Economic Woes May Move Google To Sit On Its Money

Just as search goes into flux is Google stuck?

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It’s hard to imagine the death of search as we know it, but search is changing as we speak, and unless Google finds some flexibility, the company will be at the forefront of innovation no longer. The dent in Google’s armor comes from rather surprising directions, not from Microsoft or Yahoo—both with their own rigid corporate paralysis—but from Twitter and Facebook, where users create their very own walled gardens.

From the outset it’s important to say that Google isn’t going anywhere. Who else can scan a trillion URLs with the kind of efficiency Google can? Nobody has technology that can equal, and as things evolve challenging that technological supremacy is proving to be Microsoft’s biggest misguidance. Competitors should have been evolving new spaces instead of crawling into what became exclusively Google’s.

Google CEO Eric Schmidt has admitted both that Google is not immune to the economy and that he’s currently more interested in letting the cash pile up than he is in acquiring the latest darling startup that is Twitter.

Indeed the cash cow is a bit dry at the moment. Rimm-Kaufman’s latest numbers show the down economy is coming home to roost in search, with sales from search ads down 20 percent, with lower CPC bids, with consumers searching for products less. SEMPO has adjusted down its search marketing spending forecasts for the next three years. 

Search Engine Marketing Projections

That puts Google in a bind. It seems equally as irresponsible to spend dwindling cash flow on new ventures as it is to sit out your own industry’s revolution. In the end, Google may have no choice but to pony up for Twitter, if Twitter ever feels like selling, especially when Facebook may be a magnitude more unaffordable. The reason is that real-time search is the next big thing. Facebook will have an untouchable chunk of it with a few hundred million users, and Twitter is gaining critical mass fast in the same arena.

Marissa Mayer, Google
Marissa Mayer

Google’s own Marissa Mayer
acknowledges how social networks are generating as much as four times the page views as search, equating Facebook with “user crack.”

John Battelle concurs. “This past few weeks folks are noticing an important trend – the share of traffic referred to their sites is shifting,” he writes. “Facebook (and for some, like this site, Twitter) is becoming a primary source of traffic.”

That means that Google is no longer the be all and end all of traffic flow. And that’s bad for Google’s business. (It also, as a side note, proves the absurdity of the idea that this market can really be cornered once and for all.)

The biggest current obstacle is business model. Neither Twitter nor Facebook have one at the moment. Once that’s settled, another obstacle: how to control for the eventual (and currently swelling) spam deluge.


Economic Woes May Move Google To Sit On Its Money
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  • http://www.firmalatter.dk/latterkurser-og-workshops/latterkursus.htm Ejvind

    What an interesting battle we are witnessing. It seems that everyone – Google included – thought that search was search from one location and only for the sake of search, and now it turns out that search is also coming in great deal from facebook friends and fans, as well as through ads on the social media, wher people spend much more time than on google..

    I didn’t see that coming. What a great new world we are living in :-)

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