Google's Biggest Financial Mistake

It seems that Google may have given away its ecommerce dominance when in 2012 the company switched to a pay-to-play business model for Google Shopping.

Earlier this week, eMarketer released numbers estimating Google will lose one percentage point of market share to Amazon. In fact, Amazon -- which will take 8.8% of all digital ad spend in 2019, up from 6.8% in 2018 -- could reach 10% by 2020, per the findings.

The private equity firm Catalyst Capital Group, in a post, wrote that the move may go down in history as one of the all-time corporate blunders. This one cost Google tens of billions of dollars in revenue.

Here’s how it started. In 2012, Google changed the name of Google Product Search to Google Shopping and required advertisers to pay to get listed.



The advertisers had to create data feeds or product listings through Google AdWords -- now Google Ads -- in campaigns that would run on Google Shopping.

Brands would not bid on specific keywords, but rather bid the amount they are willing to pay if the listing is served and a consumer clicks on it. Relevance and the bid price would determine the top ranking.

Amazon “played the long game while Google focused on near-term profits.”

As a result of this shift, Amazon now dominates ecommerce shopping. Catalyst Capital believes, in part, this is why Amazon’s high-margin ad revenue doubled last year from $10.1 billion.

The post also references the Amazon's Advertising Ascent report from Nanigans exploring the digital ad space. About 100 retail marketing executives, each responsible for $50 million or more in annual online sales, were surveyed.

Amazon captures 14% of this group’s budget, compared with 21% for Google and 19% to Facebook, but more than half of the brands are planning to increase ad spend on Amazon.

Some 41% spend their incremental ad budget on Amazon, and others are shifting ad budget from Facebook and Google to Amazon, per the post.

Google is not giving up its dominance in search, but it already might have lost the battle in ecommerce.

1 comment about "Google's Biggest Financial Mistake".
Check to receive email when comments are posted.
  1. Walter Sabo from SABO media, February 25, 2019 at 9:48 a.m.

    Google is too worried about letting dogs come to work and how well job applicants did in high school math. Self imploding.

Next story loading loading..