Google Faces Threats From Amazon, Yelp, Retailers As Search Goes Mobile

The search wars are back on, but this time it's different. Since Yahoo took over as the search engine for the Firefox Web browser in November, Google has been working hard to lure back users. In this edition of the search wars, however, Google also faces the challenge of competing against Amazon, Yelp and many other services that threaten to eat into its market with specialized or vertical search engines.

This threat to Google’s business has been around for years, but it was thrust back into the spotlight this week after documents from the Federal Trade Commission were revealed showing just how much the Mountain View, California, tech titan fears vertical search engines.

Specialized search engines "might cause users to shift their searches in those categories away from Google's general Web search platform. As users moved to vertical search websites, those websites could, in turn, become more attractive vehicles for advertisers, thus resulting in potentially significant revenue losses to Google,” the FTC documents, which were obtained by the Wall Street Journal, said.

This fear for Google is more pressing than ever. In 2015, advertiser spending in the U.S. mobile search market ($12.85 billion) is expected to surpass desktop spending ($12.82 billion) for the first time, according to eMarketer. This is bad news for Google, considering mobile has been a weak spot for the company and the key area where vertical search engines thrive.

Google's Struggle With Mobile

Google isn't capable of linking to information within apps the way it can with websites, which makes searching through specific apps more convenient on mobile than it is to go to Google. The search giant has been fighting back, introducing new types of search that discourage linking out to other services, but on mobile, this may already be too late. “When you’re on your phone, it’s usually a lot quicker to get to what you want when you go individually into the Yelp app or TripAdvisor or Amazon or whatever specifically that you’re looking for. You just get your answer quicker,” said Chris Schreiber, a former Google employee and the current vice president of marketing and communications for Sharethrough, a digital advertising firm.

In particular, vertical search is a major threat when it comes to searches in which advertising dollars are at stake -- namely, shopping, local and travel. That’s why it’s no surprise that the top vertical search engines that have emerged are Amazon, Yelp and TripAdvisor, along with several other travel aggregators. Pinterest is another potential threat in the future, due to its ability to help users search for things they might want to buy later on.

Google appears to have already lost ground to Amazon in the shopping space. In the third quarter of 2014, 39 percent of U.S. online shoppers began their purchase searching on Amazon compared with 11 percent who started on Google, according to Forrester Research.

“Five years ago, those numbers were drastically different,” said Dave Ragals, global managing director for IgnitionOne, a digital marketing firm. “If you’re on your phone and you’re researching to buy something, Amazon has the buy button.”

Google's In-house Vertical Searches

To keep up, Google has been rolling out specialized search engines of its own, hoping they will give users incentive to stay within the company’s ecosystem. This is why it is now possible to search for auto insurance within Google and the same reason why the company now let’s users shop for flights on its service. Google has also made a big effort to build up its shopping search service, and in 2012, it acquired Zagat to boost its presence in the local market.

These services have helped Google keep up in vertical search, especially on desktop, but it's going to be tough for Google to be all things for all users in mobile, said Adam Epstein, president and chief operating officer of adMarketplace, a search advertising platform.

“Google is subject to the winds of user behavior, just like every other company,” Epstein said. “That worked in their favor when the user behavior was to open a browser and navigate the Web through Google.com, and now it’s working to their detriment when users are downloading apps and navigating directly to the brands they know and trust, bypassing Google as the front door.”

Vertical Search Benefits Advertisers

For advertisers, the rise of vertical search engines not only brings more competition to the market but also gives them a way to better target ads. A brand such as Huggies is better off placing an ad for its products on the search engines within Kohls.com and Target.com than it is placing an ad on Google that steers users to its own website but doesn’t actually finalize a sale, argued Jonathan Opdyke, CEO of HookLogic, a company that provides advertising for search engines on retailer websites.

“Typical search is actually bad for brands, because they’re competing against their channels and driving traffic often to sites that don’t even convert [sales]”, Opdyke, whose company works with approximately 25 of the world's biggest retailer websites, said. “Some of the largest advertisers in the world ... don’t get much utility out of [Google]. We’re opening up a whole other dimension of search by condensing into the competition among the brands as opposed to the competition among the channels.”

The big challenge for Google is that it can’t get access to the data that companies such as Amazon have without cannibalizing its own advertising business. Consumers actually make purchases on Amazon, which gives the retailer a leg up on Google, but if Google were to implement its own buy button, it runs the risk of losing its No.1 client. (Amazon spent nearly $158 million on Google search ads in 2013.)

“The challenge with going all the way to the shopping cart and buying something at Google is that they basically undercut all their advertisers,” Opdyke said. “They have an existential crisis about how far to go through that process. Can they take more of the searches without taking the transactions?”