Over the last three years, Google had astonishing and rapidly increasing revenue numbers, growing $110.55 and $160.74 billion per annum. In these three years, approximately 85% of their revenue resulted from advertisement platform services. These revenues result from users being shown ads for i.e., a new TV on Coolblue.com when they search for “best TV 2020” on google.com or a similar relevant video ad on YouTube.

Simultaneously, the worldwide smart speaker sales will surpass $30 billion by 2024, and Google is the fastest-growing smart speaker producer and already owns 31% of that market. However, since one of the key functionalities of smart speakers is voice search, one should assume that consumers will make increasingly more searches based on voice search. Expected is that in 2020, such searches will represent over 30% of all searches. While the revenue from smart speakers’ sales seems like a welcome addition to Google’s portfolio, it could also disrupt the PPC (paid search) industry.  This disruption could eventually hurt Google’s main cash cow since there is no business model in place (yet) to monetize audio searches.

How should Google prepare their business model for the era where voice searches might be the dominant search method? Since already 42% of consumers using voice search state that they have shopped via smart speakers, there should be a value capturing opportunity for Google (and other PPC-based companies) here.

As you might know, you can ask your smart speaker for recommendations, i.e., to place a reservation at a restaurant. Google could make businesses pay for a higher spot on these rankings, similarly to how on-screen PPC works now. However, a key difference is that with voice search, fewer results will be shown to those who search, giving them fewer options and so less freedom of choice. However, this may also increase Google’s power, and thereby the prices they can force advertisers to pay for their services.

All in all, exciting discussion topics; what do you think the PPC industry’s future looks like with the increasing number of voice-powered searches?

Sources

https://www.statista.com/statistics/266206/googles-annual-global-revenue/

https://www.statista.com/statistics/1093781/distribution-of-googles-revenues-by-segment/

https://voicebot.ai/2020/04/28/amazon-smart-speaker-market-share-falls-to-53-in-2019-with-google-the-biggest-beneficiary-rising-to-31-sonos-also-moves-up/

https://www.digital-clarity.com/blog/voice-search-pay-per-click-advertising/

https://medium.com/voice-tech-podcast/monetization-of-voice-assistants-and-the-end-of-ppc-advertising-as-we-know-it-13c3ca317fbe

In September 2016, the Chinese company ByteDance launched the social media platform TikTok under the name of Douyin in China. However, it was not unil August 2018 that it became available worldwide, after merging with Musical.ly, another social media platform specifically built to share short video’s. In just this short period of time, the platform has expanded to more than 150 markets and reached an astonishing high MAU (monthly average user count) of an estimated 800 million, more than twice the MAU of Snapchat, Twitter and Pinterest who’ve all been around for much longer.

Instagram on the other hand, has been around from 2010. In 2012, just 2 years after its initial launch, Facebook acquired Instagram just prior to its planned IPO, for $1 billion in cash and stock. Primarily, instagram was built as a social media platform for sharing (edited) photo’s. Instagram still has a higher MAU count (+/- 1 billion) but with the current rapid growth of TikTok, this lead could be short-lived.

As with a lot of other platforms, the smaller party risks its platform being “enveloped”. This basically means that one platform provider (Instagram) adds another platform provider’s (TikTok) functionalities to its own, and then offers a multi-platform bundle. Instagram has clearly been doing this with the “Reels” feature that they just launched, as an attempt to pull as many users towards their platform instead of diverting to TikTok. To achieve this, Instagram provides basically identical features as TikTok does: creating and sharing short-form videos set to music.

Since Facebook (Instagram’s parent company) has significantly higher total reach and market capital than ByteDance, this created a head start in the battle. Also, even Donald Trump himself seems to play a role: in September, the POTUS issued an executive order stating that TikTok could be banned in America, supposedly due to national security reasons.

Could the combination of a commercial envelopment by Facebook and political ban by the Donald Trump administration mean the end of TikTok’s growth or perhaps even its existence? It is safe to say that only time will tell!

Sources:

• https://en.m.wikipedia.org/wiki/TikTok
• https://www.businessofapps.com/data/tik-tok-statistics/
• https://www.investopedia.com/articles/investing/102615/story-instagram-rise-1-photo0sharing-app.asp
• https://www.forbes.com/sites/abrambrown/2020/08/05/instagram-intensifies-battle-with-tiktok-as-influencers-ponder-their-options/
• https://www.theverge.com/2020/8/5/21354117/instagram-reels-tiktok-vine-short-videos-stories-explore-music-effects-filters