Until recently, Google, the world’s largest search engine company, was experiencing tremendous growth—growth rates were anywhere between 30 to 40% per year. However, with projections that their growth is significantly decelerating to an estimated 18% for this year, Google has begun re-strategizing their approach. Google’s $23 billion annual revenue is largely credited to its search engine operations and its advertising space. But as new competitors enter the market offering the same services as Google, only with other alternatives and benefits, Google finds itself competing with newcomers such as Microsoft’s Bing.
Google began diversifying its operations by acquiring and developing new business ventures in hopes to convert back to being considered a growth company. These acquisitions and new business ventures included YouTube, DoubleClick, AdMob, Google Apps and Android. However, the projected 2013 projected revenues for their non-search business operations was estimated between $5 to $8 billion, while in contrast, their search business revenue projections are $40 billion.
These revenue projections of their operations show that their non-search related operations are not large enough for Google valued higher and for their company to be classified as a growing corporation. Social networks such as Facebook have been one of the most substantial factors contributing to Google’s deceleration in growth. Facebook is considered a large threat to Google and its core search business firstly because 17% of total time spent online worldwide is on Facebook. Secondly, while Google obtains only a 2. % market-share of the $9 billion display advertising market, Facebook has 16% market-share. Ultimately users are replacing Google with sites such as Microsoft Bing and Facebook that offer services other than a search engine, making those websites more attractive than
Google to advertising companies, as they generate more user traffic. Google’s new strategy is to incorporate a social networking aspect to their business, in order to regain market-share. Challenges include recognizing and capitalizing on what entices the ultimate user of a social networking ite. Questions that should be addressed are that such as: what will make Google’s social networking different from existing sites like Facebook? How will Google standout and market its benefits to social networking users? It is important for Google to understand the business they are trying to capitalize in and it crucial that the right employees with the right credentials and clear understanding of the social networking business in order to carry out the strategy.
Or instead of being somewhat of a straggler to the social networking market which is dominated by Facebook, Google should look into developing the next web-based trend that is beyond just social networking, to regain attractiveness to other companies that are looking to advertise in high traffic websites. Article Source: “Google: The Search Party is Over” by Michael V. Copeland & Seth Weintraub