Facebook's
stock slide has been well documented over the last six months and until today, one rival that had been taking advantage of the slide was Google. Many speculated that Google's stock was rising over the last three months because the perceived fear of Facebook being "the next Google" had passed. That was until yesterday when Google suspiciously released its worst earnings in quite some time early after a leak. The stock fell well over 9% in a matter of minutes before it was fully suspended.
Revenues and profits are down massively and one major factor for that decrease was the reduction in PPC rates. In short, Google's core business is not increasing at the rate it once was. This isn't the end of the world as it still gains huge revenues and large profits, but investors - and the markets in general - are spooked because of the alarming slowdown. There will be all kinds of hyperbole written in the coming days, but one thing is clear: All the talk of mobile up until now has been fun and strategic for these big companies, but it has suddenly starting hurting them where it really hurts.
Will Display Advertising Work On Mobile?
In a word: No. While the desktop and personal computers have offered much real estate for targeted advertising, the simple fact is that there is little or no room on a mobile device to show these ads and there is even less chance that consumers are going to click on them. Some ads will still work, but there is a massive difference in the amount of ads that Google can show on mobile versus the desktop arena in which it has mostly operated for the last 14 odd years.
The big guys will certainly make a lot of cash from mobile, but not to the same extent they have on the desktop with display advertising. Revenue will have to come from location, deals, local and other new forms of advertising that are only just starting to evolve.
Google Is Positioning Itself For Mobile
The biggest search company in the world hasn't gotten to where it is today by being fools. It spotted the threat of mobile coming a long way off, which is why they made such a big play on Android. They also own YouTube, which is seeing mobile content explode and has many other strategic moves in the space.
These are all super moves, but if it was to get frozen out of search, which is its core market, it could be in trouble. This would be especially true if Apple was to continue its threat of removing Google products like YouTube and maps from its iOS by giving search the chop. Now that would really hurt Google and it is a step that I fear is inevitable.
The Market Is Ready To Be Disrupted
When consumer behavior starts changing this fast, there can be massive opportunity for disruption. We saw the potential when Instagram was snapped up by Facebook and grew to 100 million users in less than two years. We see new tools like Apple's personal digital assistant Siri, which is stepping right into Google's home turf of search.
It feels as if the timing is perfect for a completely new type of company to come along and take on the big guys when it comes to huge advertising revenues. Most of them (Instagram) have been snapped up before they can make an impression, but there is a new Facebook or Google-type company out there that is being built from the ground up to own mobile.
The big guys are very much at the races and still doing everything that they can strategically to own the mobile space, but they come from a different era. Nobody really knows what a new Google would look like, but it is something that you use on your smartphone and that gives you the best information. I think we could see it sooner than we all expect and this little slowdown in revenues today highlights that shift and the speed at which it is happening for me.
Despite all the doom and gloom, the really good news is that if any of these companies do get mobile right and hit it out of the park, then the potential to grow from their current positions is absolutely huge. Smartphone penetration is only going to increase and markets like China are really growing so the potential to own the mobile space is a very big prize indeed.
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