Google’s adtech antitrust trial raises critical questions about the future of paid search, with a potential company breakup on the line.
With search engines dominating nearly 90% of the global search market, PPC advertisers and marketers face an uncertain future. Established strategies could become obsolete, and new platforms may emerge.
This article explores the potential implications of a Google breakup, highlighting both challenges and opportunities for the advertising landscape.
Antitrust and advertising: What does the future of paid search look like without Google?
Antitrust discussions threaten to dismantle Google’s dominant paid search ecosystem – a platform that has been the best option for paid ads for over a decade.
Imagine a paid ads landscape suddenly fractured, where your advertising strategies become obsolete overnight.
Kurt Henninger believes that this could happen out of the blue.
The potential dismantling of Google isn’t just a regulatory question. It’s a seismic shift that could unravel the current paid advertising infrastructure.
The PPC industry heavily relies on Google Ads, which commands approximately 90% of the global search market share.
The dominance of a single platform has allowed advertisers to build expertise on one primary ecosystem, focusing on a unified set of tools and metrics.
Google’s suite of interconnected tools, including Google Ads, Google Analytics and Google Tag Manager, offers a streamlined approach to running paid ads on Google.
This integrated ecosystem allows advertisers to easily manage campaigns, track performance and implement tracking pixels.
Although not the main impetus behind the antitrust cases, this convenience and efficiency might provoke antitrust concerns.
Furthermore, the outcomes of these court cases could adversely affect this interconnectedness.
Key concerns include:
Market power: Google’s significant market share allows it to potentially favor its own products and services, limiting competition and choice for advertisers.
High barriers to entry: The substantial costs of building and maintaining a competitive advertising platform, combined with Google’s strong brand and network effects, make it difficult for new entrants to challenge Google’s dominance.
Data advantage: Google’s access to vast amounts of user data, derived from its search engine, browser and other services, gives it a competitive edge in targeting and measuring ad campaigns.
A breakup of Google could dismantle this stability, leading to increased fragmentation across platforms like Bing and Yahoo.
Here are some possible implications of forcing a Google split, whether by dividing Google into multiple independent entities or by creating enough separation to introduce several search engines into the market.
Positive implications
1. Increased competition
A split could lead to increased competition in various markets, potentially resulting in lower prices for advertisers and faster innovation.
Henninger also remembers the “good old days” of paid search in the tweet above.
Increased competition among ad platforms can drive down prices as companies compete for advertisers’ business.
When advertisers have choices, these platforms are incentivized to innovate, developing new targeting methods, ad formats and measurement tools to attract and retain clients.
This is especially true as advertisers need to prove advertising is working to continue to justify the marketing spend.
With Google as the sole option for many, there has been little motivation for them to innovate or offer support.
Advertisers seeking significant search traffic currently have no alternatives.
Melissa Mackey recalls a time when Yahoo surpassed Google in size. She notes that, although neither matched the quality of Google Ads, Yahoo had a substantial volume.
While Overture and Yahoo were dominant players in the early days of online advertising, they were eventually eclipsed by Google’s innovative approach to search and advertising.
Google’s superior search algorithm and targeted advertising capabilities allowed it to gain market share rapidly.
A Google split could potentially rekindle innovation within the paid search industry.
2. Platform-specific innovations
Smaller, more specialized ad platforms might innovate more swiftly in certain areas.
This concept ties back to the previous implication regarding competition.
Google has not only become the dominant player for search traffic but is also an incredibly large company with bureaucracy. The company’s size and dominance have stifled innovation.
Smaller ad platforms can innovate more rapidly in specific areas due to their agility, focus and reduced bureaucratic overhead.
They can quickly adapt to market changes, experiment with new technologies and make decisions without the complexities of large corporate structures.
Additionally, smaller platforms may be more willing to take risks and invest in niche markets, leading to innovative solutions that larger platforms might overlook.
3. Opportunities for innovation
A split could create new opportunities for innovation as companies focus on their core competencies.
If Google were to be split, smaller ad platforms could focus on their core competencies because they wouldn’t be burdened with managing a diverse range of products and services.
This third implication builds on the themes of competition and the drive to innovate, emphasizing that a company’s size can also limit innovation.
For instance, when a company reaches the scale of Google, search features may not always be the primary focus at any given moment. This has been evident in the AI race
Google’s parent company, Alphabet, is a massive conglomerate with interests in various tech sectors, from search and advertising to self-driving cars and healthcare.
If Google were to split, smaller companies could emerge, each focused on specific areas like search, advertising, or cloud computing.
These smaller companies could concentrate their resources and expertise on their core competencies, leading to more efficient operations, faster decision-making and greater innovation.
For example, a smaller ad platform could focus solely on developing advanced targeting algorithms or innovative ad formats without being distracted by other Google projects.
This increased focus would allow them to compete more effectively with larger, more diversified companies.
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Negative implications
4. Siloed data
Google’s integrated ecosystem allows for streamlined data collection, from Google Analytics to Tag Manager. You can easily pull data into a Looker Studio report.
Advertisers who bypass Google Analytics often highlight the availability of numerous tools for data integration. However, incorporating additional services and data integrators can lead to data loss.
This issue will likely be exacerbated when pulling data from multiple search engines and platforms, as each platform tends to calculate metrics with slight variations.
Is it even possible for us to unite on marketing standards?
A breakup would mean advertisers lose cohesive insights and would have to invest in third-party data integration solutions to bridge gaps between platforms, potentially risking data loss and hampered decision-making.
Independent platforms are incentivized to claim credit and demonstrate their role in driving revenue. This dynamic will continue to worsen the credit attribution issue we observe between paid search and paid social.
Achieving statistical significance could become challenging if search volume fragments too widely, making campaign optimizations more difficult for ad managers.
5. Increased labor costs
Costs for advertisers are already high, especially in retail, where increased CPCs further squeeze margins.