Continental drift is the movement of the Earth’s continents relative to each other, thus appearing to drift across the ocean bed.(*)

eMarketer estimates:

  • The number of smartphone users worldwide will surpass 2 billion in 2016. In 2015 there will be more than 1.91 billion smartphone users across the globe. By 2018, more than one-third of the world’s population, or more than 2.56 billion people.
  • Mobile advertising is the key driver of growth around the world, and advertisers will spend $64.25 billion on mobile in 2015, a 60% increase over 2014. By 2018, that figure will reach $158.5 billion, when mobile ads will account for 22% of all advertising spending worldwide.

JP Morgan says:

  • Lowering their estimates on Google for “4Q14, 2015, and 2016 to account for slower organic growth, continued strength in the USD, and ongoing investment opportunities.”
  • The primary concern is that lagging monetization in mobile. Smartphone CPCs remain at ~40-50% of desktop/tablet CPCs.
  • YouTube and Google Play are good investment opportunities.
  • Facebook also appears better positioned to capture new dollars coming online given its 21% share of mobile time spent, strong leverage to news feed ads, and nascent opportunities in video and Instagram.

JP Morgan adds:

  • Facebook’s share of overall Internet time improved M/M to 16.9% (vs. 16.2% in October 2014) while its share of mobile time excluding Instagram and Whatsapp also increased M/M to 21% (vs. 20% in Oct-14).

Goldman Sachs points out:

  • After steadily rising for years, 2013 marked the first period that Google’s share of global online advertising declined, from 43% to 42%, and we see share pressure continuing in the near term. Facebook, on the other hand, has seen its share go from 3% to 6% in the last three years and we expect it to double to 12% in 2016, whereas we see Google’s declining to 41%.182885
  • The fast adoption of mobile has created an environment in which consumers use horizontal search apps, like Google, less frequently, with increasing traffic going to vertical apps such as Amazon and Yelp. Additionally, we see walled-off content in apps and deep linking as challenges not present in the desktop world.

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182903Today, we search and are forced to look at a page (or more) of search results — or as I like to call it, the curse of the ten blue links. (By the way, my piece for Gigaom Research in 2009 pointed to the future challenges for search & the ten blue link model, which are now finally being questioned.)

Google and others can put ads next those results and build Autonomous Cars with the money they make. Of course, there is Facebook which is redefining the idea of search by making it all about searching inside the Facebook’s four walls, striking another blow to the traditional idea of search and search-based advertising models.

Looking out few years into the future, you start to wonder, what would happen to search advertising. Google Now, Siri, Cortana, and other virtual assistants portend to a future — admittedly not today on 2015 or 2016 — but sometime relatively soon where the search engine business model is undermined.

Today, T-Mobile USA announced that it was launching Wideband LTE in New York (now in 27 major markets) so you can get theoretical peak download speeds of up to110 Mbps on your phone (thought I will see it to believe it.) Do these virtual assistants become one of the killer apps for even faster (and hopefully lower latency) networks? I don’t know, but better/faster networks almost always inspire new behaviors.

This has started to make me wonder what kind of upheaval we are going to expect in the search-ad business. Is this the same kind of threat to Google’s business model as cloud/mobile were to desktop & client/server software giants who have to had to retool? Is this why Larry Page gave over pretty much the day to day of the company to Sundar Pichai? Clearly, I have more questions than answers.

PS: I would love to hear from folks who are in the know and are in the search business. You can talk back on Twitter or on Facebook.

From the archives: August 10, 2010

The way I see it, Google is facing pressure from two different directions. On one side, the social web is moving toward a future where serendipity replaces search. Facebook is on this side. On the other side, with mobile apps, Apple has helped popularize a new goal-oriented, task-specific paradigm that essentially starts to obviate the need for search. These two behavior changes are clear and present danger to Google, as I pointed out last year in a GigaOM research report (subscription required.)