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.