Mobile apps that take users directly to e-commerce and other types of web sites are a growing threat to traditional search engines, according to a research note from BroadPoint AmTech, released today. While the growth of mobile apps has been heralded as a healthy trend, is it good for the Googles of the world?
Search engines derive significant revenues from commerce-related queries, including ones as basic as searching for “Amazon” or “eBay,” according to the Broadpoint AmTech note. Add to the mix rapid growth in usage of mobile apps and that they’re treating search engines as the middle man to be removed, and search engines may be in trouble, says the report.
There are four primary ways that mobile apps are disrupting standard search models online and calling for change, according to the research note:
1. Bypassing Navigational Queries. “Savvy Internet users may find it hard to believe that people search for terms such as Amazon or CNN,” the report notes, “however, these navigational searches comprise a meaningful percentage of all searches and are often highly monetizable for Internet search engines.” The upshot is that mobile applications can completely bypass these types of queries, including mobile apps coming directly from e-commerce providers.
2. Disintermediation of Commercial Queries. “Product-related searches are traditionally among the most highly monetizable queries,” Broadpoint AmTech researchers note. They add that many emerging mobile apps exist solely for product queries, and ones that utilize technologies such as bar code reading can completely remove the search engine middle man from the product search process.
3. Placement on the Deck. “While virtually all smartphones provide open access to the Internet and high levels of customization for users, the importance for companies to secure prominent placement/default status on a phone’s mobile ‘deck’ remains important,” the report says. This phenomenon, of course, has gone on for years, and is part of why Google provides Mozilla nearly all of its annual revenues in exchange for a search box in the Firefox browser that feeds users directly into Google’s own search-and-ad ecosystem.
4. Convenience/Behavioral Risks. It’s becoming increasingly convenient for users to dive into mobile apps that either come from or are directly associated with large e-commerce sites, Broadpoint AmTech researchers note. “If users get in the habit of simply using the Amazon app to search for products or a Fandango app for movies, then Google would be seriously impacted,” the report concludes.
The Broadpoint AmTech research note makes a number of good points, but of all the large search engines, Google seems to be most aware of the possible threat that mobile applications represent to its traditional search business. In fact, the research note points out that Google’s own Nexus One phone could be an attempt to make “sure it can guide the development of the mobile web while protecting and expanding its own business model.” In other words, Google will want to put its own tools for directing users to its search ecosystem right on the desktop, and integrate it with the whole user experience.
Google already does that with Firefox, by buying search placement each year, to the tune of tens of millions of dollars. This is also why Google is interested in the spread of Android-based phones, many of which emphasize its tools and applications, and steer users into its search/ad ecosystem. Broadpoint AmTech makes a good point about how mobile apps can have a material impact on search engine revenues, but one has to wonder if Microsoft and Yahoo are paying anywhere near as much attention to the issue as Google.