Adwords Is Dying and Google Knows It (and they are doing something about it)

Adwords accounts for almost all of Google's revenue. The flagship advertising platform is showing no signs of slowing down, but the company is still proactively preparing for "life after Adwords."

 Before you say it, I know what you're thinking. "Adwords is a multi-billion dollar platform serving billions of searches and millions of websites every day. It's not dying, it's thriving!"

As of this article, there is no doubt that Adwords is still trending positively. More websites are going live. More people are on the web and searching. More advertisers are trying to reach these people. Why would Google be worried?

Over the years, Google has developed or acquired some excellent services (like YouTube and Gmail) and even more awful services (like Wave and Buzz), but the one constant has been Adwords. Despite its success, Google knows that two things are growing faster than "old school" Internet and will likely start chipping away from standard search and advertising platforms: mobile and social media.

As a result, they have made some recent moves that lend to their idea that a rolling stone gathers no moss. Their thought process: while they're on top, now's the perfect time to take some chances and bet on the future.

Here are some of the recent changes that support the premise:

Google Places Integration with Organic Search

Google Places Changes

In late October, 2010, Google integrated Places and Reviews into many of their organic search results. They changed the ranking system to coincide with their organic algorithm, put reviews and other information inline within their organic listings, and moved the map itself to the top of the right sidebar (and it stays there as you scroll up and down), a prime spot normally reserved for Adwords.

On the surface, this seems like a bad move. One could argue that making the search results more relevant and informative will increase their already-massive market share and help them achieve complete search domination. It's a valid argument, but unlikely.

There are ways to improve search results without hurting your revenue stream. No, this is a play for something else. We'll discuss that "something else" below.

Marissa Mayer's Move

Marissa Mayer

When you're heading up the department that accounts for over 90% of a multi-billion dollar company's revenue, the last thing you would expect is a transfer to another department.

That's exactly what happened. In moving Marissa Mayer from Search Products to Geo/Local and promoting her to the operating committee (Google's highest "club"), Google made clear where they think the money is going in the future.

"Marissa is moving over to an exciting new role covering geo/local, which is crucial to our users and the future of Google," a Google spokesperson said in a statement.

In an iPad, iPhone, Android world the future of many companies lies in geo/local. Google is no exception.

Focus on Mobile and Social

Google vs Facebook

Most tech companies are doing something to integrate into social media and mobile technology. It's the direction (singular, as they seem to be moving hand-in-hand) that makes the most sense with traditional Internet actions such as search and email giving ground to new media actions such as sharing and status updates.

There are dozens of studies to support this and I won't rehash them here. Google has already leaked that they are making their core products more social and they've been working on mobile ads for some time. Are the trends towards social media and mobile putting Google in a position where they are planning for Adwords' eventual demise?

Okay, So Adwords Isn't Dying. Yet.

"We're dying from the day we're born."

The numbers and trends point to continued success of Adwords as the largest Internet ad platform in history. Those numbers are, however, short term, and Google is not waiting for the trends to turn down before doing something about it.

Many of their actions over the last few months (and possibly longer) would be considered by most to be harmful to their most profitable product, but that's the point. Hit it hard now while it can withstand the punishment.

Move Adwords down on the search results page and add revenue-free distractions while it's still generating billions of dollars.

Move one of the most successful technology company executives in history to another department so she can work her magic there.

Move your focus from something that has worked for a decade to something that will likely work for the next decade.

These are all moves that point to the eventual demise of Adwords. When will it happen? 2011? 2012? Unlikely, but in a world that moves as mercurially as the Internet, one never knows. Google's not going to wait to find out.


[Photo by Zach Klein]

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