by Omri Levin

We call Google Now the Siri alter­na­tive; how­ev­er, Google has been toy­ing with voice search for some time. Google could have launched Google Now pri­or to Siri – they’ve been think­ing about it since Cap­tain Kirk talked to an on-board com­put­er on Star Trek.  It begs the ques­tion, why did they wait?  And fur­ther­more, why is Google Now lag­ging behind Siri when it comes to using voice to access apps or change set­tings?

Call me a con­spir­a­cy the­o­rist, but I believe it’s real­ly straight for­ward.  Google’s search adver­tis­ing rev­enue is threat­ened when voice search allows users to bypass a search engine results page (SERP).  In 2011, 96% of Google”s rev­enue came from it’s adver­tis­ing prod­ucts.  Some of the more pop­u­lar adver­tis­ing prod­ucts are desk­top search, dis­play net­work, and mobile search. Of these, mobile is by far the most promis­ing long term prospect for increas­ing ad impres­sions and clicks.  Why?  Because mobile phones are always on, always with us, and incred­i­bly con­ve­nient.  With the intro­duc­tion of tablets and, my per­son­al favorite, the Sam­sung Note II phone/tablet/phablet, we will see mobile ad impres­sions ris­ing sig­nif­i­cant­ly for at least a few more years. Accord­ing to Jeff Haden at Inc.com, it”s the end of SEM as we know it.  An excerpt on the effect of Siri and sim­i­lar voice search tools:

[Siri] Will make PPC irrel­e­vant. With­out a search engine involved, there is no PPC. If you rely heav­i­ly on PPC cam­paigns to dri­ve traf­fic, your total ad serves could steadi­ly decline.

For exam­ple, search­es for movies on Siri bypass the search engine com­plete­ly and remove the oppor­tu­ni­ty for adver­tis­ers to buy Google Media Ads.  Instead, results are orga­nized by RottenTomatoes.com reviews.

The more effi­cient Siri and Google Now get at pre­dict­ing the results we want, the less Google is able to jus­ti­fy charg­ing adver­tis­ers for pro­vid­ing the user with results.  There are sig­nif­i­cant impli­ca­tions here for adver­tis­ers, but we’ll save that for anoth­er post.

Where does that leave Google?

As we can see in their most recent earn­ings state­ment (below), Google’s pur­chase of Motoro­la diver­si­fied their rev­enue stream sig­nif­i­cant­ly.  We can expect Google’s adver­tis­ing rev­enue to be much less than 96%, but still the major­i­ty in 2012.

To stay #1 for the long haul, Google knows it’s going to need to plug any holes that spring up in its boat. For exam­ple, one major sur­prise was Amazon’s choice to use Bing as its default engine despite the fact that it is an Android-based device.  Google has a vest­ed inter­est in Android and Chrome-based devices because they use Google as the default search engine.  If Microsoft or any oth­er manufacturer’s devices pop­u­lar­ize or, in Amazon’s case, choose a dif­fer­ent default engine, Google could lose mobile search mar­ket share to users who don’t care enough to change the default from Bing to Google.

The Bot­tom Line

Google is still eas­i­ly on top when it comes to search and search relat­ed adver­tis­ing rev­enue; how­ev­er, we can expect to see Google con­tin­u­ing to diver­si­fy rev­enue through non-search chan­nels such as the Google Dis­play Net­work as well as increas­ing rev­enue and invest­ing in non-direct adver­tis­ing relat­ed activ­i­ties such as device and OS devel­op­ment.