Peak Google

ABOUT THE AUTHOR
Salahuddin Khawaja has 15 years of
experience, primarily in the Financial
Services Industry. Before joining JP Morgan
as a Program Manager he spent 11 years as
Management Consultant at Deloitte helping
Fortune 500 clients with various types of
Strategic Initiatives.
He believes in the power of Presentations,
Storytelling and Visual Design. That is why
he is fascinated with presentations.

ABOUT THE PRESENTATION
This presentation is based on Ben
Thompsons story “Peak Google” on his blog
Stratechery.
Appreciated the story and his use of paint to
show some basic graphs. So thought I’d
create a presentation out of it.

Despite the
hype about disruption,
the truth is most tech
giants, particularly platform
providers, are not so much
displaced as they are eclipsed.

For 50 years, IBM has been
successfully selling and
servicing mainframes. During
the PC era, though, they were
eclipsed by Microsoft.

The same happened to
Microsoft . Windows has been
eclipsed by smartphones, to
the benefit of (in terms of
revenue and profit) and
Google (in terms of market
share).

In both cases it turned out that
the incumbents’ prior success
resulted in misdirected incentives
IBM focused on sel l ing and
servicing PCs, instead of bui lding a
plat form, whi le Microsof t focused
on extending Windows to mobi le
instead of the user exper ience.

Who might follow
in this illustrious
but ultimately
tarnished path?

Google
dominates
search advertising
Other
Captures a huge majority of the $50 B
spend in worldwide search advertising

But, it’s only a small
percentage of the total ad
Other
spend
Total ad spend is projected to
be $545 billion in 2014

The vast majority
of that spend is not
about direct response –
i.e. ads that spur you to
make a purchase on the spot;
rather most of the money is
spent on brand advertising

The idea behind branding is that
once a customer picks a brand,
they’re loyal for years.
That adds up to a lot of l i fet ime
value, which is why consumer -
packaged goods companies

Search advertising is good at
getting a direct response, but
not good for building brands

A new type of digital advertising
has emerged to plug the hole
in digital advertising channels
for companies looking to
brand: native advertising

Native advertising is
simply “in-stream” advertising
For a news si te, nat ive adver t ising
is adver t ising in ar t icle format ; for
Twi t ter, nat ive adver t ising is a
promoted tweet ; for Facebook,
nat ive adver t ising is ads in your
news feed; for Pinterest (a future
giant ) a promoted pin

These sorts of ads are
proving to be massively more
engaging
than banner advertisements

Nat ive adver t ising requires immersive content
( e . g . F a c e b o o k ’ s n e w s f e e d , Tw i t t e r ’ s s t r e am, a P i n t e r e s t
b o a r d , o r e v e n y o u r t y p i c a l n e w s s i t e ’ s h ome page)

Google’s doesn’t have a successful
immersive products (other than YouTube)

Google’s core capabilities (the algorithm,
the auction system and machine learning)
can’t be used as a launching pad to create
immersive products

So Google lacking the human
touch has peaked and will be
eclipsed.
Paral lel to IBM and Microsof t . IBM
d i d n ’ t c a p i t a l i z e o n PCs b e c a u s e
their ski l ls lay on the hardware
s i d e , n o t s o f twa r e . Mi c r o s o f t d i d n ’ t
capi tal ize on mobi le because they
emphasized compat ibi l i ty, not the
user exper ience.

Peak Google

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