Everyone seems to agree that the next step change in Google’s earnings are not likely to come from search marketing. Google has a commanding market share and has made “Googling” a tough habit to break. But there is a limit to the amount of growth that can come from “search marketing”.
I believe that there are two areas of earnings within the online advertising pie that Google could grow reasonably strongly in the near future viz. Display advertising and Classifieds.
After “search marketing”, “display” and “classifieds” form the next big chunks that Google can go after.
Please see image title IMG1 above.
Source: http://www.mediapost.com/publications/index.cfm?fa=Articles.showArticle&art_aid=103113
Display Advertising
So far Yahoo has been the clear market leader in this space. The banner market has been the prerogative of the big brands or cheap guys right at the bottom of the heap out to make a quick buck.
Apart from opening a new ad exchange (http://tech.yahoo.com/news/pcworld/20090918/tc_pcworld/googlegoesafteryahoowithmarketplacefordisplayads), I believe that the introduction of the “View Through Conversions” (http://adwords.blogspot.com/2009/09/announcing-view-through-conversion.html) could make display advertising to the vast numbers of businesses (small and medium) that currently use Google mainly for “search marketing”.
In tough economic times, which are only going go to away, very slowly, this new metric helps measure conversions (users that took an action and were exposed to the banner) better and therefore provide a better handle on a more accurate reporting of Return on Advertising Spend (ROAS).
I tried a display campaign and was amazed at the results using this new metric. I was able to generate/report 10 times the number of people that clicked on the banner and completed a sale as View Through Conversions. There is some controversy on how best to report these conversions. Regardless, the use of View Through Conversions, should create a large opportunity for incremental sales at Google.
It was the ability to measure that created “search marketing” out of thin air a few years ago. If my experience with View Through Conversions is eve somewhat typical of others, Google should see be able to harness a lot of net new advertising dollars to its Content Network, using the View Through Conversion.
Classifieds
Google has made two changes that I think might make it more of a player in this space.
A. Google Product Ads
Within the existing adwords ads, Google is making room for ads which occupy a larger piece of real estate on the screen. These product ads will presumably be shown against shopping oriented queries alone so that the overall Google experience is not disturbed. I suspect that if these ads gain traction, they will likely help raise CPC (Cost Per Click) fees.
Please see image 2 titled IMG2 at the top of the article.
Source: http://www.seroundtable.com/archives/020583.html
B. Google Merchant Centre http://googlebase.blogspot.com/2009/09/introducing-google-merchant-center.html)
Google has recently broken up its Google Base product into two separate products. All users of Google Base (a program to feed products/data to Google) that submit products have now been provided access to the new Google Merchant Centre.
My suspicion is that once the migration is complete, service providers that provide hard goods and soft goods (data or services) could be offered bells and whistles that correspond better to each demographic. In both cases, given Google’s large reach, I would say Google could become a player in the classifieds space with enhancements to both, the existing Google Base for service/data providers and the new Merchant Center for product catalog providers.
I believe that these two potential revenue streams will materialize before any revenues from Android and allied activities materialize for Google.
