It might seem like the digital landscape has always been dominated by big companies with big names. Google. Apple. Facebook. Twitter. But the landscape can change, and can do so rapidly. Recently, Apple has begun to take a bite out of Google’s supremacy in the online advertising arena.
Online advertising has been Google’s driving force, funding all of its other ventures for nearly 2 decades. As it turns out, this is both a strength and a weakness, and one which Apple will soon be in a position to exploit.
How Apple Set The Stage To Defeat Google’s Online Advertising Empire
Apple’s Safari Defaults To Google Search
It’s recently been discovered that Apple has a deal with Google to help bolster Google’s online advertising business. It’s estimated that Google pays Apple around $1 billion each year to be the default search option on Safari, Apple’s browser which is native to every iPhone sold.
In 2014, Goldman Sachs estimated more than 75% of mobile online advertising revenue for Google came from iPhones, which, based on public information, is estimated at $8.85 billion annually, about half of which is estimated to come from Safari searches, putting the value of Google being the default search option for Safari at about $4.4 billion annually. Online advertising revenue has only increased since 2014.
In 2014, Google reported more than $66 billion in total annual revenue, so Apple supplies/controls about 6% of Google’s annual revenue. This is a powerful bargaining chip.
Apple’s CEO Positions The Company As A Champion Of Privacy
Apple’s CEO, Tim Cook, says on Apple’s privacy page: “We sell great products. We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don’t “monetize” the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you. Our software and services are designed to make our devices better. Plain and simple.”
This is in direct opposition to the purpose and mission of online advertising companies like Google and Facebook. Apple is a hugely influential brand with hundreds of millions of devotees, and when they say online advertising companies don’t care about privacy, it holds weight.
Apple tries to remind users often that by using Apple products – which process commands locally on the machine and not in the cloud like Google – they’re making themselves and their data more private, safe and secure.
Apple’s Siri Stands As A Gateway To Vertical Search
Siri isn’t open to the developer community . . . yet.
Currently, Siri can handle basic queries (along with other functions, but we’ll stick with search for now). Queries like “What movies are playing near me” will return a result of films at local cinemas, but displayed natively and not in a browser.
This is an example of a vertical search – using a particular service to get a particular result, bypassing Google’s online advertising. While Siri itself is not a vertical search tool, it can be used in the future to access them. Current examples of vertical search engines include Amazon, where the number of product searches have overtaken the total number of product searches on Google.
When Siri opens up, users will be able to search vertically much easier than they can now. For instance, instead of using Safari:
- iPhone users can use Siri to search Facebook, LinkedIn or their Contacts Book for a person
- Users can search through Siri for places and be taken to Yelp or Apple Maps directly, cutting out Google
- Searches for news can be sent straight to Apple News
- Searches for products sent to Amazon
- Searches for travel sent to Expedia, Orbitz or Priceline directly.
The more vertical searches Siri can handle, the fewer searches Google gets on Apple devices, which directly cuts into their online advertising profits and brand recognition.
The stage is set, but it will be a long, slow, drawn out process. Should Apple continue to move in these directions – being a go-to source of Google’s online advertising revenue, championing privacy and opening up vertical search – this will limit Google’s online advertising growth and lower the company’s margins.
At Cohlab Digital Marketing, we’re passionate about online advertising. If you’d like to learn more about how to grow your business through Google’s AdWords tool, reach out and we’ll walk you through the process.