesses that would love to reach this highly targeted user base.
    • Twitter Search - Rumors abound that Twitter is about to launch a PPC model to compliment an improved Twitter search experience. This could work and provide a revenue model that doesn't interfere with the micro-blogging experience.
    • Facebook Advertising - Facebook has already launched a Google-like self-service, auction-based advertising service.  While the user feedback has been bumpy, the hyper-targeting opportunity remains.  Facebook has wisely exposed their API allowing bid-mgmt and attribution tools to add Facebook to their systems.  It is not a stretch to see Facebook improving their on-site search experience and adding these targeted ads alongside the search results.
    • Digital media mgmt technology will add new PPC platforms and optimize accordingly using holistic attribution tracking, measurement and optimization.
    How should digital marketers prepare for these changes to come?  Let's look at a few recommendations. 
    • Ramp up your knowledge about mobile, social, apps, etc.  Talk to experts, immerse yourself, read blogs.
    • Launch Social strategy.  Target social search PPC at your target social profile based monitoring, listening as well as technographic and socialgraphic research.
    • Launch Mobile strategy. How will users find your company from their mobile device?  What will the experience be like?
    • Utilize a 3-pronged media management approach for Owned, Earned and Purchased media. Use media attribution and optimization.
    • Test, measure and learn from everything.
    What do you think about this blog?  Do you agree with my take on how this will upfold?  I don't have a crystal ball - just enough experience to have a point of view.  This is a process of collective learning where we all benefit through dialogue and debate.  Please add your comments below.  Thank you.

    Will Google become the “Google” of Social?

    In an earlier post, Jack mused on the Digital Marketer’s dilemma regarding Google: in a nutshell, superb ease of use (and price point!) vs. some increasingly shady questions regarding data ownership. In this post, I would like to apply similar questions to social media and social networking. So here’s our Question of the Day: Will Google become the “Google” of the Social world? The short answer is that Google is not there yet, but given certain trends, I’m quite sure that it will be. Let’s start with the trends and then bring it back to Google…

    Historically, social networks have been online destinations. That is, one goes to www.facebook.com or www.myspace.com to operate in those social networks. This is true for thousands of special-interest websites and forums, too. An unfortunate result of these “social silos” is that one person has many identities (profiles) across the platforms and services. This arrangement impedes the sharing of information beyond a particular destination’s domain and challenges marketers to define meaningful ROI metrics within and across platforms.

    The biggest social networks seem to be catching on that their relevance depends on breaking free of a destination-based model. Examples: Millions of Twitter subscribers use third party applications and hardly ever see the Twitter homepage, and Facebook has opened up its API to third-party applications like Pandora for music and Flickr for photos. Applications like these consolidate social access points. This, in turn, brings more content to the platforms while simultaneously promoting the sharing of information across them. By the way, there are precedents for this important trend. Can you imagine having to use a different email client like Outlook for each of your email accounts? Access to instant messaging platforms has been consolidated for years via applications like Trillian and Adium. And most recently, several applications originally designed for Twitter now access Facebook (Seesmic) and even LinkedIn (TweetDeck), too.

    So let’s bring this back to Google and its relevance in Social. Google is already very far ahead of other platforms in terms of evolving to a “post-destination” social network. The strategy is to provide ubiquitous tools that sit quietly in the background so that you can “become social” on demand. Here’s a few examples:
    • Google Reader allows me to follow my contacts’ reading lists and share comments with them on articles of interest.
    • Although in its infancy, Sidewiki allows me to share comments on most web pages that I browse. 
    • Android brings location-aware and on-the-scene functionality into Google. As Google’s social platform matures, Android will be the killer, in my opinion.
    • The others: Let’s not forget about Google Talk, Google Voice, Gmail, Picassa, YouTube, Blogger, Checkout, and more...
    Unlike core Facebook functionality, use of these tools does not require me to be present in a specific destination. And, while Facebook looks too big to fail, let’s also remember that Google has only just launched a true foray into Social. Its recent move to include feeds from Twitter does more than provide real-time content; Twitter data in Google subtly begins to turn users onto the idea that Google can be a social platform. Combine this with their recent release of Google Profiles, and I think we’ve just seen the beginning of Google’s eventual domination of Social. Here’s what will happen: the Profiles will slowly tie together Google’s disparate services into a social juggernaut that enables users to share thoughts and content immediately and directly from the content’s point of origin. The real question for Facebook is to see if it can “spread out” faster than Google can consolidate users to their Google Profiles. If not, Facebook will simply become consumed by Google, like so many services before it.

    So there’s my case for Google’s inevitable ascendancy in the social world. And… it brings us back to the same questions raised by Jack. Should we fear the fact that one organization will own so much of our personal data and the gateways for marketers to access it? I’ll point out that it’s this kind of paradigm that will eventually lead us to meaningful exercises in measuring the lifetime value of a customer. It will further help us to find true champions of our brands. And, just like today, Google needs us, the marketers, as much as we need it. After all, what’s the value of all that data if Google can’t turn around and sell it right back to us?