The Anchor: 4 reasons why one worries about Google

13 Feb,2012

By Sanjay Mehta

 

So you think Google Plus has its set of challenges, as it ambitiously takes on Facebook? Well, I am not even talking about that. My worry is about Google’s core product and cash earner, Google Search!

 

Let’s do a quick dipstick here:

 

  • When you search on Google for information, how fast do you get to the right information that you need? That is, if you ever get it!
  • If the information that you are looking for is not something as basic as “what is the current time in San Francisco?” or “temperature in New Delhi”, there is every chance that information search is a frustrating experience on Google. Do you agree?

 

These are the reasons I am concerned about Google.

 

1. Not all search queries produce good results on Google

While Google has been doing a fair amount of innovation in search, and for certain types of enquiries, you can get to the information faster, there are a whole host of search queries that do not lead to good results, and where as a user, you look out for alternative options.

 

2. Google’s revenue model on search worries me

The revenue model is largely an advertising model. An advertiser takes ads on Google, while mapping search words. In other words, if I am a florist, I will likely buy Google ads, for keywords like “florists in Mumbai” or “Valentine’s day flowers” and so on. In short, when someone is searching for words or phrases of these kinds, then I would like them to see my advertisement on the right side of the page on Google. Because, then I would have the best chance of finding a connect to the particular user, and tempting him to click on my ad, and come to my website.

 

The other key thing to know and understand is that advertisers typically pay only when someone clicks on their ad and not otherwise. Also, all advertisers do not pay the same amount. The amount that an advertiser pays per click depends on the budget or rate that he has chosen, and it is based on a dynamic demand-supply situation of advertisers and searchers, for that particular word or phrase.

 

But, from the point of view of the advertiser, whatever rate he has agreed to pay per click, is his “cost of acquisition”, or the cost to get an interested user, to visit his website. So, who would spend how much on advertising on Google?

 

If your business is transportation of very large-sized goods, you may still use Google advertising to get across to people who are looking for such services. But for you then, this is a marketing campaign, and you want a certain visibility amongst your target group. So you would put money here in campaign bursts, and leave it at that.

 

On the other hand, if you are an e-commerce company, selling online, whether it is travel services or products, for you, the Google ad is a direct customer acquisition cost, and all the traffic that you pull in from these ads, you have a chance to get them to buy from you, right away. Since there is a way to map conversion from such clicks also, an e-commerce company can quickly calculate the equivalent cost of acquisition, of not just a visitor to the site, but an actual buyer.

 

For those who don’t get this, let me explain with an example. Say, a hotel booking company advertises on Google and spends Rs50 per click. Say, 100 people click on the ad. So the cost is Rs5,000. Mapping for conversions from these 100 clicks, he finds out that 20 of those actually made a booking.

 

So to acquire those 20 customers, he has spent Rs5,000 or his per customer acquisition becomes Rs250. Now, if his average booking transaction is Rs10,000, he may have no issues in this kind of spend, and may keep doing the spend forever, unlike the advertiser who spends on marketing campaigns in bursts and then goes away.

 

Now here is where the challenge for Google comes in.

All of the transaction-oriented e-commerce businesses are starting to get their own specialized search engines, which do a far better job than what Google does.

 

3. If the searcher moves away from Google, so will the advertiser

Larger and regular monies are spent on Google ads, by companies who have a quick transaction engine on the web – for them, it is direct customer acquisition. However, for most of such needs, users are finding better options to go and search at; over time, users will move away from Google to search for their needs of hotels, flights, products to purchase, movie tickets, etc.

 

If the searcher moves away from Google, so will the advertiser who is looking for that searcher. What constitutes the larger spends on Google ads, will take flight and move to more relevant locations to get better returns for their money.

 

You don’t buy this argument? Let’s take the spin. Say, you are searching for tickets from Mumbai toChicago. And you are looking to find options. What do you get?

 

What I get on Google.com are a lot of ads, on the top and on the right, and in the main search, I get a few clearly SEO-doctored links, and then a few links to travel websites. So yes, if I play around these links, I will get the information that I am looking for, in a few clicks.

 

But, I go to any of the leading travel sites instead and punch the same request – I get a quick response in terms of flight options for Mumbai to Chicago.

 

And then I go to a travel comparison site like say, ixigo.com, and I get the same search results from several travel sites, simultaneously. Flight options, prices, all at a quick glance, together on the same page.

 

So why would I go via Google at all? If, similarly, I was looking for ‘hotel options in Jodhpur’, the experience will be identical to the above. Question again will be that, if I were looking for hotel options, why would I go to Google at all?

 

Let’s consider products. Say I was looking for a book, “The Maverick” by Ricardo Semler. What will be my experience?

 

Searching on Google gives me stuff about the book, about Semler, reviews, and 1-2 links to Amazon.com.

 

Instead I go to junglee.com (the killer app on Indian e-commerce, I reckon), and I get a bunch of options for purchase of the book, with price details, and seller information. Bang on! Exactly what I need.

 

Repeat this for most e-commerce or transaction-oriented categories, and you will find a similar challenge. That Google does not give you what you want. There is a specialist platform that gives you perfect results.

 

So the bottom line is that people may not start at Google when they are searching for such transaction-oriented information. And this is where the cheese may be moving away for Google!

 

This is where the old time Internet service providers and portals went wrong. Time was when AOL and Prodigy and others were the starting point for anyone in theUS, wanting to get information from the Internet.

 

Then came portals and search engines. And the game shifted. Sites like Yahoo and Lycos became the default starting points for people, as they offered best recommendations for news, education, entertainments, science, sports, or whatever.

 

Then came specialist sites for finance and matrimony and recruitment, and people went there directly, instead of going via portals. I am seeing a similar movement, away from search engines, or rather, away from Google.

 

4. Google’s revenue may see a downward spiral

Considering that search is the main money earner for Google, if they do not correct, this could be the beginning of the southward movement on the revenue front. And that will hurt Google far more than their experiments with social networks – Wave, Buzz, Google Plus, Orkut, etc not taking off!

 

I worry for Google.

 

Sanjay Mehta is the Jt. CEO, Social Wavelength

 

Post a Comment 

3 responses to “The Anchor: 4 reasons why one worries about Google”

  1. Aloke Bajpai says:

    Glad you liked our service 🙂

  2. Anonymous says:

    I would agree with your argument about vertical specialized search engines, ixigo and junglee just work (something web apps aspire to be ‘just works’); Reading your post, I looked at my search patterns and its true.. it has come to using Google for all supporting information about my core need. If am searching for a camera.. I’ll sure go on junglee, but to read more reviews, blogs.. google is my reference search engine.. thanks for the post though 🙂

    • Yuzdi says:

      Why you shouldnt worry so much:

      a. This affects ad words program revenue. Not Ad Sense – which could well be the bigger fraction of revenue for google.

      b. Branding on digital has always been a big “?” – not sure anyone has quiet got that one figured. There is one word for all the counter arguments to this point – ‘Yahoo!’

      but true; google needs another revenue stream…atleast a trickle if not a stream… but hopefully the cash pile will go a long way in keeping them ‘relevant’ … 🙂

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