Dissing the GOOG: After 15 Years, the Halo Tarnishes
May 13, 2016
I love the Google. Sorry. I love the Alphabet Google thing. I read the Google invention explaining how I could have a computer implanted in my eye. The Alphabet Google thing has sufficient time, talent, and money to move beyond Dr. Babak Amir Parviz’s contact lens invention. Amir Parviz or Amirparviz has left the Google building and the problem of cooling a computer in an eye for others to solve.
Alphabet Google can solve some problems; for example, Loon balloon drifting and making it difficult for me to locate information directly relevant to a query I pass to the Google search systems. Management glitches? No problem. Solve them with personnel shifts and reorganization.
From my perspective, the search giant turned Leonardo can envision with the best mankind has offered. The challenge seems to be finding a way to keep the online advertising machine pumping money.
I read “Is the Online Advertising Bubble Finally Starting to Pop?” This is an interesting question. The write up presents some data which make clear that Google is generating less revenue per click than it did in 2014. I looked at a chart which shows a decline in the “cost of ad space per dollar of revenue.
If the data are accurate, erosion of Google’s ad revenue is now a problem for Google to solve. The write up opined:
We estimate that the online advertising market has been artificially inflated since the end of 2013, and is much more mature than its pundits are claiming. 90% of Google’s revenues come from advertising. We expect Alphabet’s share price to go down by 75%…
The article concludes with a list of other sources which suggest that Google’s ad revenue is “crumbling to the ground.”
My reaction is that Alphabet Google’s business model pivots on the Overture/GoTo.com pay to play model. Google and now Alphabet have tried for decades to find another source of revenue which would prove that Steve Ballmer’s “one trick pony” observation was not accurate.
How have those revenue initiatives worked out? Google remains dependent on online advertising for the bulk of its revenue. The desktop search approach is not the principal method of obtaining answers to questions for most mobile users. Facebook, it appears, is more successful in providing must have information to users who will put up with Facebook’s revenue methods. Amazon, despite its woeful search systems, generates money from a couple of talented ponies, not one.
What’s going on? Here’s my view:
- Google’s vision was to build a better Alta Vista and generate revenue with online ads. That model is the foundation of the Alphabet Google thing and a digital straitjacket which Google-dini cannot escape
- Alphabet Google is a combination of science club projects and me-too innovation. Without something “new,” the GOOG is a bit of an artifact for many users. Convenience is one thing, and revenue is slightly different. A mismatch perhaps?
- Google is distracted. There are legal hassles. There are staffing hassles. There are competitive hassles. Is the pony addled by crowd noise in the online circus ring?
The Google is not going away quickly. Messrs. Brin and Page need to find the imitative magic that created a better Alta Vista. Then that “new” thing has to produce sufficient revenue to add some meaningful revenue to the company’s financials.
Is Google “feeling lucky”?
Stephen E Arnold, May 13, 2016
Comments
-
- Subscribe to Beyond Search
Feature archive
News archive
-
