Google is dominant. Google is the beast your industry’s 800lb. gorillas have nightmares about. They’re incredibly strong. But Google’s strength is incredibly brittle. In theory, Google could fail tomorrow. They’re a one-product company. They the vast majority of their revenues from one product: Advertising. What if they went away tomorrow? How could you run your business if Google didn’t exist?
While that might sound far-fetched, it’s not crazy to think about how to end your dependency on Google. Or Amazon. Or Facebook, Expedia, OpenTable, or whomever else you depend on today. In fact, it’s critical for you to think about how you could run your business if these giants didn’t exist.
How can you do that? How can you run your business as if Google didn’t exist. The latest Thinks Out Loud takes a look for you. Want to learn more? Here are the show notes for you:
Relevant Links — How To Run Your Business As If Google Didn’t Exist (Thinks Out Loud Episode 298)
- Alphabet Inc (GOOG) (GOOGL) Q2 2020 Earnings Call Transcript
- Amazon (AMZN) Q2 2020 Earnings Call Transcript
- Google is paying Apple billions each year – but perhaps not for much longer | TechRadar
- Four Questions Your Business Needs to Ask Right Now (Thinks Out Loud Episode 297)
- Two Key Steps Towards Digital Transformation (Thinks Out Loud Episode 295)
- A Digital Transformation First Step: What You Can Do Right Now (Thinks Out Loud Episode 294)
- Airbnb’s New Strategy: Living Without Google — The Information
- Stop Outsourcing Your Sales & Marketing to Gatekeepers Like Google (Thinks Out Loud Episode 257)
- Why Google Keeps Winning. And How You Can Win Too. (Thinks Out Loud Episode 263)
- How to Compete With Amazon (and Expedia and Google and…) (Thinks Out Loud Episode 221)
- We Live Online Now (Thinks Out Loud Episode 288)
- The Five Drivers of E-commerce and Digital Transformation for Your Business (Thinks Out Loud Episode 293)
- Why Google is the Beast That Scares Your Industry’s 800-lb. Gorilla (Thinks Out Loud Episode 238)
- How to Build a Digital Company (Thinks Out Loud 302)
Thinks Out Loud is sponsored by SoloSegment: SoloSegment increases large-enterprise, B2B website conversion with easy-to-install software that automatically connects website visitors to the content they need to see to achieve their goals. SoloSegment does this using anonymous data and machine learning ensuring privacy compliance, addressing the many anonymous visitors, and improving the efficiency of marketing teams. Visit SoloSegment.com.
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You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:
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Transcript: How To Run Your Business As If Google Didn’t Exist (Thinks Out Loud Episode 298)
Well, hello again, everyone. And welcome back to Thinks Out Loud your source for all the digital marketing expertise your business needs. My name is Tim Peter. This is episode 298 of the big show. And I think we’ve got a really cool episode for you today. I think there’s some amazing, amazing stuff to talk about that has enormous implications for your business.
And I want to start off by telling you some numbers. So the first number is $18.7 billion. The second number is $35 billion. The third number is $38.6 billion. The fourth number is $59.7 billion. And the fifth number is $88.9 billion. So 18.7 billion 35 billion, 38.6, 59.7 and $88.9 billion. Those are the earnings that were reported by, respectively, Facebook, Microsoft, Google, Apple, and Amazon Facebook’s at $18.7 billion. Microsoft at $35B. Google at $38.6B. Apple at $59.7B, and Amazon at $88.9 billion for the quarter, which holy crap, right?!? That’s a lot of money.
Alright, I have one last number for you. And that is minus 2%. Now that last number is Google’s earnings compared to last quarter, they fell by 2%.
Now that may not seem like a big deal, but 2% decline is about $780 million, a little over three quarters of a billion dollars. I don’t care who you are. I don’t care how big your company is. I don’t care how much money you make. Three quarters of a billion dollars is a lot of money. And this was the first quarter in Google’s 22 year history that their ad revenue has not increased. It actually fell a pretty fair amount. Their overall revenue was down about 2%. Now that’s crazy.
And there’s two things that I want to point out about this. And I want to talk a bit about why these numbers have relevance to your business. The first is that Google is a one product company. They make almost all of their revenue from search ads, from advertising specifically, but largely search ads.
Of the Frightful Five, with everything going on with digital transformation right now, they’re the only one who saw a decline in revenues in the quarter. Facebook, Microsoft, Apple, Amazon, all made more money. Google did not.
The second is their earnings were solidly in the middle of the pack. You know, I mean, they’re, you know, they’re a little bit better than Microsoft. They’re twice as large as Facebook. But they’re half the size of Amazon in terms of revenues. And you know, only about 60 percent the size of Apple.
We think of them as being so dominant. We think of them as being so strong and yet really that strength is incredibly brittle. It’s built entirely on one product, on advertising. They’re an easy company that they could easily break. I know this is bizarre to think about, but Google could vanish tomorrow. If we all woke up tomorrow and decided we were going to search on Bing, or we were going to search on DuckDuckGo. Or we were going to search on, oh, I don’t know, pick any other search engine you can think of, you know, we all want to start using, I don’t know, Baidu, Google would be screwed because their, their revenues would fall to the floor rapidly. And we just saw it. I mean, they didn’t go away completely, but they fell for the first time in the 22 year history of the company. Why? Because advertisers started advertising other places or stopped advertising altogether because of all of the challenges that are going around.
And one of the reasons that they’re so paranoid, one of the reasons that Google is so competitive is because other companies really are out to get them and really they could go away incredibly quickly.
Since I’ve started this show with numbers, do you know how much Google pays Apple to be the default search engine on iPhones and iPads every year? The numbers are a bit sketchy, but it’s certainly north of $7 billion. TechRadar had a story the other day because of a, the antitrust investigation that’s going on in Britain that Google pays Apple, at least 1.2 billion pounds, which is about a billion and a half dollars, to be the default search engine on iPhones and iPads, just in the UK. And I’ve seen numbers that say as high as 9 billion to $12 billion in the past.
Now, is that a sign of a company that’s confident in their ability to compete?
Or are they saying, no, we recognize if we lose that traffic, we’re in really, really deep trouble. And that’s why Google competes so ferociously because they have to. And they’re going to do a lot to be even more competitive, you know?
In their most recent earnings calls, Sundar Pichai was talking to financial analysts and he said, you know, “on shopping,” this is a quote, “on shopping users come to Google to find a lot of the products they are looking for, but we see an opportunity to invest and make the experience it’s better.” Google’s saying out loud, “Wow, we need to do more to get people to come to us when they shop.”
Here’s what, here’s how we continued. “Sometimes the journeys may fail because they don’t find what they’re looking for. So we want to make sure it’s comprehensive when people find what they like, we want to make it simple for them to transact. And so working on that end to end experience has been a big focus.”
Again, they know that they’ve gotta be in the middle. They have to be there or else they’re in big, big, big trouble. Now contrast those comments with what Amazon’s CFO Brian Olsavsky said on their recent earnings call. He said demand is still super high. “Well, we’re seeing it’s driven by Prime members and Prime member engagement. They’re shopping more often. They have larger basket sizes. There’s still a heavy component of online grocery sales tripled year over year in the quarter, as we added capacity there.” Which is crazy.
Olsavsky also said, and I am not kidding, this blew my mind, that they cut marketing spend in the most recent quarter two. And this is a quote, “to manage demand.” In other words, the demand that they’re seeing has exceeded their capacity to meet it. So they cut marketing to slow down demand. That’s crazy.
Wouldn’t you love to have that problem right now that you can say, you know what? I really need to cut my marketing spend because too many people want to buy from me. That’s nuts. Anyway, Olsavsky also said “Prime membership and the acceleration we saw in the U S or worldwide, it’s just another encouraging sign. We think there’s still a lot more value we can add to that program.”
So Amazon is saying we’re winning, we’re winning big time. And we’re going to still try to do better. Google is saying we’re losing and we need to do better. And that’s the reality. These are companies that are making billions of dollars per quarter, you know, billions and billions of dollars. And they’re still trying to improve.
So the question I would pose to you is imagine Google went away. What kind of business would you create? What kind of interaction would you create with your customers if you didn’t have Google? And if you prefer, you know, substitute Amazon for that, or substitute Facebook for that, or substitute Expedia or Booking.com or OpenTable, or, you know, whatever intermediary you deal with on a regular basis. What kind of relationship with your customers would you build if they didn’t exist?
Now you say, well, that’s crazy. It couldn’t be done.
First of all, it was done before they ever came along. And secondly, the there’s a great article in a journal in a, in an online publication called The Information. It is a paid media channel, but you can view one article by giving them an email address. And I will encourage you to see the article that I will put in the show notes that talks about how Airbnb is trying to structure their company as one that lives without Google. What would their relationship to customers be without Google? Now again, Airbnb sure. Big company. But how did they get to be the size that they are? By going directly to consumers in the first place and saying, they’ve said it in the article that they got to dependent on Google and now they want to be less dependent on them.
What does all this mean for you? Well, first, none of this means that Google is going to lose. I mean, who would you rather bet on? The company that’s leading the race or a scrappy underdog, who’s willing to do whatever it takes to avoid losing. You know, I know Google might have only brought in $39 billion last quarter. I mean, gosh, that’s a terrible situation. Right. But do you really think that they want that number to get smaller? Yeah, me neither. Of course they want to grow that. So I don’t think by any stretch that they’re out of the race or they’re going to fail tomorrow.
I’m saying they could. And I’m also saying that you don’t have to contribute to their continued dominance any more than you need to. I realized that probably sounds a little contradictory. I’m not saying don’t use Google. There’s a lot of really good reasons to use Google. You know last week and the week before that, and the week before that, I talked about how you can use Google’s data to get a better understanding of your customers. And I think you should totally do that. I think you should continue to do that.
But what you also need to do is think about what Amazon is doing. Think about what Airbnb is doing. Think about what other successful businesses that you know are doing. And the first of those is they’re building direct relationships with customers. You need to build direct relationships with your customers. And I know that may seem hard given everything that’s going on right now, but there’s this old adage you’ve undoubtedly heard. I’ve probably said it on the show before that the best time to plant a tree is 10 years ago. The second best time is today.
So grow your email list. Start a loyalty program, right? You think of Amazon Prime as being this really big, huge thing. And Amazon is looking for ways to continue it because they see that people who participate in the loyalty program actually buy from them more often.
Now there are two ways to build a loyalty program. I don’t want to go down this rabbit hole too much on today’s episode. But you basically can think about loyalty programs working one of two ways. One is a rewards program, which is the way many work if you think about airlines and hotels and the like, you know, you stay with us, we give you points. You can later use those points as currency to buy more hotel stays or more airline tickets or other things, gifts and stuff like that.
And then the other way is a recognition program, which is really the way Prime works more, which is you recognize your customers. And they gain benefits for being loyal customers, as opposed to gaining points that they later trade in for something.
I know a small farm stand that’s not far from where I live, that has a loyalty program. That is a recognition and rewards program. So you can do this as a small company. If you are a small business, you can do this as a mid sized business. You can do this in B2B. How do you recognize your best customers? How do you reward them for continuing to do business with you?
Next thing that you need to do is you need to build your brand. Now, this actually has more to do with Google than anybody else, but in a world of search, you really want people searching for your brand. Of course you want to gain top of funnel. Of course you want to gain people who may never have heard of you. But you want to be sure that when people are looking for a product or service that you offer, it’s much better if they’re actually looking for you by name than if they’re just looking for the category. Because if they’re looking for you by name, the odds are they’re going to come directly to you. If they’re looking for the category, the odds are that they might come to you, but they will also see all of your competitors. And again, you become more dependent on Google picking you to be the winner. If you want to run your business as though Google didn’t exist, don’t depend on them to determine that you’re the best answer. Be the best answer for your customers. Be the brand that they search for and that they seek out.
You also, to do that, you have to use data, use search data, use social listening data. As I’ve talked about the last few weeks to understand the questions your customers have. Then answer those questions, help your customers get the answers that they need, and succeed at their objectives.
You can compete. You can do this. I can point to case study after case study and real world examples, not just like academic case studies, but real world examples of companies who are succeeding with this every single day, including my own business, people come to us directly, right? Hotels that I work with, people come to them directly. Hotels that I don’t work with. Small businesses that I work with. Large businesses that I work with. People seek them out directly.
The point isn’t to beat Google. The point is simply to do what’s best for your customers and build your brand and build direct relationships with them so that it doesn’t matter whether or not Google exists at all.
And since I opened the show with numbers, I want to wrap up with one last number. And that is if you put your focus on your customers, if you run your business as if Google didn’t exist, then the only number that you’re going to have to worry about and the one that you’re going to be most happy with will be the one that’s in your bank account.
Now looking at the clock on the wall, we are out of time for this week. I want to remind you that you can find the show notes for today’s episode, as well as an archive of all past episodes by going to TimPeter.com/podcast. Again, that’s TimPeter.com/podcast. Just look for episode 298. While you’re there, you can click on the subscribe link in any of the episodes you find there to have Thinks Out Loud delivered to your favorite podcatcher every single week.
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I’d like to thank our sponsor. Thinks Out Loud is brought to you by SoloSegment. SoloSegment works with large enterprise B2B companies to convert more customers. They use machine learning powered Software as a Service to automatically connect website visitors to the content they need to achieve their goals. They do this using anonymous data and machine learning to ensure privacy compliance, address the needs of visitors and improve the efficiency of marketing teams. You can learn more by going to solosegment.com.
With that, I want to thank you so much for listening for the last 297 episodes and this one specifically. It means so much to me. I hope you have a great rest of the week. I hope you have a wonderful weekend. And I’ll look forward to speaking with you here on Thinks Out Loud next time. Until then please be well, be safe and as ever take care, everybody.