Google's Search Domination Is Eroding Because of Amazon, Apps

Google's share of search ad revenue is declining and will continue to erode each year, as increased competition from players like Amazon and Apple chip away at the tech titan's stranglehold, according to a new report by Forrester. Digital ad revenue is expected to generate $85 billion this year, nearly half of it from paid search advertising—and most of that, in turn, spent with Google. Yet the overall search market on mobile is growing, and that growth isn't going to Google but instead to rivals such as Amazon, Pinterest and Apple, says Brandon Verblow, an analyst at Forrester. "We show that Google's share is eroding not because anyone is cannibalizing it, but because there are other sources of search that are incrementally increasing the size of the market overall," Verblow says. "Google won't capture all of it." As offline dollars shift to mobile, the search category itself will continue to grow, but unlike desktop—where Google had little competition—mobile has a number of niche players who are capturing growth. Google's search market share has seen a decline each year from 88 percent in 2011 to 78 percent in 2016, Forrester says. Although Google's search ad biz grew at a solid low-teens rate over that period, the market as a whole grew faster, Forrester says, with mobile spawning more competition for Google. Forrester says Amazon is exploiting Google's "weakness" in online shopping, as shoppers are increasingly starting their product searches on Amazon instead of Google. According to the report, consumers are 2.5 times more likely to find out about the brand of a recent purchase from Amazon versus any other search. "This erosion is likely to continue" for Google, the report said. Verblow adds that CPG marketers are also likely to greatly increase their ad spend on platforms like Amazon, which has its own search ad business. "Google is not going to cede shopping to Amazon," Verblow says. "And while Amazon Alexa seems to be the leader in terms of voice search, I would definitely not count Google out of that segment. Google could turn out to be the dominant player in the voice category and gain market share right away."

Google's Search Domination Is Eroding Because of Amazon, Apps

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