Peak Google

ABOUT THE AUTHOR

Salahuddin Khawaja has 15 years of

experience, primarily in the Financial

Services Industry. Before joining JP Morgan

as a Program Manager he spent 11 years as

Management Consultant at Deloitte helping

Fortune 500 clients with various types of

Strategic Initiatives.

He believes in the power of Presentations,

Storytelling and Visual Design. That is why

he is fascinated with presentations.

ABOUT THE PRESENTATION

This presentation is based on Ben

Thompsons story “Peak Google” on his blog

Stratechery.

Appreciated the story and his use of paint to

show some basic graphs. So thought I’d

create a presentation out of it.

Despite the

hype about disruption,

the truth is most tech

giants, particularly platform

providers, are not so much

displaced as they are

eclipsed.

For 50 years, IBM has been

successfully selling and

servicing mainframes.

During the PC era, though,

they were eclipsed by

Microsoft.

The same happened to

Microsoft . Windows has

been eclipsed by

smartphones, to the

benefit of (in terms of

revenue and profit) and

Google (in terms of market

share).

In both cases it turned out

that the incumbents’ prior

success resulted in

misdirected incentives

IBM focused on selling and servicing PCs, instead of building a platform, while Microsoft focused on extending Windows to mobile instead of the user experience.

Who might

follow in this

illustrious but

ultimately

tarnished path? ?

Other

Google dominates

search advertising

Captures a huge majority of the $50 B

spend in worldwide search advertising

Other

But, it’s only a small percentage of the total ad

spend

Total ad spend is projected to be $545 billion in 2014

The vast majority

of that spend is not

about direct response –

i.e. ads that spur you to

make a purchase on the spot;

rather most of the money is

spent on brand advertising

The idea behind branding is

that once a customer picks a

brand, they’re loyal for years.

That adds up to a lot of lifetime value, which is why consumer-packaged goods companies

Search advertising is good

at getting a direct

response, but not good for

building brands

A new type of digital

advertising has emerged to

plug the hole

in digital advertising channels

for companies looking to

brand: native advertising

Native advertising is

simply “in-stream” advertising

For a news site, native advertising is advertising in article format; for Twitter, native advertising is a promoted tweet; for Facebook, native advertising is ads in your news feed; for Pinterest (a future giant) a promoted pin

These sorts of ads are

proving to be massively more

engaging

than banner advertisements

Native advertising requires immersive content (e.g. Facebook’s newsfeed, Twitter’s stream, a Pinterest board, or even your typical

news site’s home page)

Google’s doesn’t have a

successful immersive products (other than YouTube)

Google’s core capabilities (the

algorithm, the auction system and

machine learning) can’t be used as a

launching pad to create immersive

products

So Google lacking the human

touch has peaked and will be

eclipsed.

Parallel to IBM and Microsoft. IBM didn’t capitalize on PCs because their skills lay on the hardware side, not software. Microsoft didn’t capitalize on mobile because they emphasized compatibility, not the user experience.