Google is back in US District Court in Washington to fight against the breakup of its search monopoly, which was ruled illegal in last year’s landmark antitrust case. With the trial now in its remedies phase, the Department of Justice (DOJ) is arguing that the tech giant should be forced to sell its Chrome browser, the gateway to Google’s search empire.
Divestment would not only hit Google’s search business, it also stands to cause significant disruption to the flow of ad spend. Chrome gives Google a 67 percent share of the web browser market, driving some 3.4 billion users to its search ads. Without Chrome providing the audience data used to target Google ads, the company could see its lower-funnel advertisers turn to alternative channels with robust targeting and attribution models. And this encroachment on Google’s turf is already underway, according to Bradley Keefer, CRO of Keen Decision Systems, a marketing mix modelling (MMM) specialist, as retail media rapidly gains momentum.
“Retail media is starting to gain a lot of the same value that Google once had,” Keefer tells VideoWeek. “It’s selling similar capabilities to what Google used to say is their advantage – but I think it has the overall advantage, which is the ability to actually track the end-point conversion.” Consumer use of Amazon for product discovery, alongside Walmart and Target in the US, makes their retail media networks well-positioned to take significant share of redirected ad spend from Google.
Search out, AI in
And Amazon is not just seeking to replicate the Google experience for advertisers, but is increasingly looking to emulate the search giant’s user experience. Last year Amazon launched Rufus, an AI-based search system where shoppers can ask questions to generate product recommendations – similar to how users have historically interacted with Google. “As Amazon enters the prompt a question kind of search query, you can see that Amazon is already trying to figure out how to capitalise on Google,” comments Keefer.
However, Amazon is much more popular among Millennials than Gen Z, who favour TikTok when it comes to discovering new brands, products and services. According to research from Archrival, a youth culture agency, just 22 percent of Gen Z consumers in the US use Amazon for product discovery, compared with 53 percent who use TikTok. The short-form video app therefore stands to take more spend from advertisers looking to reach younger consumers, though this effect is likely diminished by ongoing uncertainty around TikTok’s future in the US.
At the same time, AI answer engines, such as Perplexity and ChatGPT, are increasingly used to field search queries. And while Google searches still dwarf the use of AI chatbots, divestment of Chrome stands to accelerate adoption of AI search tools – more so than rival search engines, such as Microsoft’s Bing. The DOJ’s proposed remedies also involve ending the practice of Google paying the likes of Apple to be the default search engine on their devices, which could open the door for Apple to introduce its own AI search tool as a default on iPhones.
“If this was 12 months ago, Bing could have capitalised on this for sure,” says Keefer. “But because of what it can do, AI becomes the prominent takeover here, more so than another traditional search engine. So I think retail media will benefit from an ad dollar perspective until ChatGPT or any of these other AI-based search systems figure out how to sell ads, which is inevitably going to happen at some point.”
The biggest waste
Until then however, weaning small advertisers from overspending on Google still presents a challenge, according to Keefer, due to the way the company presents conversions “that you would have gotten anyway” as incremental sales. He says businesses stick with Google “for far too long” because it provides these metrics in easy-to-understand dashboards – but Keen’s MMM finds that most small businesses are over-indexed on Google relative to its actual incremental impact.
“The biggest waste that we see in the industry for small business is they stick exclusively to Google for far too long,” remarks Keefer. “The reality with small business is that they’re not traditionally marketers, so they’re just going toward transaction. Small business likes Google because it’s easy, and they get a dashboard, but the reality is they don’t really know what they’re looking at. Google’s just mastered a way of sharing data back that tells someone what they want to hear.”
Follow VideoWeek on LinkedIn.
