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by Andrew Tonks on 29th October 2012
For most people involved in the search engine marketing industry, it is apparent who dominates pay per click – Google. With it attracting the largest volume of searches in most markets around the world, Google is the go-to search engine for most business looking to effectively drive visits and revenue via paid search results.
Unfortunately Google’s dominant position in the marketplace means that, for many, there is no real alternative to the AdWords product. There’s Bing Ads and other smaller pay per click programs, but for most businesses these are viewed as complementary products rather than a serious alternative to AdWords.
Does this not mean Google has a monopoly?
Well according to Google, no they don’t have a monopoly on the pay per click market and I’d agree with them on this. The definition of a monopoly is the exclusive possession or control of the supply or trade in a commodity or service. Now whilst Google dominates pay per click, it does not have exclusivity of the market as there are competing products out there like Bing Ads and anyone is free to start up their own search engine.
Whilst Google doesn’t have a monopoly, it certainly dominates the market and you can imagine this set-up and its effect on our industry is something that is debated here in the office on a number of occasions.
Starting a search engine
One of the things we have debated here at Koozai is what would be required to actually start up a successful search engine. First off, you need a lot of start-up capital – just look at how much Microsoft has ploughed into Bing. Secondly, you’re going to need an already recognisable brand – preferably one with an extremely dedicated following to become your early adopters and champion the use of your search engine on to others.
So in light of the above two, it got me thinking exactly who could realistically enter the marketplace and begin to compete with Google and as you can imagine only one business stands out and that’s Apple. Unless you’ve been living on the dark side of the moon for the past five years, practically everyone knows how successful Apple has been and with that success comes cash, lots of it.
If Apple wanted to do so, it would have more than enough start-up capital to develop and advertise a new search engine. Also, Apple has an extremely effective brand that people want to be a part of, just look at whenever a new iPad or iPhone comes out – ask yourself, are those people really queuing that long for a product or because they identify so much with the Apple brand that they want to be part of it?
Now if Apple released a search engine, who is to say those same people that queue for days for the latest product would not feel the same about an Apple-branded search engine? Furthermore, these early adopters would I am sure go on to champion this new search engine to other potential users, much in the way Mac users championed the use of Macs on to others.
Apple is not a search business …
A lot of what is said online about Apple entering search is that it will not happen because that’s not what Apple does. However, Apple has a proven track record of evolving and reinventing itself and in most cases doing it extremely successfully too.
In less than 20 years, Apple has gone from primarily a producer of computers to a business producing consumer electronics – like phones, music players and tablets – and successfully diversifying into the distribution of digital media too, with the likes of the Apple Store and iTunes. Think back to the mid 1990′s – Apple sought to enter a new market and compete with huge businesses with proven track records like Sony, who not only produce consumer electronics but also has a stake in the distribution of the media consumed on them, via subsidiaries like Sony Music.
If you had spoken to someone back then about the possibility of Apple becoming a major competitor to Sony, I think people would have given you a similar response to what people say now about Apple entering search – it won’t happen as that’s not what they do, there’s already players in the market doing it and doing it well. Furthermore, Apple managed to achieve this change in its business with far less cash than it has now – just think what the business could achieve now given their much publicised cash reserves.
Why I think search needs Apple …
By all accounts Google now has anything up to 80% to 85% of the global search market, with the next biggest players Yahoo!, Bing and Baidu only accounting for small factions of the total. Google’s dominant position has come about due to the popularity of the product it offers and the volume of searches that are carried out within it each day, meaning those who wish to drive users to their site via paid search really have no choice but you use AdWords – in most cases it’s the only viable option.
With a significant amount of users joining AdWords each day, this competitive environment is helping to drive up prices all the time. As advertisers really have nowhere else to effectively advertise, they either accept lower profits or pass on these increased costs to the consumer in the form of price rises. If this situation continues, it is going to make paid search an increasingly costly form of advertising, eventually I can see the situation arising where AdWords is only a viable option for large companies who can tolerate small margins.
In my opinion the only way we are going to see costs in AdWords stabilise is if a serious contender comes into the market and competes with Google for online ad spend.
If for example Apple could enter the market and manage to stake a claim to a notable part of the market, it would in effect reduce the competitive pressures driving up prices in AdWords. Advertisers would perhaps be inclined to invest a proportion of their budgets with this competing service, with the knock-on effect of helping to bring down prices in AdWords or at the very least stabilise them.
So whilst Google continues to dominate pay per click and there is nothing in sight yet that Apple will be launching a search engine anytime soon, I think Apple does have the money, the track record for entering new markets successfully and a strong enough brand to make a success of it. If they do enter the market, I would hope at least Google sits up and takes notice as it would imagine most likely they would make a success of entering another new market, just ask Sony!