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The Google Monopoly

Google is the undisputed king when it comes to online and mobile advertising. They possess the largest;

  1. Search Engine in most countries (Google.com and national variants)
  2. Mobile Platform (Android)
  3. Display Ad Exchange (Google AdX formerly DoubleClick)
  4. Mobile Ad Network (AdMob)
  5. Desktop Ad Network (AdSense)
  6. Ad Tracking (Dart)
  7. Web & Mobile Analytics (Google Analytics)
  8. Email (Gmail)
  9. Video Platform (YouTube)
  10. Browser (Chrome)
  11. Digital Maps (Google Maps)

The only major areas where they are not number one in the digital ecosystem is Social Media, Affiliate and possible major content portals in areas of Travel/News/Entertainment/Finance/Sport/Music. However even where they are not the largest they have made significant inroads against the incumbent players like Yelp, Tripit, Yahoo Finance, Pandora, Facebook and Commission Junction.

With owning that much of the digital eco-system, traffic levels, user data and thus being able to if not directly but indirectly set ad pricing parameters comes huge responsibility. Many companies in different industries have held this type of dominant position bordering on a monopoly and either because of their own hubris, inability to innovate or government intervention due to abuses of their monopoly position have lost that position and societal influence. Companies like Microsoft, Standard Oil, General Electric, Sears and IBM are great examples of those that were either forced to change or lost their edge and are no longer the market leader.

Google became famous in their early days for their mantra of ‘Don’t Be Evil’ as almost an internal code to drive their building of products and business practices to preserve an open standard. In many ways Google has held to this way of doing business or at least began their products out that ways let alone pursued projects with a wider social implication. This includes;

  • AdWords Bidding System for Search Engine Marketing (SEM) being auction based for quality rather than general standard at the time of bid amount per position
  • Google search referral data being passed freely to web-masters
  • Pursuing largely open standards or APIs for things like Mapping, Wearable Technology, Web Browser, Mobile OS, Email, Ad Platforms
  • Investing in Google Ventures to fund other innovative ideas and technologies
  • Innovating in greater good projects like Self Driving Cars and Human Immortality
  • Pulling out of China for government intrusion reasons
  • Being open about US Government and NSA requests for data where possible

Now I am not saying their aren’t ulterior motives in what Google did with the above and certainly they switched to more closed architecture as with their Social Media efforts as soon as it suited them. Even their much vaunted, providing their employees with 3 free meals a day, massages, haircuts, daycare, laundry, etc. while industry leading, innovative and certainly laudable had the ultimate ulterior motive of keeping employees happy and energized to work longer hours at the office.

At the core of it all today is Google Search. It provides about 80-90% of Google’s revenues historically and today and Google does everything it can to be to protect it’s position as the Internet’s gatekeeper and index of places. It is essentially the entire strategy behind Android and Chrome which it has largely won ensuring Google Search is front and centre of the new products, devices and paradigms people are using online. Free products that ensure Google Search Ad and other Digital Ad revenues come from that keeps Google’s Mobile Ad Share around 90% and their Search Ad Share around 70-95% in most countries.

Google has recently begun rolling out what may just be a wider test but my expectation is the likely new look of the Google Search results page in the screenshot below.

Screen Shot 2013-11-19 at 11.14.00 AM
The thing that has fundamentally changed in this look is the Top 3 paid results used to be in a light brown colored box to distinguish it clearly from the paid results below it. This has been removed and replaced with just the little orange ad icon in a faint overall box. It is clear that Google who already rolled out their Enhanced Campaigns change earlier this year are continually pursuing efforts to get people to click on the paid ads more and help increase the Cost per Click (CPCs) that they earn.

In the past in addition to Enhanced Campaigns, Google has introduced and/or changed the terms of their Shopping Listings, Ad Extension links, More Mobile Ads per Screen, Promoted their own properties in Organic Listings like Google+, Zagat, Google Reviews ad Google Finance over more well known and informative portals like Yelp, Facebook Pages, Yahoo Finance and Trip Advisor.

So this change was not a complete surprise to see given Google always does everything to increase their own revenues as every public company is obliged to do in a legal manner. It does offer run completely counter to their ‘Don’t be Evil’ mantra and to always present the most relevant information to the public. Google ultimately wants searchers to click on more ads and existing Advertisers to spend more on their campaigns as well as new Advertisers who might only focus on Search Engine Optimization (SEO) to get their organic listing as high as possible and the free traffic that results to all start running paid SEM Google AdWords campaigns.

Ultimately it was more the visual change that was more the shock to the system for me in this case and the reality that Google is pushing the boundaries in every area when it comes to Digital Advertising. They can do this because in general the US Federal Trade Commission (FTC), Federal Communications Commission (FCC) and to a lesser extent the European Union economic bodies have been powerless and/or unwilling to do anything about it.

The next proposed change in the digital advertising landscape the Google AdID has the potential to rock the foundations yet again. This is Google’s proposed replacement for the cookie which has for a decade and change been the default standard for Internet tracking and ad optimization. However it has got a bad rap in recent years and many Internet browsers and sites along with individual user software are preventing the overall effectiveness of this approach with various versions of cookie blocking. The problem with Google dictating a standard across the internet for advertising is because of their dominance it will become the default standard and thus they will have primary control of collecting information and ad optimization.

Google deserves all the success that comes their way and their $1,000+ stock price, brand loyalty and largely very favorable public perception of the brand. However why we must all be wary is if one entity no matter who it is has both the power to control our access to information and the ability to control pricing of advertising across an entire medium, then we are all in danger of abuse. It would be akin to Fox being able to set pricing for all ads on TV and all the programs we were able to watch.

Often large companies are disrupted from a new paradigm of thinking like Google and to a lesser extent Apple did to Microsoft and Microsoft before it did to IBM. However Google has been very adept in buying innovative companies like Invite Media, AdMeld, YouTube, DoubleClick, Android, AdMob, ITA, Blogger, etc. and thus have kept threats to their empire at bay.  We have to be more vigilant to ensure we have a vibrant economy full of a number of players in each space to ensure both fairness and innovation.

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