Google takes steps towards a fully-subscribed search service
4 min read
09 December 2013
In 2013, businesses worldwide will spend well over $100bn on digital advertising and Google will take $1 in every $3 spent. We know from working with global e-commerce advertisers that Google is the dominant analytics player and here is where Google can capitalise profitably on the control they have over the analytics marketplace.
According to research from Econsultancy in 2013, 90 per cent of advertisers use Google Analytics (GA), with 86 per cent using the service to analyse site traffic and conversion KPIs; and 75 per cent relying on it to track online campaigns. Paid search is an important part of the equation for advertisers without doubt, with 61 per cent reporting that they use GA for pay-per click optimisation.
Google recently switched off sharing organic search keywords referral data, which simply means that when an advertiser logs into their Google Analytics service, they can no longer view which search terms users typed in to get to their website. Without this data, the very marketers who have worked their way out of the “blind SEO” optimisation days have now been sent right back to square one with the introduction of secure organic search. Allegedly introduced for privacy reasons, the move will conveniently render increased investment in paid search as the obvious next course of action (where the privacy reasons don’t apply).
In a similar move earlier this year Google stopped ‘device level’ keyword targeting, meaning that advertisers had to buy mobile search words if they wanted to buy desktop search. This means the advertiser has to invest more in search if they want to maintain their desktop search activity. In doing so Google has effectively handicapped marketers and will have pushed more brands towards a fully paid-up subscription model. This quarter, we saw Google’s revenue figures leap 12 per cent on last year’s figures, with consolidated revenues for Q3 at $14.89bn at the end of September.
Google is the only player in the digital space with the power to raise its revenues as rapidly as it has done in the past quarter. These strong arm tactics ensure that its stock soars; to a record high of nearly $1,000 per share. As other media owners such as the New York Times have struggled to keep ad revenues at a steady rate, the search giant has made it clear to all advertisers that it values paid search much more highly than organic search.
The implication for advertisers over the coming months is that they lose the advantage of knowing which of their marketing channels are performing the best for individual campaigns. This will lead to over-inflated campaign tracking costs and an unhealthy bias on paid search. Our own research has found that Google typically boosts the importance of search engine advertising by up to 200 per cent. While it has been a useful tool for marketers, unbiased data analysis makes it clear that campaigns and advertisers are never homogenous – and neither are customers. The ability to understand how and why individual customers eventually came around to buying a particular product is invaluable and can have significant impact on an advertiser’s ROI.
While Google’s revenue continues to grow, a backlash is beginning in earnest. The monopoly Google holds over the media marketplace is a serious concern for advertisers and vendors who believe in a more competitive and transparent ecosystem and are willing to fight for it. Looking from my vantage point of 16 years of digital media and technology experience, it’s clear to see that Google’s revenue is boosted by their global dominance in advertising analytics. For advertisers, the challenge will be to gain true, unbiased information about which channels work best to reach customers online. Right now, I’m left still searching for an advertiser who saw a Google Analytics report extolling the virtues of Facebook ads and Yahoo! keywords.
Jon Baron is CEO of TagMan