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Google Dominates US Paid Search – Can It Be Toppled?

In Q4 2018, Google accounted for 92% of all paid search clicks and 94% of all paid search ad spend in the U.S. for Merkle advertisers. That dominance is even greater on mobile devices, as Google click and spend share on phones amounted to 97% and 98%, respectively, in Q4.

Now it’s certainly the case that some advertisers see Bing Ads and Yahoo Gemini (for now) accounting for a greater share of clicks and ad spend than the average Merkle advertiser, but independent parties like statcounter indicate a similarly dominant overall position for Google in the US market, as well as a higher Google share on phones than across all device types.

How did Google get so much bigger than the competition, and is there any chance it will ever fall from its current dominance? Here we examine both of these questions.

Google Became Popular, Then Capitalized

Looking back a decade to 2009, statcounter pegged Google’s US search market share at around 80%.  This was at a time when desktop computers accounted for essentially all search traffic, with Google’s overall market share at that time nearly identical to its share on desktop specifically.

Now over the last ten years, Google’s desktop search engine share remained roughly equivalent to what it saw back in 2009 at around 80%. Its share on phones remained roughly stable as well, at about 95%. However, phones now account for a much greater share of search traffic than they did back when iPhones were just being introduced, and in Q4 2018 accounted for 58% of all Merkle paid search clicks.

Why is Google so dominant on phones? On Android devices the answer is fairly obvious – the operating system (OS) is owned by Google itself. This has led to a huge advantage for Google as Android accounts for about 75% of mobile OS usage worldwide, according to statcounter.

But in the US specifically, Apple iOS accounts for the highest share of any OS at over 50%, with Android coming in around 45%. Of course, Google is also the default search engine for Safari on iOS devices thanks to its deal with Apple, with many estimates pegging the price tag of the agreement at around $9-$12 billion annually for Google.

Google’s Deal with Apple Difficult to Break

While its popular in the current climate of scrutiny surrounding big platforms to laude the agreement as Google paying for data on Apple users, it’s actually paying for the ad traffic those users produce.

With iOS devices accounting for 46% of all Google paid search clicks for Merkle advertisers in Q4 2018, it might seem then that an engine like Bing or Yahoo could team up with Apple and instantly put a huge dent in Google’s dominance. That’s…not as easy as it sounds.

For one, Google has historically been better than Bing and Yahoo at monetizing its paid search traffic. Yahoo itself believed as much when it restructured its deal with Bing back in 2015 to serve ad results from platforms other than Bing Ads, which wasn’t impressing Yahoo to that point.  By the end of that year it had already entered into a deal with Google to allow Yahoo to pull search results from Google, a relationship which lasted until the January 2019 announcement that Bing Ads would serve all paid results for Yahoo by the end of March 2019.

If Google can monetize search traffic better than a competitor would be able to, it can afford to bid more to pay for the status as default search engine, since it can count on greater revenue coming from those searches. And Google should certainly be able to monetize the traffic better – it has significantly more data to work with in optimizing search results and has more advertisers on its platform competing for ad slots to drive up cost-per-click (CPC). What’s more, past events indicate that search engines not named Google shouldn’t be too confident that searchers won’t switch back to Google as a default.

In December 2014, Yahoo replaced Google as the default search engine for Mozilla Firefox browsers, a move that promised to meaningfully boost Yahoo’s search (and thus paid search) traffic as Firefox accounted for about 10% of all paid search traffic at the time. However, even after the change was implemented, many Firefox users continued to use Google for searches, and Yahoo was never able to account for even a majority of Firefox paid search clicks for Merkle advertisers.

Q1 2015 Mozilla Firefox Paid Search Click Share by Engine

Google returned as the default search engine for Firefox in 2017, as Mozilla ended its deal with Yahoo earlier than the initial five years agreed upon. Knowing that a similar situation might play out on iOS devices, it would be difficult for another search engine to confidently bid competitively against Google for default search engine status.

Even looking away from the money side of the equation, Apple also has an incentive to use Google because it’s the most popular US search engine. Firefox users kept using Google even when Yahoo was the default search engine because they preferred it. Thus, using a search engine other than Google might seem to be a poor decision for user experience from Apple’s point of view.

All in all, it will be very difficult for another search engine to cut into Google’s dominance in mobile search share, but what about desktop?

Sorry Competitors – Google Has Desktop Pretty Shored Up as Well

Looking at statcounter figures, Google Chrome accounts for 60%+ of all US desktop browser usage, with Internet Explorer, Firefox, Safari, and Edge essentially dividing up the remaining traffic. Chrome naturally uses Google as the default search engine, as do Firefox and Safari.

That leaves Internet Explorer and Edge, which were both developed by Microsoft and use Bing as the default search engine. As mentioned earlier, however, default status doesn’t keep users from searching via their preferred search engine, and Google still accounts for about half of all paid search traffic coming from these browsers for Merkle advertisers.

That’s certainly less than the 90% or so share of Chrome and Safari paid search clicks that Google accounts for, but not exactly cause for celebration for Microsoft. Even if Microsoft were able to increase the popularity of its browsers, it would still likely be passing along half of the ad traffic (and an even greater share of revenue) to Google.

Thus, on both mobile and desktop, Google’s dominant market share seems well entrenched, in part because users themselves make a choice to use Google even when it’s not the default search engine for a particular browser. That is, at least looking at traditional search engines…

Amazon Looms Large, but Shouldn’t Scare Google Just Yet

Every year new stats show that more and more US online shoppers start product searches on Amazon, and it’s easy to see why. The eCommerce giant has built Prime to what’s estimated to be more than 100 million members in the US, conditioning these members to turn to Amazon first for low prices as well as fast and cheap shipping.

Google would certainly prefer that these shoppers begin their search on Google’s engine, but there are a few ways in which the idea of Amazon taking out Google’s position as search leader has been oversold.

For one, Amazon primarily deals in product search. It would certainly like to become known for a wider offering, such as its home and business services, but for now there aren’t many people looking for a lawyer who turn to Amazon first. This limits the total share of searches that it might account for.

Second, not all brands sell on Amazon. Thus, even for individuals who might start their search on Amazon for a particular product, they might still end up heading over to Google if they can’t find what they’re looking for.

Finally, Amazon itself derives a lot of its traffic from Google, some of which it pays Google for. In the US, Amazon is typically one of the biggest competitors for retailers in Google text ads, and has been a significant player in Google Shopping for home goods since wading into the format at the end of 2016.

There are reasons why Google revenue growth has chugged along at the same pace over the last few years regardless of Amazon’s growth, and those same reasons stand to keep Google running in the pole position of search for the foreseeable future.

Conclusion

On both desktop and mobile devices, competitors will find it difficult to dislodge Google as the primary recipient of search queries and ad dollars. This is partly true because of Google’s Android OS and the Chrome browser defaulting to the search giant, but is also the result of searchers choosing Google over other options even when those other options are presented as the default.

One way in which Google could slip is if the current draw towards more privacy and less tracking results in both users and Apple turning to a more privacy-focused search engine, like DuckDuckGo. However, with DuckDuckGo still only accounting for 0.4% of organic search traffic in Q4 2018, after a year in which the call for greater transparency and privacy was magnified significantly, it’s safe to say that we still have a way to go before things really get shaken up.

Q4 2018 Organic Search Visit Share by Engine

Regulators could push the pace on such a shift, but the history of regulating Google has shown that legislation can be slow to produce, slow to enact, and counterproductive to the end goals of those writing it, such as when German publishers successfully lobbied to force Google to pay to include any information other than the title of content directly in search results. After losing significant traffic once Google reduced results to just headlines, publishers quickly agreed to once again allow Google to feature more information in results free of charge.

Any industry can see abrupt and unforeseen changes come up, and that could certainly be the case with search in the US. But for now, looking at all the relevant variables available, Google looks very well positioned to continue its dominance in the space.

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