Google Inc (NASDAQ:GOOG) is known for dabbling in many different industries. After a big player enters the market or develops a new innovation, Google wants a slice of the pie. Most firms find this strategy unsuccessful. Google, on the other hand, proves that it can contend with the best. Let’s take a look at Google’s efforts to take down three market leaders.
Social networking
Zuckerberg took social networking to a new level in 2004 with Facebook Inc (NASDAQ:FB). Facebook currently has 1.11 billion users and 665 million active daily users. Who could ever challenge the mighty Facebook? Maybe Google.
Google Inc (NASDAQ:GOOG) brought us a new social networking platform, Google+, in 2012. Even though Google+ has only 400 million members (36% of Facebook), it shows tremendous growth in the Facebook-dominated social networking market. Facebook did not see a growth rate like this until 2011.
As members grow, so do advertisers. And as the number of advertisers increase, they collectively “bid up” ad prices, which are run by a competitive process. It’s a case of the strongest ad platform getting even stronger. But it also works the other way around.
Revenue equals price times volume. When advertisers change their ad network (volume decrease), ad prices also fall (price decrease). The result is that Facebook loses significant ad revenue, even though only one of the two variables is affected. Eventually, Facebook may lose market share to the Google+. It’s safe to say advertisers might rethink their marketing networks – and Facebook’s revenues may take a tumble.
Online shopping
In the last decade, Amazon.com, Inc. (NASDAQ:AMZN) has dominated the world of e-commerce. With over 200 million active customer accounts by the end of 2012. It’s not to steal market share from Amazon, but Google is starting to make a dent.
After making great efforts to revamp its online shopping, Google Inc (NASDAQ:GOOG) is reaping the rewards. Google’s new advertising model allows advertisers to customize ads more extensively. Additionally, advertisers only paid $0.31 per click with Google in the fourth quarter last year. Those same ads would have cost $0.41 per click with Amazon. Put another way, Amazon advertisers spent 132% as much as they would have by advertising on Google.
Google attracts advertisers through its lower CPC (costs per clicks) and draws more customers in through customized advertisements. After its introduction in the third quarter last year, Google Shopping connected 140% more customers to advertiser sites than Amazon. With that kind of success in the first two quarters, Google Shopping may prove to be a great threat to Amazon.
