Are we at Peak Google?
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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.
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.
Remember what happened to Myspace. Ad revenue started to drop, ad density was increased to compensate, users became fed up and left, company went into a screaming dive and was sold cheaply. Who's in that position now? Twitter? Facebook? Pinterest?
We're probably closer to "peak social" than "peak search".
Just as with DRM, you cant win with a concept of wanting to control content on a platform that is not 101% locked down.
Browsers are not locked down.
The best advertisers can hope for is that users are too lazy to block. Or they can be smart and provide "ads" that provide some kind of value like contextual search result etc.
It really isn't hard to detect. If an asset didn't go through, it was probably blocked. You're already starting to see with Hulu.
But free services and websites ( you know the stuff that's supposed to be ad supported) typically value user traffic over ad revenue. Especially if they're still in the growing phase, or if there's lots of easy alternatives to your service (the case of YouTube). They wouldn't want to risk you hopping over to another service.
The doubleclick exchange is, to first order, direct response. Not brand. The rise of mobile has not been particularly profitable for google. It's not clear that google's strength -- direct response -- will translate well to mobile. Google's cpc has been falling -- though simpson's paradox makes this difficult to interpret.
Google is, btw, seriously threatened by amazon, though that isn't mentioned in this article. Google's business is to tax ecommerce; the rise of amazon as a shopping destination where, particularly with prime, you don't search anywhere else cuts google out. Hence their initiatives like delivery.
Very little of display advertising these days is direct response. It's common for display ads to have click-through rates in the range of a few per million impressions.
Direct response is basically a way of artificially reducing supply on the most valuable properties.
Not necessarily! As brand advertising becomes more important, E-Commerce is only going to be a small slice of the online advertising pie in the future.
The most expensive advertising deals on the planet, Superbowl Commercials, aren't about instant action. Coca-Cola doesn't pay millions expecting you to go out immediately and buy a coke.
You're going to see less ads about "click here to buy this now" and more ads like "Company Y: remember us!"
For example?
Other areas this applies to are clothing and decorating.
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.
Funny, I think that's word-for-word identical to what people at Google were telling me in 2006.
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.
It seems he knows a thing or three about this Native Advertising biz... 'cause that is what this article appears to be.
Here's a company employment dataset from the University of Waterloo showing where students go from one internship to the next: https://csclub.uwaterloo.ca/~vlyubine/co-op
In this dataset, ELO is employed such that companies earn points if they "beat" another one, which loses points as a result. That is, if someone hops from Company A to Company B, Company A earns points and Company B loses some.
Among Google, Facebook, LinkedIn, etc., it was found that Palantir was the only company that never lost a student to another one. If you go to the companies dataset here and sort by ELO: https://csclub.uwaterloo.ca/~vlyubine/companies
You'll note that the rankings are: 1. Palantir Technologies 2. Twitter 3. Facebook 4. Google 5. A9.com
It appears that Palantir also beats out fellow big corps as well. I think the consensus among Ivy leaguers I know and Stanford/Waterloo is that Palantir's strict hiring criteria and unique culture make it the newer Google of today.
To me it seemed as if the employees lived there practically. I wonder what would happen if you tap into that vacation time when the other guy is working 14 hrs a day with no time off. They also have a salary cap that is BELOW wages at other high tier employers. Again sickest office I have ever seen but it seems that they attract employees due to their "exclusivity" and great office. They are very successful recruiting young college grads due to this but I suspect when they get a bit older they will realize that the salary and interesting work are more important than a swank office they want you to live in.
Although I do not work at Palantir, the work is the main reason people go there over $BIG_CORP. Government intelligence and anti-fraud problems are far more interesting than the work that FB/GOOG seem to offer to new grads these days.
Also, as far as I heard, the salary cap is now gone as of this year.
When will companies realize that knowing how to design a large scale system, or a machine learning algorithm is more useful than knowing AngularJS or NodeJS?
For the vaaast majority of companies, that will be never.
What technologies would those be? I'm scratching my head trying to think of the latest, cool stuff that people want to work with.
On the language front, among the hottest right now are NodeJS and Go. Some might argue older languages like Erlang or Haskell are pretty trendy or perhaps Rust, but none of those have the current momentum of the first two and Google is behind the runtime for NodeJS and created Go.
On the data front, Hadoop is pretty trendy right now, but that's based almost entirely off stuff that Google pioneered. Other NoSQL databases are pretty popular and, again, Google has its fingerprints all over that. Hell, a bunch of the NoSQL technologies even use LevelDB as a storage backend.
Distributed systems? You'll learn more about them at Google than anywhere else. They were first with solutions to distributed consensus and they'll likely be first with whatever new need develops simply because their scale will ensure that they hit problems before almost anyone else.
DevOps technologies like Docker? Well, beyond the fact that Docker is implemented in Go, Google has long used internal technology like Docker and have supported Docker by releasing projects like Kubernetes.
Perhaps you mean cool hardware technology like self-driving cars, wearable technology, gigabit home internet, balloon-based internet or stuff like Chromecast?
So perhaps you can share with us what technology that they'd be exposed to elsewhere that they can't find within Google?
The tools could be the same any "mortal" of us techies use, but the technology created using those tools can be something cool, creative and different.
The problem is not in the "status quo" of the tools, but in what problems and in what way its aiming at something that can be amusing and exciting, like the Wonka's Chocolate Factory to the next generation of kids.
You need to be cool to get the guys that will built the next gen of tech, and with time, tech companies loose their sex appeal, because they become a boring piramid, looking for profit; because after the IPO, you have a board of the same-old-same-old and have to deliver profits to the stock market.
Its a like a couple, in the beginning everything is exciting and new, but with time, given they repeat the same things, the same routine, theres nothing new anymore, and the glow of the beggining just fade away
Anyway, its the institutionalization effect, if you follow the same path, you will get the same results.. Its the law of impermanence, that anything grow old and dies someday
What percentage of Googler's actually built that (certainly impressive) system, vs just use it? If you go work at some other company, is that knowledge of how to use Google's tech going to be portable, or are they going to want someone with a couple years experience using Storm/Spark/whatever?
Lamport was a Googler? Well I never...
Also, it could be argued that previous solutions to distributed consensus are only partial solutions without the work that Google has done to ensure consistent time across the distributed cluster.
Regardless, it's hard to argue the original point that Google is on the forefront of that kind of technology.
Google has a best-in-class (top 5?) product in pretty much every category of software. In 10 years a Googler could work on Drive, Android, G+, Gmail, Fiber, and Maps. While working on those things he/she will be exposed to an unparalleled developer infrastructure (Google's internal tools are rigid, but insanely well engineered). So why leave for another company when I could just change managers to work in pretty much any field on software? The only reason to jump ship would be toxic culture or money, and right now Google is at the top of the heap in both culture and pay.
That's not a very convincing argument.
I would say they have the top 2, Maps and Gmail. G+ is laughable and I still dont know anyone who uses it that wasn't force to sign up. Drive is a dime a dozen and not really very compelling since we have Dropbox, Sugar Sync, SpiderOak, OneDrive, iCloud. The only compelling things MSFT and Google have going is more space. Android is another argument but since I'm currently switching back to iPhone, thats what I favor. Everything else you said is probably true.
Google is the top at Search, Mail, and probably Maps.
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?
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.
same for PCs, Search is moving out of the browser (Win8, OSX), just something you type or say (Siri, Cortana).
yes, Google has Now, etc. but it has competition now and has not launched any new blockbuster since Android - and that one does not rake in huge profits. for that, they only have ads, embedded in search.
How about "search quality" for starters?
Snapchat is not a company that is even remotely comparable to Google, you know.
Gmail. Search. Chrome. Maps. Docs. These are all hugely popular products with young people, and the user base is vast.
Here's Steve Jobs talking about the challenges with Apple TV and it's go-to-market strategy: http://youtu.be/-pSfOKMEbG0?t=31s
So balloon based radio > IBM Watson?
He mentioned a ton of other experiments including self driving cars, Google is so large that they continually create two or more internally competitive products because no other company can compete with them.
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.
Yeah it does just keep zooming in.
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.
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.
From my perspective, a mis-step is a missed opportunity to enter a market. The pushed forward with G+ and it failed. Compare that to Microsoft which failed to see these markets coming. Google had NFC support baked into the Android OS. They just needed to develop the app and use brite force to push terminals into the market. They could have even developed some kind of iOS bump app to get ahead to apple pay. Otherwise they're firing on all cylinders better than any company in history of that size and they've given themselves a ton of adjacent white space. No evolutionary dead ends here.
This says people spend an average of 40 minutes per day on Facebook: http://techcrunch.com/2014/07/23/facebook-usage-time/
I can't find quite the same statistic for Google, but this says 22 billion minutes / 47 million vistors / month, which is about 15 minutes. Of which 60-some percent is YouTube. http://mediatel.co.uk/newsline/2014/08/07/22-billion-minutes...
Now thats two different countries, but I suspect the numbers are pretty similar.
I'm looking for a subtler approach though. Some way to keep browsing, keep things like app store accessible, but disable ads.
Full disclosure: I work for Disconnect.
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.
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.
The author suggest native advertizing will eclipse search. Really? This like saying Infomercials are going to replace prime time TV dramas.
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.
Google is definitely aware of it. For example, see this article from 2011: http://www.telegraph.co.uk/technology/eric-schmidt/8873664/G...
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.
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.
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)
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).
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.
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.
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.
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.
> $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.
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.
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.
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).
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.
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.
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.
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.
Also, PCs had a definite use-case but I don't see AR/VR as having one, particularly as audio/video conferencing already fills a hole.
I mean, VR helmets have been around for decades? But you don't see people rushing to get them, other than a small gaming minority?
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.
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.
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.
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
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...
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).
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.
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.
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.