Trends are an odd thing. Something gains momentum, we watch it happen, and then we participate and assume it will have the same effect everywhere forever. But then it doesn’t, because life runs in cycles to ensure that data, energy and attention spans stay in motion. Google seems to be going through the same.
Someone asked me the other day if the reason so many people were leaving Google was the increasingly corporate climate in the company. I said, no, I didn’t think so. I thought it was just the right time for many of them. They were vested, or had gotten that career boost, and it was time to move on, because the business model was waning and as a result, the company is trying to squeeze more blood out of stones through more bureaucracy. That’s how the cycle goes in tech start-ups.
Some writing on the wall persists, though.
The report shows that spending by search advertisers on Yahoo grew a robust 57 percent while spending on Google grew only at about half that rate. That meant Google’s total share of search ad dollars declined slightly to 70.4 percent, while Yahoo’s rose to 24.2 percent. Microsoft’s declined slightly to 5.4 percent. ^
As blogged about before, internet advertising is changing from per-click to per-customer. Advertisers want to be selling to a person or “type” of person, not a random clicker. As a result, Yahoo and Microsoft — who have deeper fingers in different services than Google does, despite the success of GMail — are rising while Google is having to struggle to compete.
Google’s (GOOG) US paid-click growth in March was as bad as in February–up only 2.7%–rounding out a violent deceleration in Q1, says Comscore (per Mark Mahaney at Citi). In all of Q1, Google’s US paid clicks rose only 2% year-over-year versus 25% in Q4 and 48% in Q3. ^
Every great business opportunity only exists for a certain amount of time before it is superseded by the technologies it helped seed. The steam plough begat the car, the adding machine the computer, and now, the search engine and ad business is giving way to the target sales business. Remember how in 1998 people were talking about intelligent agents, little bots that help us shop by knowing what we want and at what prices, and niche marketing? It took some time for the market to catch up, but we’re nearly there.
What this means for Google: it’s time to get fleet-footed with that sea change. We can now surmise that Google’s great SaaS hype was a last-ditch attempt to have enough services to learn more about users and their demographic inclinations. We already know that Google knows a lot about us, but is weak on seeing what we buy at eCommerce sites; maybe they were hoping for an end-run around that. Google needs to not think Google has jumped the shark, but they need to know that Google business model 1.0 leapt over that beast late last year and is now heading for the sunset.