Google’s stock slid after report on search ad decline
recode.net
recode.net
It's obvious that Facebook has a better position for growth and adding new channels for their ads business. I can see Facebook share of online advertising grow in the next couple of years.
FTFY
Google is good to sell products that are actively searched for.
People go to Facebook when they are bored. Facebook is great to sell products to people who are bored (various forms of entertainment products and services). It's also good to sell stuff people aren't actively searching.
So, depending on the product/service you are offering you can pick a different channel to reach your customers. There's no one-size-fits-all solution.
Main problem with advertising in general is more and more people are learning it's best use is as a signal of what not to buy.
Facebook on the other hand. At least can pretend it's something a friend is recommending. Although that is transparent enough to be even worse.
Right now you have to close WhatsApp to start a search. And then come back when you have found the answer.
There is potential for Facebook for smooth search integration in its products and take bigger piece of the search-ad pie.
In 2015, Google's revenue amounted to 74.54 billion US dollars. It was largely made up (90%) by advertising revenue, which amounted to 67.39 billion US dollars in 2015. [1]
A rough estimation is that 80% of Google's advertisement revenue comes from search. [2]
1: http://www.statista.com/statistics/266206/googles-annual-glo...
2: http://www.statista.com/statistics/343191/googles-digital-ad...
Many (most?) people primarily search from their phones now, so I imagine Android generates a lot of ad revenue. Android is even more important because most people don't know how to block ads on it, whereas desktop ad blocking has become mainstream.
http://www.businessinsider.com/oracle-google-generated-42-bi...
But while we can't take Oracle's statements at face value, how do you know Android isn't making Google money? It's also likely that without Android, Google's revenues would've declined a lot faster.
Even if say people would've still used Adsense/Admob on iOS or other mobile operating systems, look what Apple did - it allowed adblockers on its platform. Google doesn't allow them and Chrome, which is the dominant browser on Android doesn't support extensions, so no adblock there either.
its just that the mobile chrome doesnt support extensions. google isnt stopping anyone from a local "adblock" proxy or editing the phones host file.
The only people who care about being on a fashionable network are young people, and Facebook solves that problem by buying whatever platform young people are using.
You may be identifying that young people set trends and thus the growth rate of different social networks, and you may be arguing that Facebook is resilient because they can buy out companies. But so can Microsoft, Google, Apple, MySpace, or Yahoo. That power is not unique.
One might also say that young people who join some social network like the peculiarities of that network, and so it behooves the parent company to keep that acquisition fairly independent in brand and experience. That means the existing strength of your platform might be a non-factor to the future success of WhatsApp or Instagram.
edit: now that I think of it facebook will be shortly in a position of being able to de-anonimize the internet. imagine selling that ad-space.
For example, I was working on integrating Facebook in a large media site, and Facebook would've had access to: what users viewed, how long they viewed things, game play usage (high scores and whatnot) and a lot of other information.
Google has some products that are market leaders with heavy usage, eg:
* Search
* GMail
* Youtube
* Android
* Chrome
* Maps
* Docs
Its just that Google is unable to monetize many of them.
However, Facebook has only Facebook, Instagram and Whatsapp.
1) Instagram _is_ what Facebook was 10 years ago. Its not a new product. They just bought it because Instagram was becoming _The Social Network_.
2) Instagram and Whatsapp were bought acquired.
What I'm trying to say is that Google is unable to monetize many of its products. And if online advertisement gets doomed, it would have to look for other business models.
But it _does_ have a very diverse set of products that people love.
What does Facebook have? and when was the last time they created something people loved?
Sure they know what age I am, that I'm college educated, live in NY, like anime and startups. But would they know I'm suffering from hemorrhoids and need help? That I'm considering an abortion and need a clinic recommendation? I sure as heck ain't broadcasting that in my timeline.
(aside since I assume that was an example! :) [Edit: and in case you aren't, hope you do get that sorted out]
Google has better potential for growth, but it still needs to prove it can heavily monetize anything outside of search. That is, find a new business that is competitive with their search revenue, until it's too late.
Facebook's first success was monetizing mobile (which Google should have been able to do better than it currently does). Its potential to find new sources of revenue is good but not as great as Google's.
Only time will tell if either or both will succeed next. Since potential isn't as good as realized potential of course.
For example, there have been talk about how search has shown promise in early cancer diagnosis [0].
So as you say, while Google are currently only monetizing their ad platform at the moment, they are far better positioned than Facebook to quickly find new revenue streams, should they need to.
Additionally, if you should believe that AI is going to be a huge area for monetization in the near future, then Google are very much well positioned to be a leader there - it is no coincidence that a "search" company is able to make self-driving cars or Alpha Go...
[0] http://www.nytimes.com/2016/06/08/technology/online-searches...
The real struggle lies not in the technology, but in the network-effect and branding.
Not much. Usually worsening them...
You're right that google is an advertisement company (87% of their revenue comes from their ad network), but I don't think that's entirely from search alone. Google's 3rd party adsense program is absolutely massive. This includes things like youtube ads, as well as ads on other 3rd party websites. Pick a random website with ads, 9 times out of 10, it will be an adsense (google) affiliated website.
Comments like these seem to suggest that Google or Facebook are the worst and one spends their time better somewhere other than IT. I really just don't see it.
For instance, if Google search took 2 seconds per search instead of 100ms, they would lose their market share. But that difference in performance is what is keeping 95% of their highly educated workforce busy.
It is just a worthless arms race, and I hope that people start to realize this.
I have no stock in Google or Facebook and don't benefit by promoting either in any way. I just genuinely appreciate what Google's tools has allowed us to do (linked spreadsheets, email, docs, Android, Chromebook, drive and search of course!). I don't care much for fb but I imagine there are businesses that wouldn't survive w/o it and whatsapp is amazing at bringing ppl closer.
But Google and Facebook are not the only companies in town that provide these products. They just invest insane amounts of money (and thus human resources) to be marginally better than everybody else. That is the saddening part of it.
Your argument falls apart there because they wouldn't be the only companies in town doing "medical or fundamental physics research" either.
It is blind luck that the industries and/or execution by Fb & Google allow them to print money - I don't think you can expect the same successes had they started off as medical or physics startups.
Incidentally, Alphabet is diversifying into medical research with Calico, and I hope it will turn out to be more than a billionaire's way of coping with their mortality.
Is this due to the increasing popularity of ad-blockers?
Competition is interesting. In 2005, there were tons of online stores, and users found them through Google search. Nowadays, most brands seem to have an Amazon store. If a user wants to buy something, they'll just go straight to Amazon and bypass Google entirely.
As Amazon accumulates more stores and more buyers, Google is increasingly cut out of that search/purchase loop, and stores have less reason to buy Google ads at all.
Google's problem is that they're terrible product designers and they never truly focus on a product the way other companies do. Are you genuinely delighted by any Google product these days? I'm having a hard time thinking what they create that even could be delightful (that regular consumers can buy, anyway).
I like Google Search, it is good, plain and simple. Regarding any of their other products: for sure no. Gmail works but creeps me out and as an admin, relying on GApps is becoming an increasingly not-fun experience since they rewrite the UI on a biweekly basis while leaving their documentation outdated. Boring and agonizing to have to spent time on something that is essentially easy except for the fact that the settings are hidden in an ever shifting castle of (pixel)sand.
Android for me suffers from the same product instability issues, I much much prefer the potential openness of Android to IOS but I certainly do NOT prefer the overt way Google monetizes their users and after fighting with mediocre Android hardware I've ended up with iphone. Low and behold it works, like, plain and simple style.
Google has the resources, but the focus?!
would it make you happy if their search business was originally 20 billion? That would make things more diversified.
I think this will change soon - at least on iOS if Apple takes ad-blocking to it's natural end. The not-so-subtle Apple v Google (and Google v. MS) strategic corporate warfare has been enlightening and entertaining to me. I had no idea corps would shake hands for the cameras whilst stabbing each other in the back concurrently.
The post title exaggerates the claim.
Except for when I travel, I don't much use gmail and Google search. (When traveling, I like booking using gmail, auto calendar and travel events, notifications, etc.). Otherwise I use my own email, calendar, etc. and DuckDuckGo.
I do pay Google about $25/month directly for Google Play Music, renting movies, and extra GDrive storage.
If I were a typical customer, would a $25/month average spend per user be enough to pay their expenses and generate sufficient profit?
Edit: dividing $4 billion per month by $25 per user per month yields a required 160 million paying users per month to equal ad revenues.
If they make $16 billion a quarter, then assuming they have about 1 billion users, that's about $5 per month per user.
I just wish I could pay that to get rid of all the ads, and the creepy user-tracking.
I do believe this is a big part of why they call us millennials the entitled generation. We literally expect everything for free. From our game of thrones TV shows to our favorite blogs, podcasts and websites. They all exist to entertain us and fuck them for wanting to make a dollar off their hard work. How dare they...
Wow, you took the words right out of my mouth. I wholeheartedly agree.
I remember talking with a non-technical friend of mine about Bandcamp and how he was annoyed that his popular free album had hit the limit of free downloads on the site. He would have to either pay Bandcamp or start charging for the album. Presumably Bandcamp does this because the cost of their infrastructure and work is not free and this is a way to get some revenue. But all my friend could say was "how greedy they are!" as if one spent their life acquiring a hard skill just to do free work for you and your band.
Its a more nuanced entitlement, where we millenials understand that it took hard work to make something, but after all, doesn't Google, Facebook, etc. do it "for free" as far as the end user is concerned?
Nearly everyone has bought into the utter bullshit that advertising makes the web free. This delusion buries not only the fact that we have made a deal with the devil, but also that the deal really sucks. What we traded our souls for we don’t even get. The web would be both cheaper and better if we just paid for what we use straight up. And more importantly, society would be better. I'll explain all of these....
It's not free.
It's more expensive.
It's even worse.
Eevilspock on HN, March 28, 2014.
Isn't that ideology center to the anti-net neutrality stance? People who only want to pay for what they use? I don't buy into that ideology because there are plenty of examples of it failing. Not only that, but doesn't serve everyone equally. And, if it wasn't already apparent, it hurts the poor. They wouldn't have access to the same content if they had to pay as they go.