Is Google becoming a former supermodel?

In the rapidly changing world of the Internet, Google has become one of its superstars. Within little more than a decade Google has risen to be a giant in the industry with almost 20,000 employees, revenue of $23.6 billion and profits of $6.5 billion. Growth though is slowing and competition is on the up. Most companies would be envious with long-term growth rates of 17% that Google is expected to achieve, but for a company that has been used to growing at between 30-40% a year such growth seems almost pedestrian. Analysts think so, and while Apple has become the most valuable company in tech, Google stocks have hit the wall in the past 12 months and under performed the broader market.

So has Google run out of runway, can it compete in this Brave New World? Is this supermodel now destined only to make cameo appearances on Hollywood movies, or in MBA terms, has Google moved from being a Star and become a Cash Cow?

To answer this question we need to look at how the Internet and in particular Google’s core search business is developing. Fresh competition appears to finally have reached Google. Microsoft’s Bing, Twitter, Foursquare, Gowalla, Yelp, Layar offer an entirely new wave of sites and services as an alternatives for consumers’ and advertisers’ time and money and they are squeezing their way into Google’s domain. And of course there is Facebook which recently surpassed Google as the most visited weekly website. (see graph below – Google’s flat trajectory perhaps says it all).

Increased competition was inevitable. Michael Porter’s 5-force model made this an almost certain outcome. Any extremely profitable industry with limited barriers to entry, will always attract new competition. Google does have the advantage of a tremendously strong leadership position and benefits by being first-to-market, but that should only help maintain or slow loss of market share. Google has recognised this challenge and has turned to strategically acquiring numerous new and potentially promising businesses from the $1.6 billion acquisition of YouTube, the $3.1 billion acquisition on ad network DoubleClick and the £750 million purchase of AdMob a mobile advertising platform. But none of the acquisitions have significantly contributed to Googles revenue stream. Not even Google’s most successful new product launch, the Android operating system for smartphones, has been able to reduce Google’s reliance on ad search income.

And here is the main problem. Consumer search and internet behaviour is changing and Google is becoming “so old-school”. Let’s say you want to hire anything from a plumber to going away on a dream holiday. Two years ago you would have Googled the word “plumber” or “dream holiday” looked at the list of results, weighed up your options and made the purchase, perhaps by clicking on one of the random links that perceivably best meet your needs. You may even have clicked on one of Google’s sponsored links believing they offered you the best option. This click, hit and sometimes miss approach to purchasing things was acceptable back then, but today things are becoming more sophisticated. Today you might still do the google search but you are more likely to post a question on Facebook asking your friends to suggest a plumber, a hotel or dream destination. You may write a tweet asking “what is your dream holiday?” or “which plumber in London offers the best service and is trustworthy?” Based on the responses you can then make a more educated and advised purchase.

Internet based community marketing is a domain where Google does not have a strangle hold, and a strengthened sense of community is the way in which consumers are driving the internet forward, it’s the future. By now, we’re used to letting Facebook and Twitter capture our social lives on the web.

This is where competitors like Facebook, Foursquare, Gowalla, Layar and other community based platforms are stealing the march on Google. At TEDxBoston, Seth Priebatsch presented on the next layer in progress on the Internet, which he calls the “game layer.” According to Seth during the last decade we used the Internet to build a social layer. In this decade, the Internet has already moved beyond the “Social” function and is now entering a level where people will perform tasks on not only in a social context but using behavior-steering game dynamics to reshape the way we interact with people and buy products. As Seth says during his presentation to a captivated audience:

Because while the last decade was the decade of social and the decade of where the framework in which we connect with other people was built, this next decade will be the decade where the game framework is built, where the motivations that we use to actually influence behavior, and the framework in which that is constructed, is decided upon, and that’s really important.”

Seth makes a good point, customers are already enticed by companies to play games offline which influence their behaviour. It’s just that many of these current games are not that much fun, but they are games none the less. There are credit card schemes and airline mile programs and coupon cards and all of these loyalty schemes actually use game dynamics to influence consumer behaviour. They’re just not very well designed and therefore aren’t much fun, but we participate and play anyway. The next wave of development on the Internet promises to change that. Pioneers like Foursquare have the potential to build a fun, competitive and interactive way into how we behave on the Internet.

So this is the future, this is the Brave New World and the future is now. Unless Google identifies that the behaviour on the Internet has already moved from “search” passed “social” and is now moving rapidly onto “gaming” it is likely to discover very quickly that it is no longer a young sexy leggy supermodel. Of course search and social shall remain important components of the Internet but gaming and community is the next phase. That may be okay though for Google. Claudia Schiffer is a former supermodel but for my money she is still the sexiest woman around, and that may not be a bad mantle for Google to hold onto as the younger models cut their teeth on the runway.

Dean van Leeuwen is a partner of TomorrowToday International, a dynamic organisation that is assisting both large and small companies navigate the rich streams of the new economy. He is recognised as a creative and strategic thinker with an ability to influence individuals and teams to explore ‘outside the box’ options. TomorrowToday have several entertaining and enlightening multimedia presentations that explore themes relevant to customer loyalty, talent, diversity and leadership in tomorrow’s world of work.

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