Monday, August 9, 2010

Marketing Japan: Why Google Worries About its Own Future....

By Mike in Tokyo Rogers

Google is dominating the Internet scene today and seems like they have destroyed the competition. But did you know that there are rumblings below the surface? Did you know that Google themselves fear for their position in the long run? It's true.

If you stop to think about it for a few moments, you can see where Google may be headed for some bad times in the very near future. Some reasons have to do with Google being so good at what they do that they have created a hole in their armor that can be exploited.

Today, I will lay out just a few of the reasons that Google and outside Internet experts alike seem to think that Google won't be king of the hill for too much longer. Here's why....

Have you ever asked the question, "Where will Google be in 10 years?"

I think a look at what has happened to major terrestrial TV broadcasting stations, or what has happened to Rock "hit" radio in recent years is a good indicator of what might probably happen to Google. If you consider the shape these two entities - TV and radio - are in today, as compared with their dominant position just 15 years ago, then it's not too far of a stretch of the imagination to see Google as, perhaps not a bit player, but not the dominant player.


I think it has to do with a few things; first the fracturing of the audience and the variety of choice given to us by the Internet due to the Long Tail. Because the Internet allows us so much choice, that choice allows people to exercise their quite unique individual tastes. This is damaging the "hit" market and exponentially growing the "niche" market. When people have many choices, they will exercise that choice.

When there were only 4 types of jam for toast, for example; strawberry, grape, blueberry or orange marmalade, people bought one of those. Now that there are hundreds - and the online stores can carry thousands - people are buying the peach, plum, or Canadian Boysenberry.

When a customer, buys one product, like Canadian Boysenberry, that's money displaced that takes away from a purchase of generic strawberry. That is what is called, "the Long Tail."

(See brief information on the Long Tail see "A Primer on the Long tail" here and "Is the Long Tail all Junk" here. For an in-depth analysis, please read Chris Anderson's definitive work in The Long Tail.)

What does all this have to do with Google? Ah, there is the crux.

Think of Google search engine like a TV station. The TV station must have very broad appeal in order to survive... Today, this broad appeal actually has started working against them in the long run.

Take the example I often use of TV Tokyo. Let's compare TV Tokyo and, the Food Channel on TV:

TV Tokyo has over 1,000 employees.
Food Channel TV has about 20 employees.

TV Tokyo has a extremely wide target audience of anywhere between 6-years-old kids to 84-year-old seniors.
Food Channel TV has a focused target audience of women between 34-years-old to 50-years-old.

It costs about $150,000 (USD) to buy 25 commercials on TV Tokyo.
It costs about $8,000 (USD) to buy 25 commercials on Food Channel.

Now, the question is; "You are a manufacturer of kitchen appliances and cook ware. Where will you advertise?"

It is obvious that you will take the focused marketing that the Food Channel offers.... Now, extrapolate this into every segment of manufacturing, goods, services and possible sponsorships. What do you get?

You get a market that demands specialization. Isn't it obvious? Isn't that the way everything has been going? What restaurants do well? The family restaurant that has everything, but nothing is especially tasty, or the specialization restaurant that only serves, say, Italian food, or the sushi shop, or the Chinese restaurant?

The catch-all shops are, in many ways, still useful and profitable (see WalMart), but they are getting fierce competition from specialization and will be in the future. People, when given a choice, will choice specialization.

I touched on that in more detail here in "Marketing Japan: Why Digital Conversion Will Destroy TV Tokyo and TBS":

When there are 300 TV channels competing for your attention and sponsor's money - both of these critical factors to the survival of TV (audience and money) will be more widely dispersed.

Think of it this way: You are the maker of, say, outdoor goods like tents, bicycles and barbeques. Say, the price for 25 TV ads on a TV station like TV Tokyo is about $150,000 (USD). The price of 35 TV ads on the sports channel is $14,000. Sure there are more viewers on TV Tokyo, but Sports TV offers a targeted audience of men who like sports (and, by the way, many are probably are married, have families, and like the outdoors).... TV Tokyo's audience ranges from 10-year-olds to 80-year-olds; Sports TV target audience is mainly 30 ~ 50-year-old men.

Now, where would you spend the money if you were the sponsor? 

It is obvious that you would go for the Sports TV. It will be the same for all manufacturers whether they make diapers or women's fashion brand shoes. The diaspora of audience will make targeting even more important as time goes by.

Now, keep this in mind... Sit back and consider... Like I said, if Google were a TV station... Google is a catch all search engine... Whatever you want to search for, Google search engine has...

But wait a minute! What about specialization?

What if some smart Internet site, say a Food Channel, decides that they wanted to corner the market for Internet searches for "Food" and anything at all related to just food and food only.

Some might say, well, "Google will make one too..."

No, they won't... They can't... They might try though...

Think back to the Long Tail and all the millions and billions (more!) niches there are! There are niches inside of niches! Google cannot compete with that...

But a small company focusing on their niche and that niche only can... And they can do very well at it.

Then imagine that every niche in the world had their own search engine. Think of it; anything to do with cars might have their own specific search engine, travel only (then inside of "travel only" sub-niches like "Travel in Western Europe" or "Travel in Lower New Jersey"); the same with sports, medicine, shopping for women's clothes, you name it.

Can you see? Google could never keep up with that.

Google would become like today's catch all TV station and the niche search engines would eat them up.

From what I am seeing, I am beginning to think that this is inevitable... I suspect that Google does too!


Google search engine, mike rogers, Marketing Japan, Google, Long Tail, travel, food, TV, TV Tokyo, sports, medicine, cars,  The long Tail, Chris Anderson,  Mike in Tokyo Rogers, niche, niches


Anonymous said...

The emergence of niche search engines is already happening now, after reading your article on Vocaloids, I used a Vocaloid specific Wiki to research it Such interest specific search engines consist of only a small portion of my internet searching but considering a year ago I didn't even know such wikis existed Google could certainly be in trouble.

Shea Davis

mike in tokyo rogers said...

Especially if the TV networks get off their asses and wake up to the potential of using a TV station to cross promote their Internet. Imagine if, say, MTV decided to use their name and reputation to become the Internet search engine for everything music related!

Google doesn't have a TV network... The stations do... That could be a game changer.

Thanks Shea! Once again, it is the younger people who come up with the observations that us people over 50 need to pay attention too...

Anonymous said...

There are 100's of trees in the forest , and all f them have names , there are millions of ''proteins'' that have been discovered and millions more to come.......

mike in tokyo rogers said...

Hi Jeff! Please write to me directly if you wish.

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