Monday, 25 December 2017 02:26

Google Is Winning Back These Valuable Internet Searches


Over the last few years, Amazon (NASDAQ: AMZN) has consistently taken a growing share of online product searches from general internet search engines like Google. Searches for products like "raincoat" or "Chromebook" are immensely valuable to search engines, as they suggest more intent to buy than searches for information. That means the Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) company can charge more for ads on those searches than others.

Over the past year, Google has taken back a good chunk of product searches. Combined with other general search engines, Google took 36% of product searches on the web, up from 28% last year, according to a survey from Survata. Amazon, meanwhile, saw its share fall back below 50% to 49%, down 6 percentage points.

Image source: Getty Images.

How Google is taking back share

Survata attributes Google's resurgence in product searches to an improved mobile experienced combined with a continued increase in mobile commerce. Shopping and paying for things on mobile is easier than ever with mobile wallets containing both payment and shipping information. Mobile will account for more than half of all online shopping this holiday season, according to an estimate from Adobe.

Google is certainly winning in the near term, as it's the default search engine on pretty much every mobile browser. The Google app is also one of the most popular apps installed on smartphones, which means a new search is always just a tap away. Indeed, the Survata survey indicates Google was preferred over Amazon in cases where shoppers were looking for inspiration, not seeking a specific item.

That said, Amazon also has a dominant mobile presence, especially among millennials. Millennials go so far as to say Amazon is their must-have app, over social media apps like Facebook, YouTube, Instagram, and Snapchat. As millennials' buying power grows, Amazon's hold over them is only going to strengthen its position in search, and Google might reach a plateau on the share of product searches it can win back.

Why shoppers are heading to Amazon instead of Google

Prime has long been considered the biggest reason shoppers head to Amazon when looking to do some online shopping. The sunk cost of the two-day shipping program makes consumers look to get the most out their $99 as possible.

But the Survata data shows something different. Only 17% of respondents said Amazon's shipping capabilities impacted their decision to start on Amazon. More common reasons for starting on Amazon include easy navigation (28%), product selection (27%), and price (25%).

The good news for Google and its parent company's investors is that it's capable of competing on all three of those fronts. Scraping more and better data from retailers will provide Google with incomparable "product selection" and price data. As I mentioned above, Google has already taken steps to improve the user experience (particularly on mobile) to make its product listings easier to navigate.

The bad news for Google is that checking Amazon first is already an entrenched habit for half of the consumers. Even as more consumers do more of their shopping online, Google is competing with trying to change habits. Google has been the beneficiary of ingrained habits, maintaining a dominant lead over other search engines, so it knows firsthand how difficult they can be to overcome.

What this all means for investors

Online product searches can be extremely valuable to search engines -- whether they're retailer-specific search engines or general internet search engines. While Amazon's dominance in the category is waning, it's nothing for Amazon investors to get alarmed about. After all, specific product searches on general search engines can often lead to

The bigger opportunity is for Google to continue improving its product search experience on both mobile and desktop. Google can take the share of the growing number of consumers that look for inspiration with product searches. Those less-specific product searches could be more valuable to Google, as multiple brands and retailers may be interested in bidding on ad space in the search results.

Google's efforts are clearly paying off so far. Watch for further improvements in the future.

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Source: This article was published By Adam Levy


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