In the past week, Alphabet, Apple and Amazon all announced positive results for Q4 2017, so why has Amazon’s stock price been the only one to hold up in the recent volatility? Search is a key battleground, for differing reasons.
Clearly Google has a fairly hefty head start in this area, and what is referred to as ‘Google sites revenue’ grew by 24% year-on-year to $22.2bn for the quarter. That’s a lot of clicks, with mobile a particular area of growth. Advertisers continue to find the money to drive people from Google’s properties to theirs, because they see the customer journey and more importantly they can attribute value to it.
Brands don’t necessarily relish filling Google’s pockets (to put it mildly). There’s a recognition, however, that Google Search, or YouTube or Gmail are where people spend their time - that the advertising options are built and optimisable against different contexts, and that with time and effort there are ways of ‘winning’ in these spaces relative to your competitors.
It was widely assumed just a few years ago that the biggest (non-traditional search engine, sorry Bing I haven’t forgotten you!) competitor for these dollars from a search perspective would be Facebook. People spend 35 minutes each a day on Facebook, but in a way that is more ‘let the content come to me’ than seeking things out. It’s the kind of inertia that might foster a dangerous proclivity for the spread of scurrilous false rumours, for example, rather than rigorous fact checking. Suggestions rather than searches. Passive not active.
Which is why Amazon and Apple have entered the race. Strangely, however, despite Siri having had a full three year head start on Alexa, Amazon seems to be surging ahead. Both have made huge inroads into the Personal Assistant space, alongside Google and Microsoft’s Cortana, and Apple’s (fairly reasonable) assumption was that the ubiquitous phone would be the key to the home. It’s the lag on getting HomeKit into devices that, in contrast to Alexa now powering 4,000 devices across 1,200 brands, has seen a shift.
The spread of certain types of queries across these devices could be a threat to Google, however from a purely financial perspective these are the types of ‘navigational’ searches that rarely saw advertisers competing. Where Amazon are making hay is that the focus of their own home products is on driving use of their own, paid for services. Prime music through Echo, Prime movies through Fire TV and, of course, purchase of goods.
I say purchase as it’s important to draw a distinction between shopping, which is still involved, and buying, which can be done as a simple instruction when top-of-mind. That’s the whole premise behind Amazon Dash, and all of it means that Jeff Bezos’ coffers are getting fuller from voice search far quicker than anyone else’s.
With Amazon’s web properties a viable destination that other Personal Assistants don’t provide (as mere conduits), we are also seeing Amazon getting better at monetising the time people do spend shopping and discovering on-site. “Our strategy is to make the customer experience additive by the ad process,” according to Brian Olsavsky, Amazon’s chief financial officer. “We want customers to be able to see new brands and have an easier time discovering products that they're looking for.”
This creates a credible threat to Google’s revenues in providing advertising options to brands within the very strong context of point-of-sale. Shopper marketing more than advertising, potentially, but certainly very powerful and, if Amazon were to open up their ad placements to attribution, one that could give a new level of insight for brands into the behaviour of a growing number of people.
Rick Lamb is a director of Latitude Digital Marketing