Google Inc Losing Ground In Mobile Search

Google

As much as Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) has branched out into other businesses over the years, the ad revenue it gets because of its dominance of online search is still central to the company’s success. While it has managed to transfer that advantage to mobile search as well, smartphone users are increasingly relying on specialized apps like KAYAK and Shazam, leaving Google with a smaller piece of the pie. In 2012 Google earned more than 80% of US mobile ad revenue, last year it earned 68.5%, and it’s on track to take home an even smaller percentage this year.

Google mobile ad revenue still growing despite falling market share

That doesn’t mean Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) is earning less from mobile ads – people are using their smartphones and tablets more extensively and the amount being spend on mobile ads has skyrocketed. This year US mobile ad spending is expected to pass $17 billion, and by 2018 mobile search revenue alone will be pushing toward $30 billion.

But the fact that Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) is no longer synonymous with search when someone is looking at their phone instead of their PC means that the company won’t be able to claim nearly as much of that growth as it would like.

“Even though browser-based search is a common behavior among mobile owners, search engines are not necessarily the first place smartphone and tablet users turn,” says eMarketer senior analyst Cathy Boyle (h/t Xeni Jardin at Boing Boing). “The explosion of mobile app development and usage means mobile users have more—and more specialized—alternatives for finding information.”

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Fragmented mobile search gives Google’s competitors an opening

While eMarketer estimates that Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s market share leveling out around 64% (or even starting to pick up again) the precipitous drop between 2012 and 2013 should make people question how easy it is to forecast trends in the tech business. Specialized search apps are still quite young compared to internet search, and they may have more room for innovation.

Microsoft Corporation (NASDAQ:MSFT) has long contended that users rate its internet search engine Bing at least as highly as Google, but that they can’t get people to even try it out in the first place. In the mobile world, that’s no longer the case and as mobile search becomes increasingly fragmented Yahoo! Inc. (NASDAQ:YHOO), Yelp Inc (NYSE:YELP), Bing and others are finding their audience at Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s expense.

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About the Author

Michael Ide
Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.

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