8 ms·

Are we at Peak Google?

193 points by nagarjun 12y ago

lazzlazzlazz 12y ago
Native advertising is so much more indirect and intrusive, I can't see how it could "trounce" search advertising in as dramatic a fashion as your charts suggest. Native adverts will definitely increase in prevalence, but search advertising still uniquely shows ads to people as they're actually looking for something.
- waps 12y ago
  Native adverts are why I turn off my iPad's wifi when playing games. I wish there was a way to use the notifier switch as a wifi switch. You wouldn't believe how much things improve. Advertisers just don't trust offline views, and probably for good reason. I'm looking for a subtler approach though. Some way to keep browsing, keep things like app store accessible, but disable ads.
  - frandroid 12y ago
    Native advertising is not in-app advertising. The term refers to what used to be known as advertorials. They used to be a minor feature of newspapers, but as newspapers have been mightily struggling financially, they have opened the floodgates and they are now happening much more frequently. That's not to mention all other non-news content sites that have commercial features as well.
  - chongli 12y ago
    Block the advertisers on your firewall?
  - easong 12y ago
    Something like domain blocking? https://itunes.apple.com/us/app/disconnect-mobile-privacy/id880693493?mt=8 https://itunes.apple.com/us/app/disconnect-mobile-privacy/id... Full disclosure: I work for Disconnect.
  - rstupek 12y ago
    So you probably won't pay for the game and don't want to have ads to compensate the developers of the game. How do you expect to continue to get quality apps in your perfect world?
    - waps 12y ago
      If even 10% of developers actually gave me a choice, you'd have a much better argument. In fairness, indie games often do, and I often pay for them, and I have a much higher tolerance for ads when trying out the free game. Other issues here are that I often turn off wifi for other games, then don't turn it back on until I've got a decent reason to do so. Today, iPads are more enjoyable with wifi off because of the ads that really push it. I think it's also a function of the fact that free apps sell better, and that makes them more likely to get my attention in the first place. When I want to find an app, I want to find a "good" app, so I often use the top selling lists, which are much more likely to have ads.
- nagarjun 12y ago
  I don't think the author trash talked search advertising. His point is around the increasing dominance of native advertising. Think about it. How long do you spend inside platforms on a given day? You probably have Facebook or Twitter open on a tab all the time. The odds of you looking at ads on any of those platforms are far more than you would on any of Google's. That isn't to say that one form of advertising is better than the other. It just means that native advertising is growing in prominence and Google doesn't technically have a presence in that space.
  - quaunaut 12y ago
    Yeah, but these ads once again miss one of the biggest things- intent. At the end of the day, nothing you do on Facebook or Twitter speaks to intent. It's great for mindshare companies, like Dr. Pepper or Apple- but it just isn't very strong for local businesses, or more purpose-driven businesses like auto parts stores or coffee shops.
    - nagarjun 12y ago
      Not entirely true. At least in the Bay Area, I've seen some highly targeted ads on my Twitter stream. Twitter also does a great job at showing me ads based on who I follow. Do I act on these ads? Sometimes yes. Companies throw out incentives to act on promoted Tweets. I think it's a nice, subtle form of advertising that just works. Facebook, I don't like. Their advertising comes off very intrusive and honestly, I've never acted on a single ad there. Helps with brand recognition though. When I see a brand advertised on Facebook, I recollect it. How many times have you been to a coffee shop and seen posters redirecting you to their Facebook presence (I know that's not an ad but, it goes to show you that they have a presence there). Some take it to the next level and advertise too! I've seen quite a few local ads on my stream.
  - lazzlazzlazz 12y ago
    I don't have a Facebook account anymore. When I did, I blocked all ads. I don't block Google ads because they can be genuinely useful.
- imjk 12y ago
  But that's the nature of branded advertising and why it's so big. Search is based on helping a consumer reach out and buy what they're looking for, while branded advertising reaches out to the consumer and convinces them to buy something they may not necessarily know they want to buy. Search fulfills current market desires, while branded advertising expands market desires.
deleted 12y ago
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spindritf 12y ago
Google managed to ride two subsequent waves: web (not pc which came before) and mobile. Between Glass and Magic Leap, they're well on their way to catch the third wave of virtual/augmented reality. And native adverts, really? Let's hope this is not the grand industry of the future. Not for Google's sake but for our own.
- frandroid 12y ago
  Huh, Google Glass is a failed product so far.
  - acgourley 12y ago
    Google Glass isn't a product yet, so it's unclear how it could be a failed product.
  - ux-app 12y ago
    I think it's a little early to tell if it's a failed product. It might be in terms of unit sales, but I'm sure that in terms of the knowledge and understanding of AR, Google are probably in a good position to capitalise on the (hopefully) coming AR/VR wave.
    - missserenity 12y ago
      Did Windows Mobile help Microsoft capitalize on the Mobile revolution? A too early product doesn't always help you capture the value of coming wave.
- acgourley 12y ago
  Claiming that VR/AR is a wave on the same order of magnitude as mobile a bold statement. Mostly AR/VR extend existing waves. They make gaming better. They make mobile better. They are not by themselves the same kind of shift as PC -> Mobile.
  - natrius 12y ago
    Claiming that virtual reality is a wave on the same order of magnitude as mobile is an understatement. High fidelity virtual reality will change the way we communicate. It'll change the way we live.
mbesto 12y ago
One major flaw in this thesis. Advertising marketplaces where the bids on eyeballs are competitive in theory will always continue to increase as long as the businesses in those markets continue grow. In other words, if the market for cookies grew it at 6% every year, and thus the number of searches for cookies grew at 6% per year, it means that as long as Google continues to hold a static position, they can increase the bidding for cookie keywords and thus increases revenues there without ever increasing market share. IBM and MS on the other hand have to continue to convince customers (i.e. sales) that their product rule. This is really costly. The author suggest native advertizing will eclipse search. Really? This like saying Infomercials are going to replace prime time TV dramas.
- jasode 12y ago
  >, if the market for cookies grew it at 6% every year, and thus the number of searches for cookies grew at 6% per year, The author may have used poor examples to flesh out his thesis but I think his point is the contexts & triggers for advertisements can drastically change. When that happens, it can make newer companies become dominant. For example, if Facebook-Apple comes out with an Oculus-or-wrist-wearable-augmented-reality-gadget, a user could be standing on a street corner and see a car pass by that he doesn't recognize. He then sends a voice command to his wearable to ask what the model is and it creates ads of dealers that sell it. The "search engine" behind the scenes could be Bing or whatever Facebook-Apple licenses. The ads are still there. Searches (of some type) are still there. But the contextual triggers have changed. There are no business guarantees that google.com will remain in the pipeline of future (lucrative) ad triggers. My example above may also be convoluted but I'm sure others could imagine a future where the majority of searches come from another mechanism besides typing words into a little box on a webpage. Ad rates from google would nosedive because advertisers would pay a premium for Oculus ads instead of google.com ads. I think those are the scenarios that would "eclipse" google.com. This has happened before with newspapers. The car industry grew but newspapers ad rates for cars and car dealers have declined. A lot of those ad dollars shifted to television and google. Newspapers declined even though they still run ads for cars today.
  - jfim 12y ago
andrewvc 12y ago
One thing this is leaving out is that IBM existed, and was very successful, long before mainframes. The company has existed since the 1880s for christ's sake. Additionally, during the mainframe era it had a number of other successful products, like the selectric typewriter. The history of IBM (http://en.wikipedia.org/wiki/History_of_IBM http://en.wikipedia.org/wiki/History_of_IBM) is pretty damn long. If you pick your dates right it's easy to find trends, but the real world is much more complex. HP, for instance, has taken a long, meandering path to where it is. It doesn't fit on a simple chart with simple graphics.
- jacques_chester 12y ago
  Selection bias is useful for allowing all sorts of fascinating arguments to be made.
- sleet 12y ago
  The IBM Centennial Film [1] is a nice watch for anyone interested in the history of IBM. [1] http://youtu.be/39jtNUGgmd4 http://youtu.be/39jtNUGgmd4
- jthol 12y ago
  > It doesn't fit on a simple chart with simple graphics. Yeah it does just keep zooming in.
danso 12y ago
I skimmed this article 3 times...Sorry, was there any actual substance to this link-baity headline, other than "Mainframes were big, now they're not and PCs were big, now they are not, ergo, Google is big, and someday they will not be"? The OP provides little to no hypothesis on what will takeover Google...more "human" content, a la Buzzfeed? Seriously?? And then the OP goes on to dismiss all of Google's next-gen research (self-driving cars, Google Glass, etc) with a conclusion akin "Well Microsoft Research sucked so Google will to". The OP is link-bait wankery at its worst. I'm sorry to even have spent 15 minutes trying to interpret it.
- monkbent 12y ago
  Maybe don't skim and read thoroughly? I actually said they're still big. It's just that even bigger things came along.
- missserenity 12y ago
  ? The author specifically mentions companies like Facebook, Twitter, and Pinterest. Plus the point isn't that one company will replace Google, it's that Google isn't positioned to take advantage of the next wave of online advertising - digital brand advertising. And Google is not 3M. They have not proven to any significant degree that any of their research projects will provide lasting value to the company. In fact, almost all of their successful non-search products were acquisitions, not the result of internal R&D. Android was an acquisition; Maps was an acquisition; Docs was an acquisition.
deleted 12y ago
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msabalau 12y ago
Perhaps, in a world where direct response advertising is growing ever more relevant and useful, brand advertising can wither and die, taking the Wanamaker problem with it. Do we need to hear stories that try to make us have emotional relationships with floor waxes?
deleted 12y ago
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minor_nitwit 12y ago
Google is both dominating smart phones and search at the moment. The examples given were of particular products that superseded other products. Is there a product that going to supersede Google Search or Android? If not, I don't see Google at its peak. In fact, with their efforts to take over the last google free screen in your living room, it might be that they're due to break into an even bigger advertising market.
ajessup 12y ago
"The problem for Google is [...] they’re an ad company, but the key to native advertising on the Internet is the capability of producing immersive content within which to place the ad [...] Google has nothing in this regard (with the notable exception of YouTube" Google has plenty of other assets here to build immersive advertising experiences on top of if they chose to leverage them, not the least of which is the most popular mobile OS in the world. "Moreover, all of the things that make Google great [...] translate to the more touchy-feely qualities that make a social service or content site compelling." Google has the best asset of all here - an empowered sales force that has direct relationships exactly the agencies, creatives and buyers that would be the first to jump on an innovative immersive ad format.
slykat 12y ago
Google is just as well poised for getting brand advertising dollars. Specifically consider this point from the article itself: "To date this type of brand advertising has strongly favored television; targeting is certainly nice, but channels like Lifetime (Dove) or ESPN (Axe) are specific enough..." The majority of brand advertising dollars are currently in TV. What's the next generation of TV? We don't know yet, but these are some contenders: 1) Apple - Apple TV / iTunes 2) Amazon - Streaming Prime Content 3) Netflix 4) Google - Android TV & Youtube Out of all these players only Google is taking advertising model for video content; the rest of the players are monetizing through content itself. Thus, it's very possible that Google will be taking the lion's share of brand advertising dollars as consumers cut cable. I wouldn't count Google out of the brand advertising game. Youtube has over 1 billion monthly actives who consume 6 hours a month in a format very friendly to native ads.
temuze 12y ago
I disagree with a lot of this post. This analysis breaks down because the transition from IBM->Microsoft->Smartphone companies was because of newer and better technology. Native ads hardly fit this category. In fact, if you think about it, search ads are native ads! Just like sponsored Buzzfeed articles, search ads on Google pretend to be content. In some ways, it's like they're the ultimate native ad because they're close to what you expected to see when you typed in that query. They aren't annoying, they're very relevant and they're easy to buy. > IBM didn’t capitalize on PCs because their skills lay on the hardware side, not software. Microsoft didn’t capitalize on mobile because they emphasized compatibility, not the user experience. And now Google is dominant when it comes to the algorithm, but lacks the human touch needed for social or viral content. Google has expanded way beyond search ads and everything in the internet is their batting zone. They own: - DoubleClick, the biggest ad server on the Internet - Youtube, the biggest platform for videos - Display Network, the largest contextual network of display ads on the internet Google isn't going away any time soon.
- jrkelly 12y ago
  Agree - commercials as "30 or 60 second fully produced dramas" is laughable. Native ads can fall to wide adoption of AdBlock. It's like commercial skipping on DVRs. The only "ads" that make sense long term are things like AMZN rankings. That's what GOOG needs to fear. Ads that are valuable to the user because they can't be bought - that breaks the business model.
  - ryandvm 12y ago
    That's a great line of thought. The worst possible future for Google is that the bottom drops out on the valuation of their product - paid ads. The only way that happens is that somebody figures out how to deliver the same quality of advertising at a much lower price point (perhaps a company that isn't employing quite so many PhDs or bankrolling so many moon shots). Or alternatively, somebody comes up with a much higher quality product. Frankly neither of those seem particularly out of reach.
    - Animats 12y ago
chubot 12y ago
This article is a huge non-sequitur. Yes, every big company will eventually be eclipsed. That says nothing about "native advertising". There was already something like "native advertising" for search: it was GoTo.com. You could pay to appear in the search results. It's not hard to imagine that, as a result, the search result quality was inferior to Google's, and users chose to go elsewhere. http://en.wikipedia.org/wiki/Yahoo!_Search_Marketing#Origins_of_GoTo.com http://en.wikipedia.org/wiki/Yahoo!_Search_Marketing#Origins...
nextstep 12y ago
Working for Google today is a lot like working for the Microsoft of ~15 years ago. Employees are well paid, benefits are good, it's comfortable. The quality of the hires are still pretty good, but definitely not what they were 5 years ago. The engineering culture is still strong and permeates the entire organization, but the company is so large that less and less flexibility is allowed in each team's process. Thus, engineers (especially those at the lowest levels, like right out of school) aren't exposed to as much interesting work; many will find in 2-3 years that they have career opportunities at Google and companies of similar size but few opportunities at more interesting companies that are looking for someone with a few years experience with newer technologies. Technologies that Google doesn't use. Processes that Googlers don't know because they work in the confines of a huge corporation. Still not a bad place to be 'cause Google pays well and they're comfortable. But then the best and brightest stop coming to Google. And then the company slowly dies a painful death toward irrelevancy that takes decades. I think the comparison to Microsoft is spot on. The exact timeframe remains to be seen.
- cperciva 12y ago
  The quality of the hires are still pretty good, but definitely not what they were 5 years ago. Funny, I think that's word-for-word identical to what people at Google were telling me in 2006.
  - jshen 12y ago
    so it's a steady decline?
    - adventured 12y ago
      More likely a false perception based on the fog of scale and decreased intimacy: as a singular person, you have no idea what most of the people in the company are like once it passes a certain scale, and the larger it gets, the less informed your opinion can realistically be. Not to mention, no organization can hire 100,000 people over time and have them all be top 1% talent. That doesn't mean they're not still acquiring more top 1% talent than anybody else.
iamthepieman 12y ago
all the other upsets the author mentions were consumer product driven. Mainframe -> PC. PC -> Mobile. Advertisement is business driven. It doesn't seem to be even in the same league as the other upsets and search advertisement will likely upset by "Death of a thousand cuts" than some plucky upstart.
cromwellian 12y ago
http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines
shanev 12y ago
In an age when information is ubiquitous, with advertisers trying to monetize every bit of it, filtering becomes an important skill. Today advertisers run ads alongside content, tomorrow advertisers and brands will dictate what content gets written. It's already happening with native ads as this post shows, but will soon become standard. The Truth will become increasingly elusive to the unskilled: a new kind of digital divide.
- Taek 12y ago
  This has been true for a while though. Consumer behavior is clearly manipulated by advertising, and it's common that an inferior and more expensive product wins as the result of superior marketing. I don't think it's something we're permanently tethered to though. As reviews are getting better, consumers are realizing more and more that knowing which product is best for them is a very valuable tool. We're seeing stuff like yelp, tripadvisor, healthgrades really take off. The idea of being an "informed" consumer is gaining a lot of traction and that's going to dilute the effectiveness of targeted advertisement.
- imjk 12y ago
  Advertising has a large spectrum and what you're describing is product placement which has been around as long as advertising has existed. Whether it's placement in a movie, a well crafted article, or a celebrity endorsement. Even academic studies are funded by private parties that have an incentive to sell you something.
rdlecler1 12y ago
People were saying this back in 2011 ahead of Facebook's IPO. 2 years later, Google was looking as strong as ever. I'm willing to bet that Google will be the first trillion dollar company. Their bench is just too deep. The only major mis-step I've seen is not aggressively rolling out an apple pay competitor 1-2 years ago (Giving away terminals if they had to). The major threats Google faces right now are: (1) Precision marketing from Facebook (2) Companies like Amazon get so big that users side-step the need for Google discovery. Also an AI business can be as big as their search business (AI as a service in the new smart economy.) Addressing these: (1) Most people use Google far more each day than they use Facebook so there are just more opportunities to monetize. Frankly if Facebook disappeared it would be a minor inconvenience to most people, whereas if Google disappeared it would be armageddon. Facebook is always at risk of being superseded by another trend, but Google has become a necessary tool. Furthermore, most people check facebook 2-3 times per day and the real estate is far more limited in a facebook feed (Albeit far more valuable). Finally, Google still has Gmail which is basically the world's second biggest social network and it can be mined for far more valuable insight for even greater degrees of precision marketing. (2) We only have room in our brains for handful of companies like Amazon, and Amazon is primarily limited to consumer goods. That still leaves the rest of the economy that needs discovery: cars, investments, nose jobs, viagra and fake twitter followers. Still, Google does need a mobile/local ad strategy. However, they can pool search history, Gmail, and track your physical location (Oh and they have maps) and start inserting hyper personalized ads/offers into their search result feed. Add a payment system to that layer and they'll crush it.
- jyu 12y ago
  How much are you willing to bet and by what date? Google has had multiple missteps. G+, terrible customer service, lack of diversity in revenue, a lackluster post acquisitions track record besides android. The specific examples stated rely too heavily on personal experience. You site all these large companies in the US, but the world is much bigger than just the US. 10 years from now things could look very different geopolitically. It's not hard to imagine the "Amazon" of India or "Google" of China becoming the biggest in the world due to population and growing economies.
misterbishop 12y ago
The argument eats itself on its most substantive point: native advertising. The writer dismisses "youtube" as the exception to Google's supposed weakness in native advertising. Personally, I'd much rather be Youtube than any of the other examples cited (facebook and so on). Not only is Youtube an absolute monster in video streaming, Youtube is going to be even more important as set top boxes take off. Plus there's a lot more social innovation left to tap in Youtube.
ivv 12y ago
To state that "few are even bothering to challenge [Google] anymore is to misunderstand the nature of Google's competition. This competition isn't Bing, DuckDuckGo, or any other generalized search engine, it's search engines that focus on the most lucrative niches. It's Amazon -- it was fairly recently that Amazon moved ahead of Google in the number of product-related searches originating on its site. It's Yelp, TripAdvisor, and WebMD, and there will be others. You don't need all of Google's search traffic to beat it -- a large chunk of it doesn't make any money -- just the part that pays.
- jquery 12y ago
  Don't forget Pinterest, already in my biased opinion a better search/discovery engine than Google for a growing number of categories.
  - torbit 12y ago
    but there is more future legal problems with that site. They need to youtube it.
  - billpaetzke 12y ago
    > or a growing number of categories For example?
    - kedean 12y ago
      Recipe's is a good one. I know a huge number of people who browse Pinterest when, for example, they want a good chili recipe. It's especially good for them because of the bookmarking functionalities, if they see something like think looks good for later its so easy to store it and when you're hungry just look through the list of ones you pinned. Other areas this applies to are clothing and decorating.
MarkMc 12y ago
This analysis is wrong for several reasons: 1. Android is no longer just a way for Google to protect its search engine - it is now a strong contender to become the biggest platform for watching TV and movies in the world. 2. Google knows more about me than anyone else. They know my age, sex, occupation, where I sleep, who I email, what supermarket I shop at, and a thousand other details. That's an enormous competitive advantage in the business of selling brand (or 'Native') advertising. 3. Unlike Facebook and Twitter, people who produce compelling TV and movies usually just auction off the advertising rights to the highest bidder. Google can simply buy the right to advertise in the next James Bond film or English Premier League final.
- 72deluxe 12y ago
  Of the points you make, I think point 1 is very interesting but I am not sure about it. I mean, they attempted with Google TV and it never took off. They've had Google Play Movies for a while but do you see any good films on there? Regarding point 2, the data they have is valuable but do people like being advertised to? Product placement in films is pretty nastily received though. Look at Iron Man 2 and the appearances of Oracle and Larry Ellison everywhere; it was not enjoyable. It didn't make me want to switch database providers. (I didn't notice that Elon Musk is in it too)
  - MarkMc 12y ago
    Yes Google TV was a flop, but the Nexus Player could be hugely successful. People hate being advertised to, but they put up with and and they clearly identify 'native' ads as just more advertising. Regarding point 3: Sorry, I wasn't clear - I didn't mean product placement in the James Bond film. I meant that Google can simply buy the right to screen the movie and run their 30-second ads at the appropriate points (ie. like movies on regular TV).
    - 72deluxe 12y ago
      That's an interesting point for point 3. I wonder if they'll do it? I know I hate watching ITV here in the UK because of the adverts, and knowing that there are data limits for broadband, being pushed video adverts in HD may be obnoxious to some (but you'd have to watch adverts all day long for it to make a difference!)
sutterbomb 12y ago
A few others have noted, but search ads are actually perfectly native ads. The form and function are identical to the rest of the stream they are shown in. Setting aside the term "native" then, as the point was much more about brand vs. direct response ad markets. I'd reword the author's thesis (while keeping the intent) to look like this: 1) All mediums develop native advertising styles over time, which web & mobile are just in beginning stages 2) The market for brand advertising will continue to be larger than the market for direct response advertising 3) Google won't win the market for online brand advertising
shadowmint 12y ago
Lack luster thesis aside, does anyone have any solid stats about the effectiveness of these new 'in steam' / 'native' advertisements? Quite curious. In theory they should be effective at engaging because they can be so narrowly targeted, but I still have such a hard time believing that they actually convert into user action (eg. purchase).
- imjk 12y ago
  For one thing, native ads tend to be more viral oriented versus paid, so they have much lower costs which can be as low as free. It's not so much about the narrow targeting as it is about the engagement. These "advertisements" show up in your FB news feeds and Pinterest pages because someone else in your community thought it worthy to share; they go viral when many people find it worthy to share. They're also much more integrated to the platforms as they don't initially appear as advertisements, unlike say banner ads. "I still have such a hard time believing that they actually convert into user action (eg. purchase)." To your last point, the author argues that native advertising is more akin to Brand advertising versus direct response, so in the same way, they're not intended to function as direct response ads that encourage you to buy immediately. But I'd argue that these native ads are even more effective because they can serve both purposes; they can serve the purpose of bringing brand awareness as merely being subtly place subject matter into and article that brings awareness to a brand, or they can be as direct as a product endorsement by a celebrity on their Twitter feeds or Pinterest pages. Native advertising can be versatile enough to cover both direct response and brand building advertisements.
adventured 12y ago
Google will continue to own search on mobile. As such, their ability to monetize that avenue will remain intact. And it's an extraordinarily lucrative position. It does not matter whether the ideal format for mobile ads is native or not, if it is then Google will adapt their search dominance to that approach and print money the same as they have been. There has been no drop off in their mobile search position of power, and there's nothing likely to displace their role there. There's no particular reason mentioned in the article, for why Google can't benefit with the reach of mobile in regards to advertising. I saw no explanation for why search won't get bigger with the mobile market's growth in the next decade. Nor why Google isn't just as well positioned as anybody to take a big cut of native ads via search. The only way in which this is approximately peak Google, is that their PE ratio is likely to compress to half what it is now over the next decade, while their profits increase, leading to a flat stock for a very long time (as happens to most companies in their situation; eg Microsoft, Apple, IBM, Oracle, Cisco, Intel, etc).
- millstone 12y ago
  The concern about mobile search is twofold: mobile ads are less effective than desktop ads, and people search less often on mobile than on desktop. So "owning search on mobile" may not end up being a position of power at all. I don't see an easy avenue for adopting their search dominance to native ads. Native ads are "in-stream" ads: think Buzzfeed instead of banners. "Native ads via search" doesn't make sense: search is finding content, but is not itself content. Google doesn't have much in the way of content, with the notable exception of YouTube.
r0h1n 12y ago
I would challenge the core of Ben Thompson's argument, namely: > $50 billion for worldwide search advertising (of which Google captures a huge majority) sounds like a lot, but it’s only a small percentage of total ad spend, projected to be $545 billion in 2014. The vast majority of that spend is not about direct response – i.e. ads that spur you to make a purchase on the spot; rather most of the money is spent on brand advertising. Essentially his point is direct response is ~10% of brand advertising, and that other players are better positioned than Gooogle to capture that. But what if that ratio itself were a legacy assumption? And thus, why should we take his following statement at face value: > The idea behind brand advertising is to build “affinity” among potential customers. I posit that brand advertising has traditionally been orders of magnitude larger than direct advertising because options for quality direct response advertising were limited. But thanks to the rise of the web and mobile, we're now moving into an era where the line between brand advertising & direct advertising is blurring. Not just that, but the time/distance between a customer's latent desires to purchase action is also shortening, thanks to 24x7 e-commerce. In this world, why should direct response be 1/10th of brand advertising? Heck, why should direct response always be distinct from brand advertising? Sure, companies will continue to run brand adverting, including ads masquerading as stories (advertorials once, "native ads" today). But the split (or even distinction) between direct response and brand advertising will continue to reduce.
- missserenity 12y ago
  Is Coca-Cola ever going to move away from brand advertising? Is Bud Light? Is McDonald's? There are too many products where value comes from building a lifelong relationship with the customer, rather than directing a single purchase. That's stuff only branding can do.
rvn1045 12y ago
I don't think we are at peak google. I think we are having this conversation a bit prematurely. Some other company in the future will disrupt google (who knows in how many years?), that is just the nature of this business. For now Google will enjoy it's dominance.
wildermuthn 12y ago
All companies founded upon one core technology will diminish once a new technology becomes more useful and prevalent. Ads aren't going to displace Google — some new and better technological platform will. IBM brought the mainframe. MS brought the PC. Google brought the internet. Apple brought the smartphone. These are all platforms, and they all built off one another. So what new platform will build off the last platforms? What new device is powered by the screens and sensors of smartphones? What new device was funded by zealous crowds coordinating their money and development through the internet? What new device requires what only the PC can provide: affordable and massive processing power? Oculus brought Virtual Reality.
cromwellian 12y ago
I find "native" advertising pretty shady. Google is already heavily criticized for ads that are hard to make out as ads in SERPs or product searches. I also think consumers get wise to it over time and it starts to get mentally blocked out. I'd say YouTube is probably Google's most effective hedge against a future where all the revenue is in branding/display ads. However, if you look at last quarter's results, non-ad "Other" revenue is now 10%, whereas ads used to supply 98% of revenue. The "Other" revenue is also growing 50% year over year. It may very well be that Google gets eclipsed or disrupted, but might end up eclipsing or disrupting its own ads business, especially as "apps" tend to take over user attention, and "Web" ads decline.
- 72deluxe 12y ago
  It's true that people quickly mentally block out adverts. Even on YouTube, I ignore the advert and anxiously wait for the "skip ad" button to appear. Doesn't everyone?
ChuckMcM 12y ago
I find the 'Peak <x>' meme somewhat tired but the point that everyone guns for the monopoly and is a valid one. I've noted over the years that Google's CPC has been falling steadily, and the amount they have been spending on paid distribution has been growing even faster. But mostly that means that they are no longer the 'new thing' and now are the 'old thing' where 'stream advertising' is the 'new thing' now. And while they really pushed hard on making G+ their stream I don't think it has been as successful as they would have liked. I've also noticed that search hasn't been about finding every web page for a long time now, now it is a service that is part of some app or other environment, and it isn't unique. The article's point about Amazon doing more product searches, I can believe it based on experience that nearly always a search on Google gives an amazon link that I seem to invariably click on, if only to read the reviews. So why not search on Amazon first? In my opinion, it is only a matter of time before Google tries to monetize the non-commerce queries. Once the RPMs on Bing, Yahoo, and Google Ad feeds are all about the same the underlying crawling and indexing search infrastructure will become a drag on profits. That will be an interesting time for me.
sytelus 12y ago
Another arm-chair pundit trying to fit present to past anecdotes and predicting future... In 10 years of time Google might be self-driven car company which has search as side business or a company selling robots which walks and moves like humans quickly taking on cheap labor jobs. The strength of Google, in my view, is not its current products but ability, desire and enablement to innovate and take risks. This in part comes from its leadership and the culture. How many other companies take on the expensive product developments such as Fiber, city-wide wifi, online office, gmail, Android, home delivery etc - without a definitive business plan? During Bill Gates era, there was a saying in Microsoft that your product pitch would fail if you can't convince executives that your idea would yield another billion dollar business because they thought it simply wasn't worth their time. Even at the peak nobody thought IBM would take risks to start home delivery system or experiment with balloon based radio systems.
- pinaceae 12y ago
  completely disagree. a company is measured by its profits, any new venture needs to have a business behind it. xerox parc, ms labs - great hobbies, no monetization. google x? nothing so far. glass is cooling off. car has driven 400k miles - on the same, tightly controled circuit. no commercial products in sight. i personnally have had discussions with google execs about new business areas where google could easily transform established industries - to be shut down with the phrase "we don't touch any market below 1bn". and that was 3 years ago. kids these days don't give a shit about google. search happens in the browser url bar, not google.com. search is a commodity. how exactly is google still relevant?
  - rcraft 12y ago
    "search happens in the browser url bar, not google.com. search is a commodity. how exactly is google still relevant?" Exactly his point and the one you are missing. Google had the foresight to invest in chrome, android, gmail, and Chromecast years ago. At the same time people like you thought they were silly for pursuing products that had no short term revenue or ecosystem benefits.
    - 12y ago
eva1984 12y ago
Google has a serious problem right now: the new Mobile ecosystem is driving users to vertical search services: individual Apps. Want to buy stuff, open Amazon Shopping App; want to find restaurants nearby, Yelp is at your service; Take a ride maybe? Uber is your best friend. Same thing could be said for a lot of other stuff, like Airbnb for renting and Flipboard for news(damn, poor Google Reader). What makes things worse is that those kinds of traffic are Google's cash cows. The point is, in the era of mobile, there isn't a unified entrance for everything, not like the way Google dominates Web. I think that is why Google Now comes to play, to ensure user can access google's search service with a single swipe, but it is hard to tell whether this will work out or not. Of course, Google has the best technology in town, but the internet is a more diverse places right now. Even though it owns Android and Chrome, it won't become the sole gatekeeper of all information. Google will not become the microsoft of the internet, and maybe this is a good thing.
tantalor 12y ago
Was this written in 2014 or 2008? This happened years ago when Facebook wiped the floor with Google in social networks.
- 72deluxe 12y ago
  Is Facebook still such a big thing to people? There was a time when everyone and their dog were asking "are you on Facebook?" with eagerness and then looking at your as if you had publicly fluctuated when you said "no". With over 271 million domains on the Internet, it seemed odd that people were going crazy over one or two (Facebook and Twitter). But now people just accept that you don't have an account and are happy with emails or face to face communication, whether that be in person or via conferencing of some form. If social networks were relevant to everyone, then I could understand you saying that Google was in decline. However, they're not important to everyone - they might be in your circle though. Finding things on the Internet is still pretty big though, as is email.
Doctor_Fegg 12y ago
Google Search is vulnerable for the first time in years. If I type "king" into Safari's address bar on my iPhone, even with Google search suggestions turned off, it prominently suggests "Wikipedia: King Games". Spotlight on Yosemite does the same. Apple are quietly relegating Google results to second place or worse. Is there a better result in Wikipedia? In iTunes? In the App Store? On Maps? Spotlight highlights that; it's probably what you want. It's not hard to imagine deals with Amazon (tablet/ebook rivalry aside) and Yelp, too. The remaining search results are supplied by Bing for Spotlight, Google for Safari. But I expect Bing to replace Google in Safari for iOS 9. This is how Google will be dethroned. Not by someone building a better text-based search engine, but by Apple and Microsoft routing around them. And this is why Android remains so important to Google, and why Google were so anxious to prevent Samsung going their own way.
- adventured 12y ago
  What share of the global market for smartphones does Apple + Microsoft currently possess? Most of the rest of the growth in smartphones - the next two billion users - will come from poorer countries where relatively few of the people can afford iPhones. That means that market share for search will, as of today, go to Google via Android. Apple and Microsoft pose zero threat to Google's search dominance unless they can unseat Android globally.
- iribe 12y ago
  There are multiple fronts. There are the microsoft/apple fronts where they use every opportunity to not provide google search results. Then there's European antitrust investigations which microsoft is funding via 'grassroots' organizations. Basically every large player not named google is determined to see google fail. Which is ironic given the push for antitrust, but I digress.
- 72deluxe 12y ago
  I turned off Spotlight web searches under Yosemite precisely because the search results were returned by Bing - they weren't any good!
PSeitz 12y ago
You forgot to mention Google Inbox in your article.
mncolinlee 12y ago
I beg to differ. Google may have the strongest native advertising platform. It's called Gmail/Inbox/Now. Google knows exactly when you're thinking about a major purchase like an automobile because they see your e-mail and search traffic. Nudging you towards that car brand via Now or Inbox may be quite effective.

193 points by nagarjun 12y ago

Native advertising is so much more indirect and intrusive, I can't see how it could "trounce" search advertising in as dramatic a fashion as your charts suggest. Native adverts will definitely increase in prevalence, but search advertising still uniquely shows ads to people as they're actually looking for something.

waps 12y ago
Native adverts are why I turn off my iPad's wifi when playing games. I wish there was a way to use the notifier switch as a wifi switch. You wouldn't believe how much things improve. Advertisers just don't trust offline views, and probably for good reason. I'm looking for a subtler approach though. Some way to keep browsing, keep things like app store accessible, but disable ads.
- frandroid 12y ago
  Native advertising is not in-app advertising. The term refers to what used to be known as advertorials. They used to be a minor feature of newspapers, but as newspapers have been mightily struggling financially, they have opened the floodgates and they are now happening much more frequently. That's not to mention all other non-news content sites that have commercial features as well.
- chongli 12y ago
  Block the advertisers on your firewall?
- easong 12y ago
  Something like domain blocking? https://itunes.apple.com/us/app/disconnect-mobile-privacy/id880693493?mt=8 https://itunes.apple.com/us/app/disconnect-mobile-privacy/id... Full disclosure: I work for Disconnect.
- rstupek 12y ago
  So you probably won't pay for the game and don't want to have ads to compensate the developers of the game. How do you expect to continue to get quality apps in your perfect world?
  - waps 12y ago
    If even 10% of developers actually gave me a choice, you'd have a much better argument. In fairness, indie games often do, and I often pay for them, and I have a much higher tolerance for ads when trying out the free game. Other issues here are that I often turn off wifi for other games, then don't turn it back on until I've got a decent reason to do so. Today, iPads are more enjoyable with wifi off because of the ads that really push it. I think it's also a function of the fact that free apps sell better, and that makes them more likely to get my attention in the first place. When I want to find an app, I want to find a "good" app, so I often use the top selling lists, which are much more likely to have ads.
nagarjun 12y ago
I don't think the author trash talked search advertising. His point is around the increasing dominance of native advertising. Think about it. How long do you spend inside platforms on a given day? You probably have Facebook or Twitter open on a tab all the time. The odds of you looking at ads on any of those platforms are far more than you would on any of Google's. That isn't to say that one form of advertising is better than the other. It just means that native advertising is growing in prominence and Google doesn't technically have a presence in that space.
- quaunaut 12y ago
  Yeah, but these ads once again miss one of the biggest things- intent. At the end of the day, nothing you do on Facebook or Twitter speaks to intent. It's great for mindshare companies, like Dr. Pepper or Apple- but it just isn't very strong for local businesses, or more purpose-driven businesses like auto parts stores or coffee shops.
  - nagarjun 12y ago
    Not entirely true. At least in the Bay Area, I've seen some highly targeted ads on my Twitter stream. Twitter also does a great job at showing me ads based on who I follow. Do I act on these ads? Sometimes yes. Companies throw out incentives to act on promoted Tweets. I think it's a nice, subtle form of advertising that just works. Facebook, I don't like. Their advertising comes off very intrusive and honestly, I've never acted on a single ad there. Helps with brand recognition though. When I see a brand advertised on Facebook, I recollect it. How many times have you been to a coffee shop and seen posters redirecting you to their Facebook presence (I know that's not an ad but, it goes to show you that they have a presence there). Some take it to the next level and advertise too! I've seen quite a few local ads on my stream.
- lazzlazzlazz 12y ago
  I don't have a Facebook account anymore. When I did, I blocked all ads. I don't block Google ads because they can be genuinely useful.
imjk 12y ago
But that's the nature of branded advertising and why it's so big. Search is based on helping a consumer reach out and buy what they're looking for, while branded advertising reaches out to the consumer and convinces them to buy something they may not necessarily know they want to buy. Search fulfills current market desires, while branded advertising expands market desires.

deleted 12y ago

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spindritf 12y ago

Google managed to ride two subsequent waves: web (not pc which came before) and mobile. Between Glass and Magic Leap, they're well on their way to catch the third wave of virtual/augmented reality. And native adverts, really? Let's hope this is not the grand industry of the future. Not for Google's sake but for our own.

frandroid 12y ago
Huh, Google Glass is a failed product so far.
- acgourley 12y ago
  Google Glass isn't a product yet, so it's unclear how it could be a failed product.
- ux-app 12y ago
  I think it's a little early to tell if it's a failed product. It might be in terms of unit sales, but I'm sure that in terms of the knowledge and understanding of AR, Google are probably in a good position to capitalise on the (hopefully) coming AR/VR wave.
  - missserenity 12y ago
    Did Windows Mobile help Microsoft capitalize on the Mobile revolution? A too early product doesn't always help you capture the value of coming wave.
acgourley 12y ago
Claiming that VR/AR is a wave on the same order of magnitude as mobile a bold statement. Mostly AR/VR extend existing waves. They make gaming better. They make mobile better. They are not by themselves the same kind of shift as PC -> Mobile.
- natrius 12y ago
  Claiming that virtual reality is a wave on the same order of magnitude as mobile is an understatement. High fidelity virtual reality will change the way we communicate. It'll change the way we live.

mbesto 12y ago

One major flaw in this thesis. Advertising marketplaces where the bids on eyeballs are competitive in theory will always continue to increase as long as the businesses in those markets continue grow. In other words, if the market for cookies grew it at 6% every year, and thus the number of searches for cookies grew at 6% per year, it means that as long as Google continues to hold a static position, they can increase the bidding for cookie keywords and thus increases revenues there without ever increasing market share. IBM and MS on the other hand have to continue to convince customers (i.e. sales) that their product rule. This is really costly. The author suggest native advertizing will eclipse search. Really? This like saying Infomercials are going to replace prime time TV dramas.

jasode 12y ago
>, if the market for cookies grew it at 6% every year, and thus the number of searches for cookies grew at 6% per year, The author may have used poor examples to flesh out his thesis but I think his point is the contexts & triggers for advertisements can drastically change. When that happens, it can make newer companies become dominant. For example, if Facebook-Apple comes out with an Oculus-or-wrist-wearable-augmented-reality-gadget, a user could be standing on a street corner and see a car pass by that he doesn't recognize. He then sends a voice command to his wearable to ask what the model is and it creates ads of dealers that sell it. The "search engine" behind the scenes could be Bing or whatever Facebook-Apple licenses. The ads are still there. Searches (of some type) are still there. But the contextual triggers have changed. There are no business guarantees that google.com will remain in the pipeline of future (lucrative) ad triggers. My example above may also be convoluted but I'm sure others could imagine a future where the majority of searches come from another mechanism besides typing words into a little box on a webpage. Ad rates from google would nosedive because advertisers would pay a premium for Oculus ads instead of google.com ads. I think those are the scenarios that would "eclipse" google.com. This has happened before with newspapers. The car industry grew but newspapers ad rates for cars and car dealers have declined. A lot of those ad dollars shifted to television and google. Newspapers declined even though they still run ads for cars today.
- jfim 12y ago

andrewvc 12y ago

One thing this is leaving out is that IBM existed, and was very successful, long before mainframes. The company has existed since the 1880s for christ's sake. Additionally, during the mainframe era it had a number of other successful products, like the selectric typewriter. The history of IBM (http://en.wikipedia.org/wiki/History_of_IBM http://en.wikipedia.org/wiki/History_of_IBM) is pretty damn long. If you pick your dates right it's easy to find trends, but the real world is much more complex. HP, for instance, has taken a long, meandering path to where it is. It doesn't fit on a simple chart with simple graphics.

jacques_chester 12y ago
Selection bias is useful for allowing all sorts of fascinating arguments to be made.
sleet 12y ago
The IBM Centennial Film [1] is a nice watch for anyone interested in the history of IBM. [1] http://youtu.be/39jtNUGgmd4 http://youtu.be/39jtNUGgmd4
jthol 12y ago
> It doesn't fit on a simple chart with simple graphics. Yeah it does just keep zooming in.

danso 12y ago

I skimmed this article 3 times...Sorry, was there any actual substance to this link-baity headline, other than "Mainframes were big, now they're not and PCs were big, now they are not, ergo, Google is big, and someday they will not be"? The OP provides little to no hypothesis on what will takeover Google...more "human" content, a la Buzzfeed? Seriously?? And then the OP goes on to dismiss all of Google's next-gen research (self-driving cars, Google Glass, etc) with a conclusion akin "Well Microsoft Research sucked so Google will to". The OP is link-bait wankery at its worst. I'm sorry to even have spent 15 minutes trying to interpret it.

monkbent 12y ago
Maybe don't skim and read thoroughly? I actually said they're still big. It's just that even bigger things came along.
missserenity 12y ago
? The author specifically mentions companies like Facebook, Twitter, and Pinterest. Plus the point isn't that one company will replace Google, it's that Google isn't positioned to take advantage of the next wave of online advertising - digital brand advertising. And Google is not 3M. They have not proven to any significant degree that any of their research projects will provide lasting value to the company. In fact, almost all of their successful non-search products were acquisitions, not the result of internal R&D. Android was an acquisition; Maps was an acquisition; Docs was an acquisition.

deleted 12y ago

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msabalau 12y ago

Perhaps, in a world where direct response advertising is growing ever more relevant and useful, brand advertising can wither and die, taking the Wanamaker problem with it. Do we need to hear stories that try to make us have emotional relationships with floor waxes?

deleted 12y ago

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minor_nitwit 12y ago

Google is both dominating smart phones and search at the moment. The examples given were of particular products that superseded other products. Is there a product that going to supersede Google Search or Android? If not, I don't see Google at its peak. In fact, with their efforts to take over the last google free screen in your living room, it might be that they're due to break into an even bigger advertising market.

ajessup 12y ago

"The problem for Google is [...] they’re an ad company, but the key to native advertising on the Internet is the capability of producing immersive content within which to place the ad [...] Google has nothing in this regard (with the notable exception of YouTube" Google has plenty of other assets here to build immersive advertising experiences on top of if they chose to leverage them, not the least of which is the most popular mobile OS in the world. "Moreover, all of the things that make Google great [...] translate to the more touchy-feely qualities that make a social service or content site compelling." Google has the best asset of all here - an empowered sales force that has direct relationships exactly the agencies, creatives and buyers that would be the first to jump on an innovative immersive ad format.

slykat 12y ago

Google is just as well poised for getting brand advertising dollars. Specifically consider this point from the article itself: "To date this type of brand advertising has strongly favored television; targeting is certainly nice, but channels like Lifetime (Dove) or ESPN (Axe) are specific enough..." The majority of brand advertising dollars are currently in TV. What's the next generation of TV? We don't know yet, but these are some contenders: 1) Apple - Apple TV / iTunes 2) Amazon - Streaming Prime Content 3) Netflix 4) Google - Android TV & Youtube Out of all these players only Google is taking advertising model for video content; the rest of the players are monetizing through content itself. Thus, it's very possible that Google will be taking the lion's share of brand advertising dollars as consumers cut cable. I wouldn't count Google out of the brand advertising game. Youtube has over 1 billion monthly actives who consume 6 hours a month in a format very friendly to native ads.

temuze 12y ago

I disagree with a lot of this post. This analysis breaks down because the transition from IBM->Microsoft->Smartphone companies was because of newer and better technology. Native ads hardly fit this category. In fact, if you think about it, search ads are native ads! Just like sponsored Buzzfeed articles, search ads on Google pretend to be content. In some ways, it's like they're the ultimate native ad because they're close to what you expected to see when you typed in that query. They aren't annoying, they're very relevant and they're easy to buy. > IBM didn’t capitalize on PCs because their skills lay on the hardware side, not software. Microsoft didn’t capitalize on mobile because they emphasized compatibility, not the user experience. And now Google is dominant when it comes to the algorithm, but lacks the human touch needed for social or viral content. Google has expanded way beyond search ads and everything in the internet is their batting zone. They own: - DoubleClick, the biggest ad server on the Internet - Youtube, the biggest platform for videos - Display Network, the largest contextual network of display ads on the internet Google isn't going away any time soon.

jrkelly 12y ago
Agree - commercials as "30 or 60 second fully produced dramas" is laughable. Native ads can fall to wide adoption of AdBlock. It's like commercial skipping on DVRs. The only "ads" that make sense long term are things like AMZN rankings. That's what GOOG needs to fear. Ads that are valuable to the user because they can't be bought - that breaks the business model.
- ryandvm 12y ago
  That's a great line of thought. The worst possible future for Google is that the bottom drops out on the valuation of their product - paid ads. The only way that happens is that somebody figures out how to deliver the same quality of advertising at a much lower price point (perhaps a company that isn't employing quite so many PhDs or bankrolling so many moon shots). Or alternatively, somebody comes up with a much higher quality product. Frankly neither of those seem particularly out of reach.
  - Animats 12y ago

chubot 12y ago

This article is a huge non-sequitur. Yes, every big company will eventually be eclipsed. That says nothing about "native advertising". There was already something like "native advertising" for search: it was GoTo.com. You could pay to appear in the search results. It's not hard to imagine that, as a result, the search result quality was inferior to Google's, and users chose to go elsewhere. http://en.wikipedia.org/wiki/Yahoo!_Search_Marketing#Origins_of_GoTo.com http://en.wikipedia.org/wiki/Yahoo!_Search_Marketing#Origins...

nextstep 12y ago

Working for Google today is a lot like working for the Microsoft of ~15 years ago. Employees are well paid, benefits are good, it's comfortable. The quality of the hires are still pretty good, but definitely not what they were 5 years ago. The engineering culture is still strong and permeates the entire organization, but the company is so large that less and less flexibility is allowed in each team's process. Thus, engineers (especially those at the lowest levels, like right out of school) aren't exposed to as much interesting work; many will find in 2-3 years that they have career opportunities at Google and companies of similar size but few opportunities at more interesting companies that are looking for someone with a few years experience with newer technologies. Technologies that Google doesn't use. Processes that Googlers don't know because they work in the confines of a huge corporation. Still not a bad place to be 'cause Google pays well and they're comfortable. But then the best and brightest stop coming to Google. And then the company slowly dies a painful death toward irrelevancy that takes decades. I think the comparison to Microsoft is spot on. The exact timeframe remains to be seen.

cperciva 12y ago
The quality of the hires are still pretty good, but definitely not what they were 5 years ago. Funny, I think that's word-for-word identical to what people at Google were telling me in 2006.
- jshen 12y ago
  so it's a steady decline?
  - adventured 12y ago
    More likely a false perception based on the fog of scale and decreased intimacy: as a singular person, you have no idea what most of the people in the company are like once it passes a certain scale, and the larger it gets, the less informed your opinion can realistically be. Not to mention, no organization can hire 100,000 people over time and have them all be top 1% talent. That doesn't mean they're not still acquiring more top 1% talent than anybody else.

iamthepieman 12y ago

all the other upsets the author mentions were consumer product driven. Mainframe -> PC. PC -> Mobile. Advertisement is business driven. It doesn't seem to be even in the same league as the other upsets and search advertisement will likely upset by "Death of a thousand cuts" than some plucky upstart.

cromwellian 12y ago

http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines

shanev 12y ago

In an age when information is ubiquitous, with advertisers trying to monetize every bit of it, filtering becomes an important skill. Today advertisers run ads alongside content, tomorrow advertisers and brands will dictate what content gets written. It's already happening with native ads as this post shows, but will soon become standard. The Truth will become increasingly elusive to the unskilled: a new kind of digital divide.

Taek 12y ago
This has been true for a while though. Consumer behavior is clearly manipulated by advertising, and it's common that an inferior and more expensive product wins as the result of superior marketing. I don't think it's something we're permanently tethered to though. As reviews are getting better, consumers are realizing more and more that knowing which product is best for them is a very valuable tool. We're seeing stuff like yelp, tripadvisor, healthgrades really take off. The idea of being an "informed" consumer is gaining a lot of traction and that's going to dilute the effectiveness of targeted advertisement.
imjk 12y ago
Advertising has a large spectrum and what you're describing is product placement which has been around as long as advertising has existed. Whether it's placement in a movie, a well crafted article, or a celebrity endorsement. Even academic studies are funded by private parties that have an incentive to sell you something.

rdlecler1 12y ago

People were saying this back in 2011 ahead of Facebook's IPO. 2 years later, Google was looking as strong as ever. I'm willing to bet that Google will be the first trillion dollar company. Their bench is just too deep. The only major mis-step I've seen is not aggressively rolling out an apple pay competitor 1-2 years ago (Giving away terminals if they had to). The major threats Google faces right now are: (1) Precision marketing from Facebook (2) Companies like Amazon get so big that users side-step the need for Google discovery. Also an AI business can be as big as their search business (AI as a service in the new smart economy.) Addressing these: (1) Most people use Google far more each day than they use Facebook so there are just more opportunities to monetize. Frankly if Facebook disappeared it would be a minor inconvenience to most people, whereas if Google disappeared it would be armageddon. Facebook is always at risk of being superseded by another trend, but Google has become a necessary tool. Furthermore, most people check facebook 2-3 times per day and the real estate is far more limited in a facebook feed (Albeit far more valuable). Finally, Google still has Gmail which is basically the world's second biggest social network and it can be mined for far more valuable insight for even greater degrees of precision marketing. (2) We only have room in our brains for handful of companies like Amazon, and Amazon is primarily limited to consumer goods. That still leaves the rest of the economy that needs discovery: cars, investments, nose jobs, viagra and fake twitter followers. Still, Google does need a mobile/local ad strategy. However, they can pool search history, Gmail, and track your physical location (Oh and they have maps) and start inserting hyper personalized ads/offers into their search result feed. Add a payment system to that layer and they'll crush it.

jyu 12y ago
How much are you willing to bet and by what date? Google has had multiple missteps. G+, terrible customer service, lack of diversity in revenue, a lackluster post acquisitions track record besides android. The specific examples stated rely too heavily on personal experience. You site all these large companies in the US, but the world is much bigger than just the US. 10 years from now things could look very different geopolitically. It's not hard to imagine the "Amazon" of India or "Google" of China becoming the biggest in the world due to population and growing economies.

misterbishop 12y ago

The argument eats itself on its most substantive point: native advertising. The writer dismisses "youtube" as the exception to Google's supposed weakness in native advertising. Personally, I'd much rather be Youtube than any of the other examples cited (facebook and so on). Not only is Youtube an absolute monster in video streaming, Youtube is going to be even more important as set top boxes take off. Plus there's a lot more social innovation left to tap in Youtube.

ivv 12y ago

To state that "few are even bothering to challenge [Google] anymore is to misunderstand the nature of Google's competition. This competition isn't Bing, DuckDuckGo, or any other generalized search engine, it's search engines that focus on the most lucrative niches. It's Amazon -- it was fairly recently that Amazon moved ahead of Google in the number of product-related searches originating on its site. It's Yelp, TripAdvisor, and WebMD, and there will be others. You don't need all of Google's search traffic to beat it -- a large chunk of it doesn't make any money -- just the part that pays.

jquery 12y ago
Don't forget Pinterest, already in my biased opinion a better search/discovery engine than Google for a growing number of categories.
- torbit 12y ago
  but there is more future legal problems with that site. They need to youtube it.
- billpaetzke 12y ago
  > or a growing number of categories For example?
  - kedean 12y ago
    Recipe's is a good one. I know a huge number of people who browse Pinterest when, for example, they want a good chili recipe. It's especially good for them because of the bookmarking functionalities, if they see something like think looks good for later its so easy to store it and when you're hungry just look through the list of ones you pinned. Other areas this applies to are clothing and decorating.

MarkMc 12y ago

This analysis is wrong for several reasons: 1. Android is no longer just a way for Google to protect its search engine - it is now a strong contender to become the biggest platform for watching TV and movies in the world. 2. Google knows more about me than anyone else. They know my age, sex, occupation, where I sleep, who I email, what supermarket I shop at, and a thousand other details. That's an enormous competitive advantage in the business of selling brand (or 'Native') advertising. 3. Unlike Facebook and Twitter, people who produce compelling TV and movies usually just auction off the advertising rights to the highest bidder. Google can simply buy the right to advertise in the next James Bond film or English Premier League final.

72deluxe 12y ago
Of the points you make, I think point 1 is very interesting but I am not sure about it. I mean, they attempted with Google TV and it never took off. They've had Google Play Movies for a while but do you see any good films on there? Regarding point 2, the data they have is valuable but do people like being advertised to? Product placement in films is pretty nastily received though. Look at Iron Man 2 and the appearances of Oracle and Larry Ellison everywhere; it was not enjoyable. It didn't make me want to switch database providers. (I didn't notice that Elon Musk is in it too)
- MarkMc 12y ago
  Yes Google TV was a flop, but the Nexus Player could be hugely successful. People hate being advertised to, but they put up with and and they clearly identify 'native' ads as just more advertising. Regarding point 3: Sorry, I wasn't clear - I didn't mean product placement in the James Bond film. I meant that Google can simply buy the right to screen the movie and run their 30-second ads at the appropriate points (ie. like movies on regular TV).
  - 72deluxe 12y ago
    That's an interesting point for point 3. I wonder if they'll do it? I know I hate watching ITV here in the UK because of the adverts, and knowing that there are data limits for broadband, being pushed video adverts in HD may be obnoxious to some (but you'd have to watch adverts all day long for it to make a difference!)

sutterbomb 12y ago

A few others have noted, but search ads are actually perfectly native ads. The form and function are identical to the rest of the stream they are shown in. Setting aside the term "native" then, as the point was much more about brand vs. direct response ad markets. I'd reword the author's thesis (while keeping the intent) to look like this: 1) All mediums develop native advertising styles over time, which web & mobile are just in beginning stages 2) The market for brand advertising will continue to be larger than the market for direct response advertising 3) Google won't win the market for online brand advertising

shadowmint 12y ago

Lack luster thesis aside, does anyone have any solid stats about the effectiveness of these new 'in steam' / 'native' advertisements? Quite curious. In theory they should be effective at engaging because they can be so narrowly targeted, but I still have such a hard time believing that they actually convert into user action (eg. purchase).

imjk 12y ago
For one thing, native ads tend to be more viral oriented versus paid, so they have much lower costs which can be as low as free. It's not so much about the narrow targeting as it is about the engagement. These "advertisements" show up in your FB news feeds and Pinterest pages because someone else in your community thought it worthy to share; they go viral when many people find it worthy to share. They're also much more integrated to the platforms as they don't initially appear as advertisements, unlike say banner ads. "I still have such a hard time believing that they actually convert into user action (eg. purchase)." To your last point, the author argues that native advertising is more akin to Brand advertising versus direct response, so in the same way, they're not intended to function as direct response ads that encourage you to buy immediately. But I'd argue that these native ads are even more effective because they can serve both purposes; they can serve the purpose of bringing brand awareness as merely being subtly place subject matter into and article that brings awareness to a brand, or they can be as direct as a product endorsement by a celebrity on their Twitter feeds or Pinterest pages. Native advertising can be versatile enough to cover both direct response and brand building advertisements.

adventured 12y ago

Google will continue to own search on mobile. As such, their ability to monetize that avenue will remain intact. And it's an extraordinarily lucrative position. It does not matter whether the ideal format for mobile ads is native or not, if it is then Google will adapt their search dominance to that approach and print money the same as they have been. There has been no drop off in their mobile search position of power, and there's nothing likely to displace their role there. There's no particular reason mentioned in the article, for why Google can't benefit with the reach of mobile in regards to advertising. I saw no explanation for why search won't get bigger with the mobile market's growth in the next decade. Nor why Google isn't just as well positioned as anybody to take a big cut of native ads via search. The only way in which this is approximately peak Google, is that their PE ratio is likely to compress to half what it is now over the next decade, while their profits increase, leading to a flat stock for a very long time (as happens to most companies in their situation; eg Microsoft, Apple, IBM, Oracle, Cisco, Intel, etc).

millstone 12y ago
The concern about mobile search is twofold: mobile ads are less effective than desktop ads, and people search less often on mobile than on desktop. So "owning search on mobile" may not end up being a position of power at all. I don't see an easy avenue for adopting their search dominance to native ads. Native ads are "in-stream" ads: think Buzzfeed instead of banners. "Native ads via search" doesn't make sense: search is finding content, but is not itself content. Google doesn't have much in the way of content, with the notable exception of YouTube.

r0h1n 12y ago

I would challenge the core of Ben Thompson's argument, namely: > $50 billion for worldwide search advertising (of which Google captures a huge majority) sounds like a lot, but it’s only a small percentage of total ad spend, projected to be $545 billion in 2014. The vast majority of that spend is not about direct response – i.e. ads that spur you to make a purchase on the spot; rather most of the money is spent on brand advertising. Essentially his point is direct response is ~10% of brand advertising, and that other players are better positioned than Gooogle to capture that. But what if that ratio itself were a legacy assumption? And thus, why should we take his following statement at face value: > The idea behind brand advertising is to build “affinity” among potential customers. I posit that brand advertising has traditionally been orders of magnitude larger than direct advertising because options for quality direct response advertising were limited. But thanks to the rise of the web and mobile, we're now moving into an era where the line between brand advertising & direct advertising is blurring. Not just that, but the time/distance between a customer's latent desires to purchase action is also shortening, thanks to 24x7 e-commerce. In this world, why should direct response be 1/10th of brand advertising? Heck, why should direct response always be distinct from brand advertising? Sure, companies will continue to run brand adverting, including ads masquerading as stories (advertorials once, "native ads" today). But the split (or even distinction) between direct response and brand advertising will continue to reduce.

missserenity 12y ago
Is Coca-Cola ever going to move away from brand advertising? Is Bud Light? Is McDonald's? There are too many products where value comes from building a lifelong relationship with the customer, rather than directing a single purchase. That's stuff only branding can do.

rvn1045 12y ago

I don't think we are at peak google. I think we are having this conversation a bit prematurely. Some other company in the future will disrupt google (who knows in how many years?), that is just the nature of this business. For now Google will enjoy it's dominance.

wildermuthn 12y ago

All companies founded upon one core technology will diminish once a new technology becomes more useful and prevalent. Ads aren't going to displace Google — some new and better technological platform will. IBM brought the mainframe. MS brought the PC. Google brought the internet. Apple brought the smartphone. These are all platforms, and they all built off one another. So what new platform will build off the last platforms? What new device is powered by the screens and sensors of smartphones? What new device was funded by zealous crowds coordinating their money and development through the internet? What new device requires what only the PC can provide: affordable and massive processing power? Oculus brought Virtual Reality.

cromwellian 12y ago

I find "native" advertising pretty shady. Google is already heavily criticized for ads that are hard to make out as ads in SERPs or product searches. I also think consumers get wise to it over time and it starts to get mentally blocked out. I'd say YouTube is probably Google's most effective hedge against a future where all the revenue is in branding/display ads. However, if you look at last quarter's results, non-ad "Other" revenue is now 10%, whereas ads used to supply 98% of revenue. The "Other" revenue is also growing 50% year over year. It may very well be that Google gets eclipsed or disrupted, but might end up eclipsing or disrupting its own ads business, especially as "apps" tend to take over user attention, and "Web" ads decline.

72deluxe 12y ago
It's true that people quickly mentally block out adverts. Even on YouTube, I ignore the advert and anxiously wait for the "skip ad" button to appear. Doesn't everyone?

ChuckMcM 12y ago

I find the 'Peak <x>' meme somewhat tired but the point that everyone guns for the monopoly and is a valid one. I've noted over the years that Google's CPC has been falling steadily, and the amount they have been spending on paid distribution has been growing even faster. But mostly that means that they are no longer the 'new thing' and now are the 'old thing' where 'stream advertising' is the 'new thing' now. And while they really pushed hard on making G+ their stream I don't think it has been as successful as they would have liked. I've also noticed that search hasn't been about finding every web page for a long time now, now it is a service that is part of some app or other environment, and it isn't unique. The article's point about Amazon doing more product searches, I can believe it based on experience that nearly always a search on Google gives an amazon link that I seem to invariably click on, if only to read the reviews. So why not search on Amazon first? In my opinion, it is only a matter of time before Google tries to monetize the non-commerce queries. Once the RPMs on Bing, Yahoo, and Google Ad feeds are all about the same the underlying crawling and indexing search infrastructure will become a drag on profits. That will be an interesting time for me.

sytelus 12y ago

Another arm-chair pundit trying to fit present to past anecdotes and predicting future... In 10 years of time Google might be self-driven car company which has search as side business or a company selling robots which walks and moves like humans quickly taking on cheap labor jobs. The strength of Google, in my view, is not its current products but ability, desire and enablement to innovate and take risks. This in part comes from its leadership and the culture. How many other companies take on the expensive product developments such as Fiber, city-wide wifi, online office, gmail, Android, home delivery etc - without a definitive business plan? During Bill Gates era, there was a saying in Microsoft that your product pitch would fail if you can't convince executives that your idea would yield another billion dollar business because they thought it simply wasn't worth their time. Even at the peak nobody thought IBM would take risks to start home delivery system or experiment with balloon based radio systems.

pinaceae 12y ago
completely disagree. a company is measured by its profits, any new venture needs to have a business behind it. xerox parc, ms labs - great hobbies, no monetization. google x? nothing so far. glass is cooling off. car has driven 400k miles - on the same, tightly controled circuit. no commercial products in sight. i personnally have had discussions with google execs about new business areas where google could easily transform established industries - to be shut down with the phrase "we don't touch any market below 1bn". and that was 3 years ago. kids these days don't give a shit about google. search happens in the browser url bar, not google.com. search is a commodity. how exactly is google still relevant?
- rcraft 12y ago
  "search happens in the browser url bar, not google.com. search is a commodity. how exactly is google still relevant?" Exactly his point and the one you are missing. Google had the foresight to invest in chrome, android, gmail, and Chromecast years ago. At the same time people like you thought they were silly for pursuing products that had no short term revenue or ecosystem benefits.
  - 12y ago

eva1984 12y ago

Google has a serious problem right now: the new Mobile ecosystem is driving users to vertical search services: individual Apps. Want to buy stuff, open Amazon Shopping App; want to find restaurants nearby, Yelp is at your service; Take a ride maybe? Uber is your best friend. Same thing could be said for a lot of other stuff, like Airbnb for renting and Flipboard for news(damn, poor Google Reader). What makes things worse is that those kinds of traffic are Google's cash cows. The point is, in the era of mobile, there isn't a unified entrance for everything, not like the way Google dominates Web. I think that is why Google Now comes to play, to ensure user can access google's search service with a single swipe, but it is hard to tell whether this will work out or not. Of course, Google has the best technology in town, but the internet is a more diverse places right now. Even though it owns Android and Chrome, it won't become the sole gatekeeper of all information. Google will not become the microsoft of the internet, and maybe this is a good thing.

tantalor 12y ago

Was this written in 2014 or 2008? This happened years ago when Facebook wiped the floor with Google in social networks.

72deluxe 12y ago
Is Facebook still such a big thing to people? There was a time when everyone and their dog were asking "are you on Facebook?" with eagerness and then looking at your as if you had publicly fluctuated when you said "no". With over 271 million domains on the Internet, it seemed odd that people were going crazy over one or two (Facebook and Twitter). But now people just accept that you don't have an account and are happy with emails or face to face communication, whether that be in person or via conferencing of some form. If social networks were relevant to everyone, then I could understand you saying that Google was in decline. However, they're not important to everyone - they might be in your circle though. Finding things on the Internet is still pretty big though, as is email.

Doctor_Fegg 12y ago

Google Search is vulnerable for the first time in years. If I type "king" into Safari's address bar on my iPhone, even with Google search suggestions turned off, it prominently suggests "Wikipedia: King Games". Spotlight on Yosemite does the same. Apple are quietly relegating Google results to second place or worse. Is there a better result in Wikipedia? In iTunes? In the App Store? On Maps? Spotlight highlights that; it's probably what you want. It's not hard to imagine deals with Amazon (tablet/ebook rivalry aside) and Yelp, too. The remaining search results are supplied by Bing for Spotlight, Google for Safari. But I expect Bing to replace Google in Safari for iOS 9. This is how Google will be dethroned. Not by someone building a better text-based search engine, but by Apple and Microsoft routing around them. And this is why Android remains so important to Google, and why Google were so anxious to prevent Samsung going their own way.

adventured 12y ago
What share of the global market for smartphones does Apple + Microsoft currently possess? Most of the rest of the growth in smartphones - the next two billion users - will come from poorer countries where relatively few of the people can afford iPhones. That means that market share for search will, as of today, go to Google via Android. Apple and Microsoft pose zero threat to Google's search dominance unless they can unseat Android globally.
iribe 12y ago
There are multiple fronts. There are the microsoft/apple fronts where they use every opportunity to not provide google search results. Then there's European antitrust investigations which microsoft is funding via 'grassroots' organizations. Basically every large player not named google is determined to see google fail. Which is ironic given the push for antitrust, but I digress.
72deluxe 12y ago
I turned off Spotlight web searches under Yosemite precisely because the search results were returned by Bing - they weren't any good!

PSeitz 12y ago

You forgot to mention Google Inbox in your article.

mncolinlee 12y ago

I beg to differ. Google may have the strongest native advertising platform. It's called Gmail/Inbox/Now. Google knows exactly when you're thinking about a major purchase like an automobile because they see your e-mail and search traffic. Nudging you towards that car brand via Now or Inbox may be quite effective.