Can Google Retain Its Edge In Mobile Search?
A recent report from comScore shows that the number of users on mobile has outnumbered that on desktops. Going forward, advertisers will focus more on mobile marketing strategies as mobile searches have exceeded PC searches, according to a recent report by Google. Traditionally, Google (NASDAQ:GOOG) has had a stronghold in PC search and is now reinventing itself in the mobile search space as well. We expect nearly 40% of Google’s valuation to come from mobile search ads. We also forecast Google’s mobile search market share to remain stable at around 85%. Google recently introduced deep links for Android developers that support content indexing for apps, which ensures that content within an app is surfaced on the search page when a user searches through mobile. We expect this constant innovation from Google towards making mobile search easier and seamless and the popularity of its Android platform will help it maintain its market share, despite stiff competition from Apple.
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Competition from Apple and Itself
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In July 2015, Apple released a beta version of its iOS which allows iPhone and iPad users to use Apple’s search engine and potentially bypass Google by making Bing as the default search engine. This is a threat to Google, especially since the U.S. market share of the iOS operating system increased significantly in the past three years.
Google also faces a threat from the fact that Android is an “open source” software which means it can be modified and included in any phone free of charge. Phone manufacturers are replacing Google Apps with local apps in Android phones. Samsung is one such example and more players especially in emerging markets are likely to do so. The absence of Google Apps on Android phones will negatively impact Google’s market share. As app-based searches increase, Google can lose out on the global mobile search growth to other app-based search providers, such as Yelp, Bing and niche providers such as Kayak. If Google’s market share declines to 75%, there is a 5% downside to our price estimate.
Google Is Taking Steps In The Right Direction
Identifying the need to “redefine” search in smartphones and tablets, Google is focusing on innovation. It launched its mobile friendly search algorithm earlier this year, providing a higher ranking to websites that can be viewed easily on smartphones. This algorithm has also been customized based on the smartphone model. Considering that typing in a box is almost redundant in the smart watch era, Google built Knowledge Graph, which responds to queries with answers and bolsters its voice search. “Now on Tap”, another innovation, embeds search inside features like texts and apps which makes mobile search more user friendly. Google has also spent resources to improve its mobile ad tracking capabilities to capture the effectiveness of ads on its devices. It has introduced deep links for app developers supporting both android and iOS, which ensures that content within the app appears on the search page.
Google is definitely making efforts to stay on top in the new mobile search space and maintain its leading position. While competition is increasing, we expect Google’s innovation will let it stay ahead of the game and help maintain its mobile search market share.
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