The Yahooing of Alphabet Google
August 12, 2016
I read “Google Isn’t Safe from Yahoo’s Fate.” The write up is a business school type analysis which reminded me of the inevitable decline of many businesses. Case studies pose MBAs to be to the thrills of success and the consequences of management missteps. I recall a book, published by a now lost and forgotten outfit, which talked about blind spots and management myopia. Humans have a tendency to make errors. That’s what makes life exciting. But I see a GooHoo trajectory.
I learned in this article:
Google is on the wrong side of major trends in the digital advertising industry: Google captures direct response dollars as digital ad spend shifts up the funnel, its focus is still on browsers and websites as engagement is moving into apps and feeds, Google is deeply dependent on search during a shift to serendipitous discovery and ads designed to interrupt the user’s attention are being replaced by advertising designed to engage them. Its competitor, Facebook, is on the right side of all these trends.
The Alphabet Google thing has not been able to hit home runs in social media in my opinion. The Google Facebook dust up exists, and it seems to me that Google is withdrawing from the field of social battle.
The write up informed me:
Google’s search advertising model is built on direct response in that it charges for search ads that people click on. In theory, this is an entirely transparent model: After all, advertisers only pay when the advertising works. What it conceals is that they are taking more credit (and charging more) for value that its ads didn’t deliver. By charging you for the click that follows a search, Google effectively takes credit for the entire funnel of purchase consideration that led you to type in the search and click on the link in the first place….But the ad itself didn’t create their purchase intent — it just takes credit for it. Google’s lower funnel ads are getting credit for upper-funnel effectiveness, in no small part because the latter is just too hard to measure.
Because I am a consumer, I noted this passage:
The shift to mobile has already changed the dynamics of search. Google’s average number of searches per month — 100 billion — has been the same since 2012. That nets out to about one search on mobile per day, on average. By contrast, the average user spends 50 minutes a day on Facebook. Facebook has surpassed search to become the No. 1 source of traffic for digital publishers or content providers; social has replaced SEO.
My take on this prompted three notes written on a napkin in the greasy spoon diner in Harrod’s Creek, Kentucky:
- I am not certain that Google is in a fight to the death with Facebook. What about Amazon? Snapchat? Itself with finance pushing one way and free spending senior managers another?
- Social may have more stickiness than running a query on a mobile device. One has novelty and social hooks; the other has looking stuff up appeal. Then there is that “dwell” time for Facebook. Big delta from a search hit to a wallowing in sociality.
- Alphabet Google has not been able to diversify its revenue streams. Facebook does not seem to be trying very hard to cook up new businesses. Are both these outfits vulnerable to competitors and innovators who come in the side door?
Not on the list is my built-in biggie for Yahoo and the Alphabet Google thing. When I think of Yahoo and Google, I recall the legal hassle between the two companies. The disagreement concerned Google’s online advertising system and method. Prior to the Google initial public offering, Google and Yahoo found a common ground built on a nine figure settlement.
This means for me that Google possesses the DNA of Yahoo: The GoTo.com/Overture.com online advertising approach. Writing about Google becoming Yahoo, therefore, is an exercise in the obvious. That DNA test I apply reveals that under the Loon balloons and the other big bets, a bright purple heart is beating.
Ergo: Google may have little control over what its protein structures do. MBA that thought, gentle reader.
Stephen E Arnold, August 12, 2016
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