What do you base this on? Customizable user-tailored ads through natural language would make even more money arguably and Google is uniquely positioned to do it.
Also consider that paying even a dollar a month for a service will result in the addressable market going down orders of magnitude. Apple is pretty much the only company in existence that is able to make people pay so much on luxuries like that.
yup, but that would be a great way to google if they want to move away from ads. Years of software engineering in great apps, integrations, google maps, etc.. that's can for sure generate more $ if, they invest more time on that, but I agree that will never beat the ads machine.
Would ad companies like Google make less money? Not really. Overall advertising budgets are not dominated by the effectiveness of advertising, but by adversarial spending by their competitors
This premise seems wrong to me. It assumes that advertising is always a net positive, regardless of how targeted it is.
As someone who runs a company that built apps and have spent ZERO on advertising and PR, I can tell you that is usually not the case.
In fact, the biggest component of user acquisition cost is the untargeted advertising. Much better to reduce that cost to zero by increasing the viral k-factor and user retention. Those two metrics matter way more than advertising. If you can reduce the ad spend per user, or per customer, you are BETTER off, not worse.
For example, Google adwords nor any other advert network offers NO WAY of targeting MacOS, only iOS and Android, so we couldn’t make any money advertising our Calendars for Mac app.
And trust me we experimented with all kinds of monetization in that app:
It would be too expensive. Google is making $40 every time someone clicks on many categories of ads. They probably have users generating them thousands of dollars a year.
I think monetization would require near-monopoly-level control for Google. How much would adwords bring in if Google weren't the "default search" destination?
If Google can basically kick Apple back into niche status (not there yet), then they could extract monopoly rents on a defacto standard of ad-based apps either using Google's mobile ad network, or a consortium of which they are the sole influential player.
Perhaps that explains why they haven't tried to heavily monetize this yet - that would pus more consumers into non-ad-based apps where Apple is strongest.
The problem is that ads price discriminate. Google may not get much money off of you, but there are other users that are very valuable (think of a manager in a billion dollar enterprise searching for a subscription product to buy). Would you be okay with it costing 0.05% of your income?
Of course it will be hard to compete with ads as business model if the alternative doesn't allow for price discrimination.
I don't think the result is economical purely because if it were, Google would be monetising their own models by now (of course, maybe they could monetise it if they were willing to go with a paid instead of ad model for search).
The opportunity cost would likely be much more than $750 million. Google isn't a nimble, agile startup. AdMob is already a key player in this market[1] serving display ads in apps as well as sites.
[1] Given analysts use AdMob metrics to figure out market shares of various mobile phones
I think a subscription model could succeed for a niche group of people if the price was right, and the quality was good enough.
Also, I think Google could make a ton of money if they sold one ad per language at a time. As in, for the next 5 minutes the ad for all English speaking users will be for coca-cola, and then it will be for boscovs. Just like TV ads.
That is to say, a search engine could sell advertising without betraying it's users or compromising its own quality. It is possible, but would need constant vigilance against the temptations of greed.
Google runs the largest advertising network on the web.
They already pay for much of the content you see online.
Only they have the ability to say "pay $1-$3 a month, and we'll replace those ads with a thank you", and have it actually affect a significant fraction of what you see.
If I were an advertiser, I would be keenly interested in how my client's products can be embedded into natural-sounding AI conversation. That is an extraordinary valuable innovation and Google can charge accordingly.
Meanwhile, MS has a lot of catching up to do in the ad space.
Nice idea. But there's no sign that such a market exists. To put it into perspective, Google makes a nickle of ad revenue for every search. Would you pay that much?
I'd go further and say, if this could provably generate ad based revenue from a non-trivial number of users, Google would build the same thing and include it in the basic search result shown in the article (with adwords suggestions) for effectively zero cost to Google.
So, even if it were financially successful, it wouldn't likely survive the competition.
DDG's ads wouldn't need to be as profitable as Google's, they'd only need to be as profitable as what Google pays Apple to use Google as the default search engine, which is likely less than what Google makes on ads on searches from Macs.
Which makes me wonder what search network ads look like in a hypothetical world in not so distant future if audio interfaces were primary search tool and output for the results.
Personally, at this point I'd rather pay Google a monthly subscription and get everything ad-free. That would align their interests with their users who would then be the customers vs the product and free up Google to do what is best for them in cases where ads may not make sense.
Google don't seem to be advertiser friendly in the same way they used to be.
Adwords is increasingly becoming a black box where advertisers aren't really encouraged to understand what is going on. In all lot of cases they seem to want to deny advertisers information. I'm not sure what the thinking behind this all is but I suspect one of the biggest reasons is leveraging data without exposing it to advertisers or allowing them to do creepy seeming stuff.
That doesn't mean Google won't buy them or won't want to provide these kinds of services. They do provide a crappy product in this category which has very few use-cases these days.
Anyway $28m considering the SAAS/SME model should be viable at a range of scales. I wonder if they are planning any big changes that require this kind of cash. Maybe something freemium or a new product that will take a lot of time before it can be profitable. Just speculating.
Yes, as long as one still needs to look at the screen there is still scope for ads. On-screen ads, if they are small enough, aren't annoying and sometimes they are useful too. There will be some interesting dynamics regarding how ad money is distributed among all the api backends.
But if voice response is used a lot, then ads(in the audio) will be sufficiently annoying for many people to switch to paying the equivalent small amount every month for ad-free services (which will have to be be distributed to the backend providers using micropayments). If this kind of service works out, then the mechanism exists for getting rid of the on-screen ads too, whether or not people actually use it. I wonder how much a the ad-value for a typical user is every month. A very rough calculation 30 billion in google's revenue/(say 200 million users * 12 months) gives 12.5 dollars/month. I think this should be an upper bound on the average, and that there will be a large variance - users who consume drugs will have larger value for advertisers, for instance.
Also consider that paying even a dollar a month for a service will result in the addressable market going down orders of magnitude. Apple is pretty much the only company in existence that is able to make people pay so much on luxuries like that.
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