Google in the mobile ecosphere

Mobile is a problem for Google. It’s a paradigm shift that few saw coming just 5 or 6 years ago, but the launch of the pocket web has begun to completely reshape our experience of the internet, which sites we interact with, and how we organise our spending. There are two reasons this creates problems for Google.

Less space for ads + different user XP

Here is a current screen cap of a typical Google search for “used ford kuga”

kuga

I’ve highlight the ads in yellow. Of the 10 available positions on the page, no fewer than 8 of those are paid ads. Given this experience, there is plenty of choice for the consumer even without scrolling down. In the desktop-only world in which Google’s ad model was conceived, this is wonderful – as you have many advertisers, all trying to appear in those top 8 slots, plus another 3 or 4 willing to appear further down the page.

On mobile the story is different. Here is the same result – again with the ads highlighted in yellow.

mobile1

As you can see, the amount of screen space given over to ads is similar – with only one organic result. But that screen space includes just 2 ads.

That means greater competition for those two spaces, which in theory means higher CPCs for those wishing to compete in that space.

But, from a user perspective – and assuming we value choice – there is very little utility there. If I want to see diversity, I scroll. And here’s the rub: we DO scroll with our thumbs.

The old rubrick about organic listings in particular was that most of the traffic went to the top 3 sites and that anywhere further down the list was almost invisible (I exaggerate a little). But that was driven in part by the mouse-point-click metaphor that belonged to the desktop. With a scrolling interface, we can are accustomed to the easy flick of a thumb to see more: hell – the interface demands it.

Thus, on mobile, it is likely that fewer people will actually click the ads as they will assess what they see and move down the page.

In short, whereas equity on desktop is split across potentially 12 different ads, the opportunity for Google on mobile is less. Even if you include the bottom of the page that’s still just 3 additional slots.

mobile2

5 slots instead of 10-12 means fewer opportunities for clicks. All things being equal, Google would have to see double the CPC or CTR from these ads to generate the same revenue from a mobile search as from a desktop search. And here we hit the wall of reality: in most markets, vendors are selling the same product with the same costs and the same margins. Investors might have been impressed by the stunning growth of the internet and Google’s revenues, but very real limits exist driven by real-world costs.

If I can buy Blue Widgets at £5 then so can my competitors. Having first-mover advantage on the internet might mean a window where I can buy clicks for 10p, sell the widget for £10 and thus make a profit according to my conversion rate. That doesn’t last, however. As more people come in, the market matures, margins narrow and thus the money available to spend on clicks declines. According to economic theory, the marginal profits on fungible goods are effectively zero. No wonder then that Google’s CPCs have been in decline for some time.

This probably is a peek behind the curtains as to the resurgence of brand building and display – none of which favours Google.

Apps are… better

Compounding Google’s problem on mobile is the very core of the mobile experience: the app.

I’ve opined before how a horizontal search engine such as Google is actually pretty clumsy when it comes to vertical searches like holidays, clothes shopping etc (other opinions are available)(other opinions are available). I’ve booked a couple of dozen hotels over the last year or two and the number of times I’ve used Google as part of that process? Zero*.

There’s always a danger of reading too much into your own personal experience (after all: I’m quite experienced and savvy these days) but specific apps just seem to make so much more sense than meta engines.

If you were actually looking to buy a Ford Kuga as per my example, downloading the AutoTrader app would make for a whole better experience than clicking through 5 or 6 different websites while trying to learn their varying internal logics and navigational methods.

In conclusion…

Google are still a money printing machine – even on mobile. That isn’t going to change any time soon and any advertiser who can afford to, has to be in the game. The day that the mobile web is the web is already here, and Google recent ‘mobilegeddon’ update is tacit acknowledgement of that fact.

In display, Google rule the roost – with the world’s most popular video channel, largest display network, and other native advertising tools for marketers to take advantage of: all of which yield good results if handled properly.


 

*Actually, that’s a small lie. A small example: when I stayed in Glasgow recently, I used Google to find out where the hotel was in relationship to various things I wanted to see and visit but the important bit – the transaction – was carried out through the booking.com app. What Google couldn’t do was monetise me.

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