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Google seeks mobile search payoff October 24, 2011

Posted by David Card in Uncategorized.
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At its third-quarter earnings call, Google said its mobile advertising business was on pace to hit $2.5 billion in yearly revenues, and shortly thereafter it launched a handful of new search ads for mobile apps. But that same week, Apple showed off its latest iPhone with Siri voice technology, which has a big potential to disrupt search. Analysts questioned whether mobile search would ever be as big a business for Google as the desktop market. Will mobile search be a bonanza? If so, is Google the company to win it?

Mobile introduces new challenges to Google’s usual strengths in search, but the company is well-positioned to address most of them. And Google is developing a war chest of marketing services that will complement mobile search and help compensate for mobile’s relatively smaller revenue potential.

Here are some of the characteristics of mobile search that make it different for Google:

Siri could be a disruptive force in search because of its role in UI and in the presentation of results. Siri may be evolutionary, but its natural language recognition is generating a lot of iPhone buzz. A Siri query can produce a Google search result, but Apple has also engineered Siri to pull up results from local info provider Yelp and other search engines and sources. Google’s own voice-activated search depends more on structured commands than natural language. Google will need to deliver competitive technology or train users how to use commands.

Google and its search marketing ecosystem are working on mobile results and ranking. Making sites more Siri-friendly requires search engine optimization techniques identical to the ones marketers already use to boost their organic results on Google, so that won’t hurt Google. Meanwhile, Google is tuning its analytics tools and adding location extensions to search ads to assist search marketers with mobile SEO and paid search. And Google is already taking things like proximity into account when ranking mobile search results.

Google didn’t break down its reported $2.5 billion run rate into display vs. search advertising, but it’s a safe bet that the vast majority is search. Meanwhile, Google is adding paid features and services to beef up mobile search transactions. Click-to-call lets advertisers show local phone numbers on mobile search results with pretty positive results. Advertisers like Enterprise Rent-A-Car seem to like Google’s hyperlocal ad features. Presenting deals and offers next to mobile search results will be crucial for enticing transactions, and Google is working aggressively on Offers and a new ad Circular format.

So far, Google is well-prepared to withstand potential Siri disruption, even without counting on Android market share gains. It still needs to improve its own voice-driven search interface, though. Google’s mobile search and ad enhancements will add to its mobile marketing revenues, though they won’t approach search sales volumes for at least three to five years. But Google’s tactics to make search results more local and mobile will guarantee that its own results show up from a Siri call, and they will help dissuade Apple from integrating more Google alternatives.

Question of the week

Will mobile search be a bonanza, and is Google the company to win it?
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