Alphabet/Google’s revenue continues to grow. In fact, earlier this year, it briefly surpassed Apple to become the most valuable public company. But, over the years, Google has reported one number that has left the advertising world wanting to know more. Since 2011, the average ‘ad cost’ continues to decline. In simple terms, Google is serving more and more ads every year, but each ad is earning company less and less. To someone in the online advertising world, this should not be news; online ad effectiveness has witnessed slow and steady decline over the years. The industry doesn’t want its customers to know about some underlying issues that are creating an online advertising bubble. Following six issues are a big reason for concern as there would likely be no turning back the moment advertisers get a grip of what is really happening.
1 – Perils of Technology & Automation
Yet, there is a much bigger irony at play – virtues of automation are becoming its own flaws.
Advertising technology has seen tremendous advancement in the past decade. From precise user tracking and matching algorithms to automation and programmatic buying, placing an ad now requires very little human effort. For most part, this has been a big boon for all stakeholders, but some cracks are starting to show. For one – advertisers took industry’s word on ad effectiveness, who in turn totally relied on advanced technology for their argument. If you look at ad performance over the years, it paints a completely different picture – online ad efficiency has been declining, and it has been declining for some of the most advanced online businesses who really know what they are doing. Yet, there is a much bigger irony at play – virtues of automation are becoming its own flaws. Automation has made it extremely cheap to plan and place ads on small/low quality websites, which has encouraged advertisers of all sizes to join in hordes without understanding anything about ad efficiency.
@fnelson - Google market is currently limited to SMBs. Very few enterprises have risk-appetite to even try a consumer vendor. – JASMEET SAWHNEY
For Google the outlook is bright: It will succeed in enterprise, just not quite yet. Despite numerous customer wins and a surge of momentum in cloud-based productivity apps, the company, for now, is far from emerging victorious, partly because of its methodical approach to the enterprise, and partly because of enterprises’ cautious approach to Google — two awkward dance partners, eyeing each other from across the room.
Google is competing for enterprise relevance in several key categories: Office productivity applications, including e-mail, personal cloud, corporate back-end cloud services, and social. Google is just starting out with Google Compute Engine, its cloud infrastructure service. Google Drive, the company’s personal cloud offering, and Google Plus, its social media product, are both still pining for consumer attention, much less enterprise relevance. But even here, there’s promise; more on these in a future post.