There's no doubt that Google (GOOG 0.74%) (GOOGL 0.55%) is the 800-pound gorilla in search and display advertising. However, the company has been under pressure of late as competition from Facebook (META -0.52%) and Microsoft is increasing. Microsoft's Bing search platform is gaining market share, while Facebook seems to be making its move in display advertising. In such a scenario, it is important for Google to make some impressive moves.
The threat
Facebook, for example, has reportedly overtaken Google in digital display ad revenues in the U.S. According to eMarketer, Facebook served more ad impressions on mobile devices than on desktop in the last quarter of 2013, leading to a 51% jump in U.S. digital display ad revenue. In comparison, Google's growth rate came in at 33.3%. By the end of 2014, Facebook is expected to clock $4.8 billion in digital display revenue, up from a prior projection of $3.35 billion.
Comparatively, Google's display revenue in the U.S. this year is expected to clock $4 billion. As you can see, Facebook is positioned to overtake the search giant in this department as the social network's mobile growth is quite impressive.
Google's strategies
To counter Facebook's approach, Google is focusing on four strategic areas. The first focuses on performance marketing, the second on brand building, the third one on ad technology platforms, and the fourth has Google focusing on digital content, enterprise, and hardware.
The company is making aggressive investments in performance advertising. In today's connected world, people are online more often than not and look for an easy and seamless experience when they move from screen to screen. Hence, Google is trying to ensure that it has a better search engine that will enrich the user experience and help people navigate between web and apps in an intuitive manner.
On the back of such moves, Google is seeing advertisers adopt its performance platform as it is helping them drive better monetization. In addition, Google is seeing that its clients have already started benefiting from its investments in Enhanced Campaigns.
For example, international retailer Farfetch upgraded its shopping campaign with Google and increased its conversion rate by 13% while reducing cost per acquisition by 20%. In addition, Shutterfly has also benefited from Google's search engine. It witnessed a nearly 60% increase in mobile conversions for its non-brand items, and now plans to include 100% of its keywords on mobile devices.
Focus on digital content and new platforms
YouTube is also turning out to be a money spinner for Google. YouTube reaches out to more than 1 billion people every month, and Google is making the most of this reach with video ads. YouTube is attracting many marketers and agencies that were earlier showcasing their brands on TV. They are now reengineering their planning and investment toward digital.
Going forward, Google strategically plans to help brands reach out to end users through its innovative display ad formats. For example, the company recently teamed up with Tory Burch to display her New York Fashion Week Shown to a global audience across Google's display network. This was the first ever live stream of a fashion show in an ad using light box ads, and Google was able to share the exclusive event with more than 7 million people.
Moreover, Google's ad tech platforms have helped it to strengthen its relationship with premium publishing partners like The Local Media Consortium, which comprises more than 800 daily newspapers and 200 local broadcast stations. Further, the company is investing heavily to safeguard the ad networks and exchanges, providing its clients the best quality control in a trusted environment.
Google is also focusing on emerging businesses such as digital content, enterprise, and hardware. Google Play is at the center of its digital content business, and it is continuously expanding. Google has introduced Google Play movies to 39 new countries, taking its reach to 65 countries.
Google has also teamed up with Sonos to enhance its music capabilities and provide customers with high-fidelity play music. In addition, the company has introduced new development tools for Google Play games, including game gifting and iOS multiplayer support. Google Play has added over 75 million new users in the last six months and the number is expected to grow considerably in the coming quarters. Google's moves into digital content are gaining momentum, and this should help the company increase its advertising footprint going forward.
The bottom line
There's no doubt that Google is working hard to stay on top in the advertising segment. To accomplish this. it has lined up a number of developments to sustain its growth. Whether it will be able to fight Facebook's growing dominance in the long run remains to be seen, though.
