What Will Google do to Survive?
Posted On: 2008-10-30
Well you don't need me to tell you that the world's economy is in the toilet. Every television news report has something about rising unemployment, shares falling, jobs being cut and even more foreclosures on homes.
And if you miss it on the television you're sure to read about it in the newspapers, see it on the Internet or hear about it on the radio. Of course that means that it's going to be harder to sell our products to surfers. They're going to have less disposable income and even though sex always sells actually getting surfers to pay for it is getting harder and harder.
Of course it's also getting harder and harder for those who flood the Net with free porn too so perhaps there's some silver lining in all those dark clouds.
Life is also getting harder and harder for some of the businesses we deal with and the pressure is on them to maintain their profit margins and keep their share value up. While that can sometimes mean a fairly rough ride for us, there could also be some silver lining for us in the way that many businesses try to do the impossible and maintain their profits and share value.
Of course the biggest business that you and I deal with if we're trying to sell something ... anything ... on line is Google. No matter what we do online or how we do it inevitably Google has some impact on whether we succeed or fail. For many of us that success is dependant on where our websites and pages rank in Google.
So it's always important to watch what Google is doing and during dark economic times it's even more important to watch what that monolith is doing. While Google has been around during the previous economic downturn this time it's an entirely different scenario; last time Google was just the Google twins ... this time there are heaps of investors who want the share price to stay up.
Now Steve and I have been around long enough to be able to say that we've been around through a number of economic recessions and we would suggest that at times like this many companies totally change the way they do business. For many it's plainly and simply a matter of survival and when it comes down to something as basic as survival then some companies will do absolutely anything to survive.
If it's a question of survival then many businesses will screw their customers, destroy the trust those customers had in the business and do whatever else the business might think is necessary to ensure its survival. And for some companies reaching the point where they are prepared to destroy their reputation simply to survive may come sooner than you might expect.
Right now we're seeing Google facing the economic realities of a recession. Their share price has fallen incredibly since the heady days when it listed on the stock exchange and there may be no point at which the share market will draw the line. As I write this the last trade in Google's shares was at $339.29 and it had been at a daily high of $350.47 and a low of $324.74 so the pressure is on.
Google needs to maintain some investor confidence because basically the company owns very little in the way of tangible goods or resources. The value of Google is tied up in cyberspace and maybe investors will suddenly wake up to the fact that Google is mostly about smoke and mirrors and in economic times like these smoke and mirrors are the last thing any investor wants to sink his or her money into.
So Google has to do something to keep up the confidence in their shares and the best way to do that is to increase its income ... something that's really hard to do in tough economic times. It's even harder to do when you really only have one main revenue stream and when you look at the figures that's the position that Google is in. Take away its Adwords advertising stream and there's not much left of Google that would justify a share price of anywhere near $300.00.
That means that Google somehow has to increase the amount of money that Adwords is making for it but that's hard to do when all the advertisers that use Adwords are suffering a decline in revenue. When the advertisers have no money to spend on advertising what does Google do to increase its advertising revenues?
Well perhaps we're seeing the answer to that in something new that has been appearing at the top of some of Google's search engine results pages in the last couple of weeks. Google is now integrating images with some of its Adwords advertising.
Some have seen it in the usual Adwords advertising on the right hand side of the search engine results pages that Google has served up to them while others have seen it in the Adwords advertising that you see at the top of most search engine results pages. You know, the advertising that appears in a colored bar at the top of the page.
Now that doesn't sound too drastic does it? But wait, there's more ... a lot more and it's indicative of the fact that Google may be prepared to do anything to ensure its survival.
It's one thing to see two or three ads at the top of a page ... that still gives us a chance to get surfers to visit your organic listings that appear below those ads ... especially if your meta description tag is written in a way that is attractive to the people who are looking for what you're selling.
But what if Google makes those ads at the top of the page so big ... and includes so many ... that it takes up the whole screen above the fold?
Search engine results pages from Google have been spotted lately with Adwords advertising at the top of the page that has taken up the whole screen on a monitor set to 1024x768 ... the most common resolution that's currently in use.
Is Google that desperate that it will screw all of us who depend on the organic listings? I think that we're only another drop in share price away from that scenario ... after all there will be some in the Google boardroom who fail to understand that it's the organic listings that got Google to the point where it actually had something to sell.
If that does happen then those of us who rely on organic listings are going to be struggling to get the traffic we need. As we all know, the further down the page a surfer has to scroll to find what he wants the less chance there is that he will remain on that page and if everything that he can see on the screen is paid advertising do you think that he's going to scroll?
So Google will screw us in an effort to survive ... and if that's the case where is the silver lining for us?
Think about why people started using Google in the first place ... they were taught to believe that Google would give them most relevant responses to their search queries of any of the search engines. What happens when all searchers see is paid advertising?
It's certainly going to be something that will be fun to watch in the months ahead.