Google is looking for the next Revenue Stream

Google is looking for the next Revenue Stream

Google has been busy the last months looking into potential approaches towards Social Media. The latest incubation out of Area 120 „Shoploop“ is looking to create „an entertaining new way to shop online“.

While initially focused around the beauty industry, the goal is to create a seamless integration of fun interactive Videos with the possibility to purchase the product.

Lax Poojary, General Manager of Shoploop describes it as: „Shoploop, a video shopping platform for discovering, evaluating and buying products, all in one place.“

This comes during time when Facebook introduced Stores for Facebook and Instagram. Video platforms like TikTok gaining massive traction and overall Social Media is moving in the direction of Video or Story like elements.

Just last month (18.6.2020) CJ Adams announced Keen to the world, a Pinterest like Social Media application also out of the Area 120 section.

Seemingly Google is looking towards a potential new angle after their famous shutdown of Google+ back in April 2019. Where Google also got the stamp as someone who is unable to come up with a working Social Media Platform (YouTube aside).

The other story to this is however, Google is in need to find a new revenue stream. With STADIA still in the early investment/scaling phase, search already massively shifted towards paid and YouTube facing more and more competitors (TikTok, Netflix, FB/IG …) and more experimental activities like Waymo and Google Glass not mainstream ready yet.

Additional to this, according to eMarketer Google will have a drop in Ad revenue for the first time from 2019 to 2020. In large parts due to CORONA and the travel segment. However, players like Amazon and Facebook can seemingly rather profit from it.

Coming from behind

When looking at the big four (Google/Alphabet, Amazon, Apple, Facebook), it looks like Google is the one not moving ahead. With Amazon getting big hits like AWS and Amazon Prime, Facebook with Instagram Stories and Apples introduction of AirPods and the recent shift towards ARM based Macs.

Google has been milking the cash cow „search“ for years, adding step by step more advertisement slots and elements like Google Shopping. But with an actual decreasing number of searches this has its limits. Pair this together with the famous 50% of product searches starts on Amazon in the US and you can see that even core business models start to become under attack.

I wouldn’t say that Google is up against the wall already, but the writing is on the wall. There needs to be something on the horizon that gets investors excited and that shows how Google is able to transition out of the search category in other segments to stay relevant or generate innovation.

The other side to this is also the user, when adding features like Instagram Stories it is clear where the users are coming from. For Google, they need to once again open up a new field when they now start becoming more active again in the social media field.

There is still a very big corporate existing at Google, more than capable of coming up with exciting new technologies and functions. But with competition coming from every angle, either by directly competing with existing functions or by creating better working alternatives. The pressure is on, also social pressure, as the ad driven business model and the data hungry element that entails it is not only problematic for Facebook but also for Google.

In search for the core

What makes it difficult somehow for Google is this missing core fundamental that connects all the dots. When looking at Amazon they create everything around improving the core function to sell to customers. Facebook is about connecting people and Apple is for the privacy aware product lovers.

Google felt for a long time as the prototypical „internet company“, but they are starting to fight on so many fronts right now. From self-driving cars to voice assistant to search, video, infrastructure (Google Cloud, Android) and gaming. Having the ability to process data efficiently helps everywhere but overall it feels a lot more scattered than what many others are doing.

It shouldn’t come as a big surprise that even companies like Google will start to struggle at a certain point. Given the size it has grown into and the amount of additional revenue it has to generate each year to please shareholders, opening up new segments become much more vital than it has been in the beginning.

Google did a great job of leveraging the search business model, from creating Google Shopping to more recent additions of Job and Flight. But this path has limits, and they are maybe approaching those limits quicker than they would have liked.

Sometimes I also forget that Google was founded in 1998 and existing for that long in a high innovation and ever-changing segment is in itself a hard task.