Are Businesses Relying Too Much On Google?

Google provides a valuable platform for marketing and advertising, but businesses may relying upon on it too much with other alternatives available.

Aug 11, 2014 at 10:00AM

Many business know all too well the importance of Google (NASDAQ:GOOG) (NASDAQ:GOOGL) marketing and advertising. In today's world, strong search placement can be the difference between success or failure. Yet, while the power of Google remains a key component of many business's marketing and advertising approach, relying on it too much could leave business owners especially vulnerable.

Get with the program
We've all heard stories of small businesses turned big by the power of Google: A person in their garage creates a web-site with popular key words and great search reception and becomes a millionaire. Tim Carter's AsktheBuilder.com is a great example, a man whose site had great search traction and then made a fortune through advertisements.  In retrospect, most large successful dotcom sites, even those publicly traded, likely catapulted to success through Google.

While not all share such great success, Google advertising has still become a key component to small and medium sized businesses marketing budgets, as has the importance of strong search placement. This fact is evident in the amount of money that Google creates per monthly active user -- which is $45 -- showing consumers are willing to pay a pretty penny to reach Google's customers.

With that said, Google is also a company built on innovation, having a need to constantly reinvent itself. Therefore, Google is continuously making important changes to programs designed to give users a better experience. One of those programs is called Panda, a key component of its search algorithm that boosts exposure to high-quality sites, or those that have the most content per page and are most meaningful based on Google search .

Back on May 20, Google rolled out its latest Panda update -- called 4.0 -- but prior to this version the company had refreshed Panda on 25 other occasions . For businesses that rely on traffic from Google, this can be a nightmare, such as online couponing site RetailMeNot (NASDAQ:SALE).

Panda

Source: Innovisionbiz

At the time of Google's Panda 4.0 refresh, it was reported by Search Engine Land, using data from Searchmetrics, that RetailMeNot lost more than 30% of its total traffic in the days that followed. While the company has since adjusted many of its optimization and marketing techniques to Panda 4.0, and has also stated that it believes these numbers to be overstated, this has still been a challenge for the company to deal with and has caused its revenue outlook for both its next quarter and full-year to fall short of Wall Street expectations.

Here's the problem
While RetailMeNot is the most noted example of what can happen when Google makes key updates to its search business, there were countless other examples with Panda 4.0, like Expedia (NASDAQ:EXPE) who reportedly lost 25% of its Google search visibility around the time that Panda 4.0 launched.

Albeit, such problems highlight the importance of not relying on one platform for success -- whether it's a small business or someone trying to sell a few household items -- Google algorithms are unreliable long-term, as the company will always make drastic changes to stay steps ahead of its fast-moving technology peers.

However, Facebook (NASDAQ:FB) has quickly become an advertiser and small business owner's sanctuary, as likes and followers are not often lost once created. Facebook's advertising targets users based on their previous likes and interests. In addition, the company has launched several new tools like Facebook Audience Insights which allows advertisers to access detailed information on user demographic, location, and their activity so that advertisements can be directed more efficiently . Not to mention, at $6.44 per North American monthly active user, Facebook advertising is a lot cheaper than Google, for the time being.

Facebook Insights

Source: adopsbuzz.com

Then, services like Yelp (NYSE:YELP) have become a valuable resource for business owners and advertisers who claim their page, add service prices, and encourage customers to leave a review. In today's social media dot-com world, success can be measured by one's ability to grow a large network, and all of these companies have thrived behind their own unique way to make this goal a reality. 

Foolish Thoughts
While Google makes continuous changes to key algorithms that can affect search results and traffic, Facebook, Yelp, and even others like Twitter operate a model where what's gained only adds further value to a small business. Once positive reviews are earned on Yelp, those are always seen by searching users, and as Facebook business pages earn more likes, future content will reach more people. Hence, Yelp, Facebook, and this new group of dotcom companies have created business models that might be more appealing over the long-term to advertisers, and perhaps more valuable long-term than an ever-evolving Google

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Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Editor's Note: The source for RetailMeNot's reported traffic drop has been included, as well as a link to RetailMeNot's response to the report. A previous version of this article did not provide this information.

Brian Nichols owns shares of Apple. The Motley Fool recommends Apple, Facebook, Google (A shares), Google (C shares), RetailMeNot, and Yelp. The Motley Fool owns shares of Apple, Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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