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.