Over on Techcrunch Keith Teare has written a fascinating article that draws together several news-strands to reach a compelling conclusion – that we are seeing “the start of a secular trend that represents nothing less than the end of the web 2.0 era where we all consumed services through a browser on a computer. Replacing that era is a new, app-based, message-centric mobile Internet. In this new era the essential unit of advertising (a page based ad, whether text, display or anything else) is simply the wrong monetization vehicle. Something new has to emerge.”
Teare reaches this conclusion based on a couple of news items relating to Google. The first is the recent slump in Google’s stock price (not purely based on Google’s decision to create a new non-voting class of stock). The second, and more fundamental, story is the fact that Google’s cost per click rates dropped for the second consecutive quarter.
Teare is of the view that the shift to the mobile platform spells major problems for Google. The point he makes is that traditional advertising approaches on the traditional web page simply don’t translate well to mobile platforms. But, in addition, the way people use smart-phones is very different, he claims – less search and more app-focused activity that takes the action (and the revenue) away from Google.
He tries to illustrate this point by referring to some responses by Larry Page and others at a recent analyst briefing – although the quotes he provides don’t really strengthen his argument especially well. Indeed Page implied that reliance on traditional search revenue on the mobile platform is less likely in future. He overly referred to “offers” and Google Wallet. Although militating against this will be disappointing performance in terms of Android shipments of late, poor take-up of Wallet and no especially strong solution in the Google camp for location based sales promotion.
So Teare is probably right that Google may have issues to deal with as traffic continues to surge in the direction of mobile. But expect some big announcements from Google designed to keep that stock price up. However, it may be too little too late in a market that is evolving rather quickly.