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June 22, 2016

Google’s Ad-Based Business Model May Vanish

“Machine learning is a core, transformative way by which we’re rethinking everything we’re doing.”

– Sundar Pichai, Google CEO

Professional SEOs are used to Google shaking things up. Several times a year, the company changes its algorithms and throws a monkey wrench into everyone’s SEO blueprint. The idea that Google is currently pursuing, however, could change the game of search in its entirety and finally bring those “SEO is dead!” headlines to fruition.

Last month at Google’s I/O developer’s conference, the masters of search brought forth their newest offerings to the world; its new virtual assistant accompanied with its voice-activated home product dubbed Google Home.

The new virtual assistant brings machine learning to a new level as it fuses Google search data, user profiles and location information, the knowledge base of Google Now, and anything else the AI can pull from to provide intelligent answers that it will then speak back to the user. Google Home, which will tout the same AI support, seeks to bring search into a new era where users will never need to visit a website, read a piece of content, or sit in front of a desktop or mobile device for answers again.

This very notion seems a touch mad — this kind of hands-free user interaction would bring about the demise of the omnipresent search engine itself due to its business relying largely on selling ads. After all, how can Google possibly sell text-based ads that link to websites on this type of a platform?

Despite the fact that Google’s cost-per-click (CPC) continues to drop, the company is still the dominating force in digital ad real estate and rakes in unspeakable amounts of cash from ad sales. Google’s parent company, Alphabet, relies on AdWords so much that 88 percent of its $75 billion in revenue last year was derived from this source.

By all accounts, it seems that Google is headed for a major restructuring in how the company pulls in revenue. Google CEO Sundar Pichai has been quoted as saying, “Our investments in machine learning and artificial intelligence are a priority for us,” and that Google is “. . . thoughtfully applying it across all our products, be it search, ads, YouTube, or Play.”

So then, where will Google’s cash flow come from if its new products and apps take flight? EMarketer senior forecasting analyst Martin Uteras is confident that Google will find the solution: “The ad business isn’t going away any time soon, but they’re looking at all these new areas and as those products gain a larger user base, the question is how do you monetize those?”

It isn’t just Google’s own products that potentially endanger the company’s own wellbeing and the future of search engines. As individuals are spending increased amounts of time in apps like Facebook, Instagram, and a variety of others, these platforms are beginning to eat up a larger portion of the advertising business. Facebook, which began selling ads six years after Google, now accrues approximately a quarter of the ad revenue of Google. Twitter also entered its hat into the ad arena several years back, Instagram recently began doing the same, and others such as Snapchat are sure to follow. This poses a significant problem for Google as apps continue to consume more of mobile user’s time and attention.

These social outlets are also beginning to offer more creative ads and more valuable user information than that provided by Google, all while circumventing ad-blocking software, which is more popular than ever before. As it currently stands, Google is still making up for these losses with the combined revenue from the YouTube video app along with the Play store app.

Financial analysts also say that it is premature to worry about the rise of digital personal assistant and the move away from traditional search. But with all of this information laid out, one can’t help but to wonder if Google could potentially be killing the current search engine model intentionally due to the rampant nature of apps and social media’s adoption of creative advertising.

If this is in fact the case, how will the ads of the virtual-assistant-run future work? If a Home user asks it to book a lunch reservation through OpenTable, will Google play an audio ad first? Not likely considering that the purpose of the device is to provide fast, accurate answers. Then maybe Google will abandon ads altogether and charge a fee to the business it connects the user to. If this is the case, transactional revenue could be a potential goldmine for a once ad-based business to adopt.

All speculation aside, Omar Siddiqui, CEO of chatbot tool developer Kiwi Inc., weighed in on the matter stating, “With virtual assistants, we’re at where Web pages were in 1995. Business models have yet to emerge.”

The future of search is very unclear as new and unforeseen devices enter the marketplace. The fact is, at some point, search will have to evolve past its current incarnation as more devices like Home, Alexa, and other AI products become a reality. Eventually, the world will reach a point where the Internet is no longer accessed as it is now and businesses will have to figure out how to survive in that type of digital climate. As Google, Microsoft, Facebook and others are currently hard at work on AI, machine learning, and other products that will undoubtedly reshape the digital landscape, it is only a matter of time before this point is reached. For now, all businesses can do is keep a close eye on the matter at hand and do their best to change with the times.

Do you think Google is intentionally changing how search will work in the future? What do in-home devices like Google Home spell for the future of businesses that advertise with Google?


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Conscious online marketer, web executive, and multi-faceted writer Tina Courtney has been creating and fostering online innovations since 1996. Tina has assisted many clients in maximizing online production and marketing efforts, and is a staff writer for SiteProNews, one of the Web’s foremost webmaster and tech news blogs. She’s produced and marketed innovative content for major players like Disney and JDate, as well as boutique startups galore, with fortes including social media, SEO, influencer marketing, community management, lead generation, and project management. Tina is also a certified Reiki practitioner, herbalist, and accomplished life coach.  Learn more on LinkedIn, Facebook and Google+.

20 Responses to “Google’s Ad-Based Business Model May Vanish

    avatar Nexscience says:

    Awesome and very informative article . thanks for sharing…

    They are simply going to break the iceberg and SEO will find where to fit. That is the more reason social medias are taking a chunk of the market right now commanding more engagement from its users. Basically we will go back to the old system of follower-ship and keeping a mailing list.

    avatar Andy Harris says:

    Google is the new Skynet (the Terminator Genisys movie is particularly applicable here) and there’s bound to come a time when people don’t want to have ‘systems’ knowing so much about them. Not that Google is going to destroy humanity of course, but the whole subject of ‘avoiding the grip of Google’ may well arise in the future.

    Personally, I think that from a B2B perspective, there will be a new disruptor in the market that will bypass Google and will connect people’s needs with solutions, but in a safe (and initially anonymous) way, and the funding will come from the businesses that want to be in front of people with certain needs at any given time (but the offerings will be relevant instead of the raw efforts that Google serves up as search results nowadays).

    So much respect for your thoughts.

    avatar Sepia says:

    Thanks for sharing with all of us the Incredible post on your blog.

    Yes there will be a time where the search will evolve to say smart search where popular keywords will be suggested and people as per their preferences, budget etc will be shown various websites.

    Already Google has done this when you type a movie name it shows all IMDB, Rotten Tomatoes etc ratings and type movie songs and all the songs with their samples are listed.

    So yes search is getting evolved but the process has to be slow otherwise customers will find it difficult to grasp.

    avatar Sharing says:

    Thanks for share

    avatar Adrian says:

    This may well apply to some areas of search where a spoken response can provide an answer to a specific question but where the question is for a general answer Google will still need to provide a selection of websites to satisfy the need of the searcher.

    For example if a searcher asks for “Properties for sale in xxxxxxxx” a one word answer would be useless and Google would still need to provide links to real estate agents with properties for sale in the area, town, country requested.

    It seems that Google is truly taking their observation from last year, that they wish to help people answer questions in the moment to the next logical step. At this point, content creators need to be focused on answering questions, providing solutions and doing so in ways that get them indexed into knowledge cards on Google. The landscape is increasingly small for those who wish to stand apart–if one truly wants to be outstanding in one’s field, one must develop authority and presence around one’s line of business.

    avatar Kumarapush says:

    Is it time to block Google bots.
    As per your article, its gonna learn (machine learning)from all the websites across internet, gain knowledge & then tell the customer only the answers, but completely ignore the source from where it gained that knowledge.
    I guess Google wont do that way without giving a credit to the millions of web authors who generate useful content.
    Its confusing though. Have to wait till they make any clear statement.

    Great article! Taken together along with this WSJ article it gives me even more confidence my new advertising paradigm might actually work!

    Thank You for sharing valuable information. Nice article

    Seeing is believing. One remembers a higher percentage of what one sees vis-à-vis what one hears. And, logically speaking when we see various search results on the Google SERP’s (or any other search engine for that matter), we scan the results quickly and click on the link that we comprehend to be the best fit for our needs. How will Google be able to replace this experience through voice is something that is not easily comprehensible.

    avatar CydiaNerd says:

    Google Ads business is already out of the game. Publishers have changed the way to make money, and people has already equipped ad-blockers everywhere.

    great thank you this was very nice page shareit for pc

    avatar Ty Whalin says:

    Interesting theory that Google and others could turn search to all audio and ask for a search finders fee to provide the most relevant information. As it is easy to speak into a microphone and tell the search engines what you want through an APP etc… it is not a complete search solution for everyone.

    At this point I think the voice command is more of a search accessibility and has become widespread for some. Although you could be right that if Google drops PPC and loses ad sales then it would definitely require the Google to find a new means of revenue to cover the loss of profit.

    avatar Rakesh Jha says:

    @Tina

    very nice article !! I just want to know about your opinion on the future of SEO in India.

    At this point I think the voice command is more of a search accessibility and has become widespread for some. Although you could be right that if Google drops PPC and loses ad sales then it would definitely require the Google to find a new means of revenue to cover the loss of profit.

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