Google has a real rival; Search Competition to Look out for in 2012-13

We all often talk about the Google-Facebook rivalry or the ‘android versus iphone’ war going on. The truth is neither Apple nor Facebook is causing Google any worries as much as another old big player. The company that is in every Google exec’s nightmare is Amazon !  It’s quite simply the truth and the current consumer trends have the potential to cause Google a whopping 20% reduction in their revenue in the coming years.  Before you go ‘what the ??’ let me throw some light on a few basic stuff. Google or any search company for that matter, generates revenue by showing relevant ads in their search results. And every time people visit those ads the search company gets paid. Now if there is a post search action(sales, paid subscription etc) or in business terms if there is conversion Google  gets a much bigger cut. I know from my experience with Google Adwords that you need to pay at least $30 per click to bring a sales landing page on top of the search results and this is for a low competition niche and assuming the click did not convert. Now you do the math !  So it is no surprise that pre sales search contributes to a big portion(about 20 percent) of Google’s revenue.

Online sales has always been dominated by Amazon and the Seattle based company is still growing at an amazing pace. Google has always benefited from this because people always love to search everything on Google even when they know exactly where to get what they want. Of course, Google does crawl the website content perfectly, but that is only one of the reason why people search everything on Google, the other is the very plain fact that it has become quite habitual. It is just like how most of us visit wikipedia through Google. So right now what concerns Google execs is that there is a growing trend among consumers to skip Google altogether and go to the product sales page in one step. A major reason for this development is the growing popularity of mobile apps that facilitate shopping like we’ve never imagined. Another reason is the investment companies like Amazon are putting into search within their domain. They have made search so brilliant and people simply love it.

There is no actual data to prove this trend but it just makes sense. Amazon search queries are up by seventy percent last year and that’s definitely one indication. The main point here is that Google’s 20% Ad revenue is dependent on pre sales search people do and that definitely puts Google on the vulnerable side. Amazon, thus is a real competitor to Google and it is going to be interesting to watch out this hot competition over the next few years.

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