Internet search giant Google (Nasdaq: GOOG) launched an update on Wednesday to its search user platform, Google Instant, which may help raise the competitive bar for Microsoft's (Nasdaq: MSFT) Bing, Yahoo! (Nasdaq: YHOO), Ask.com, and other rivals.

Google Instant, as the name suggests, gives real-time results as a query is typed and predicts what the user may be seeking. If one of the predictions is a closer match to the user's search, the user can scroll to it within the search box to generate the desired results.

As Google Instant is Ajax-enabled, real-time search results continually refresh as the user types the query, giving fast and accurate results in an intuitive and seamless format. Google Instant is part of a major product roll-out expected from Google over the next several months and reflects the company's aggressive investment in long-term growth.

After trying Google Instant, users will likely find it less satisfying or more difficult to use alternative convenience-based search engines; this innovation in user experience could improve Google's market share lead, and at a minimum, it will force competitors to play catch-up.

Google Instant could help maintain or even strengthen Google's 400-plus basis points market share lead. Google currently has a 415 basis points lead vs. its next competitor in the U.S., Yahoo!, and a 540 basis points lead vs. its competitors worldwide (Yahoo! and Bing).

As Google Instant changes the search experience, it should guess users' expected answers more quickly and more accurately. Instead of searching 4-5 times to find the relevant results, the user may narrow the query in the search box in real time. Thus, ad targeting should also be improved.

While Google stated that Search Engine Optimization (SEO) rankings will not change, market analysts expect users to spend less time browsing natural search results (particularly below the fold and on the second page), and thus "gratuitous" branding is likely to become less frequent.

This is likely to mean natural search becomes less valuable, and advertisers may shift spending from SEO to paid search as Google Instant shifts user behavior, market analysts said.

As of Wednesday, Google Instant is available in the U.S. on Chrome, Firefox, Internet Explorer 8, and Safari browsers when users sign in to Google accounts. It will be available in France, Italy, Germany, Russia, Spain, and the U.K. over the next week, and Hong Kong and Japan over the next few months.

Mobile Search -- Google Instant could be a game changer
Longer term, Google Instant will be available more broadly and usable directly via the browser, rather than the search box. A mobile version is expected to launch by the end of the year.

For mobile search, Google Instant could be a game changer. Considering the difficulty of typing on smartphones, the product should simplify mobile search by enabling users to get the answers they seek with one or two letter inputs.

Thus, Google Instant could meaningfully accelerate mobile query growth when it launches. According to Google, mobile search has grown 5 times over the past two years already, with mobile search concentrated on smartphones (on which queries have grown 4 times over the last year).

Google anticipates this product update will have a significant favorable impact on query volumes. comScore said in the recent query search results that core query growth for year-to-date is up just 12 percent in the U.S., and query growth is up 25 percent worldwide.

"With improved search relevancy, we would expect a rise in mobile cost per clicks, and over time, mobile ad pricing should close the gap or exceed desktop cost per clicks. Stronger cost per clicks coupled with an increase in clicks and conversions should mean stronger mobile advertising," Susquehanna Financial analysts including Malindi Davies said in a note.

A rise in number of clicks and queries could boost Google's ad revenue amid surging mobile ad market in the U.S.

IDC forecasts the U.S. mobile ad market will grow from $733 million in 2009 to $4.7 billion in 2014, representing a 45 percent compound annual growth rate.

"We have estimated long-term growth for search advertising is about 15 percent, although the potential from Google Instant could mean growth accelerates above these levels near term. We expect targeting and conversion will improve with this roll-out, which should ultimately raise cost per clicks," Susquehanna Financial analysts said.

Ibtimes

International Business Times, The Global Business News Leader

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